Kannan (P.) v. Director Of Sugars, Madras, And Others

1. The above two writ petitions are filed by one P. Kannan, an employee of the Kallakurichi Co-operative Sugar Mills, Ltd., Moongilthuraipattu, South Arcot District (the second respondent in both the writ petitions) (hereinafter referred to as the sugar mills), praying for the issuance of a writ of certiorarified mandamus in Writ Petition No. 2276 of 1984, quashing the order of the second respondent made in Rc. No. 2411 of 1984-A, dated 24 February, 1984, transferring the petitioner and posting him as accountant (audit) in the accounts section and transferring and posting the third respondent as internal auditor and directing respondents 1 and 2 to post the petitioner in the post of internal auditor and continue him in the same post, and for the issuance of a writ of mandamus in Writ Petition No. 2277 of 1984, directing respondents 1 and 2 to fix the pay of the petitioner in the scale of Rs. 1,300-75-1,600-100-2,000 from 12 June, 1975, or in the alternative in the scale of Rs. 1,000-50-1,500 from 12 May, 1975 till 31 March, 1979, in the scale of Rs. 1,300-75-1,600-100-1,900 from 1 April, 1978, ignoring the letter of the first respondent bearing No. 15233-70-3-C, dated 14 September, 1983, and the further communication of the second respondent, dated 6 October, 1983, bearing No. 200-76-A and for passing suitable orders.

2. The facts leading to the filing of these two writ petitions are common and can be briefly stated as follows: The petitioner joined the service of the second respondent-sugar mills as lower division clerk-cum-typist under the appointment order, dated 24 December, 1963. In 1966, he was appointed assistant cashier pursuant to an interview. Later he was promoted as cashier in 1969 in the scale of pay of Rs. 200-8-240-EB-12-300 with effect from 1 July, 1969, and further posted as accountant incharge of the main accounts section on 7 December, 1970. On 25 September, 1973, his scale of pay in the cadre of accountant was revised with effect from 1 November, 1969 to Rs. 255-8, 295-EB-12-403. On 26 October, 1974, the petitioner was designated as assistant accountant and promoted to the supervisory cadre in the scale of Rs. 255-15-390-20-490 plus the usual dearness allowance with effect from 21 October, 1974. Ry the order bearing No. 9276-65-A, dated 7 June, 1975, the petitioner was promoted and appointed as internal auditor in the pay-scale of supervisory cadre B with effect from the date of his joining the said post. The scale of pay was as in the case of supervisory cadre B, viz., Rs. 305-20-405-25-630. The petitioner was put on probation in the post of internal auditor for a period of one year. On 12 July, 1976, the second respondent declared the petitioner to have completed satisfactorily the probationary period of one year in the post of internal auditor on 11 June, 1976, and his basic pay was raised from Rs. 305 to Rs. 325 after sanctioning the annual increment of Rs. 20. So far as the qualification of the petitioner is concerned he is a B.Com Graduate and has also obtained a Diploma in Commerce. He has been appearing for the M. Com. examination of the Venkateswara University and also the I.C.W.A examination. In 1977 he came to know that in similar sugar mills as the second respondent sugar mills, the internal auditor is paid a higher scale of pay of Rs. 550-25-600-35-950. Therefore, the petitioner requested the second respondent to revise his scale of pay by his letters, dated 11 November and 30 December, 1977 and 28 December, 1978. The first respondent, by his proceedings, dated 24 May, 1978, was insisting on the employees like the petitioner to qualify themselves as Chartered Accountants or as Cost Accountants on or before 30 June, 1981. The petitioner was requesting the second respondent and through him, the first respondent, to relax the educational qualifications adverted to in the above said proceedings and requesting them to treat him on par with the internal auditor of the sugar mills. In the case of internal auditor the Special Officer of the mills revised the scale of pay without the prior approval of the first respondent and accordingly the pay-scale of the internal auditor of the second respondent-sugar mills was revised as Rs. 1,000-50-1,200-75-1,800 with effect from 1 April, 1978. But the petitioner was given only the scale of pay as per the Wage Board Recommendations for Sugar Industries. The new qualifications now introduced, according to the petitioner, could be made applicable only to the chief accountant and/or internal auditor appointed after the decision of the Chief Executive, dated 8 April, 1977, based on which letter was written by the first respondent in his proceedings, dated 3 September, 1978, addressed to the second respondent, stating that the Chief Executive of the Co-operative Sugar Mills on 8 April, 1977, had decided that the scale of pay for the chief accountants/internal auditors who qualified as Chartered Accountants was Rs. 1,300-75-1,600-100-2,000. The unqualified chief accountants of the Sugar Mills, Madurantakam Sugar Mills and Kallakurichi Sugar Mills and the internal auditor of Madurantakam Co-operative Sugar Mills, all B.Com have been fitted in and permitted by the first respondent to draw the scale of pay of Rs. 1,000-50-1,500. Further, the first respondent has also permitted the unqualified chief accountant, by his letter, dated 3 January, 1983, to draw the scale of pay of Rs. 1,000-75-1,600-100-1,900 with effect from 1 Apr, 1978. Though the petitioner is having the same qualifications, viz., a B.Com degree, the first respondent had not fitted him and permitted him to draw the above scale of pay. The petitioner is an appointee under the provisions of the registered special bye-laws of the second respondent, which bye-laws have been registered under S. 11 of the Tamil Nadu Co-operative Societies Act, binding on respondents 1 and 2. The scale of pay revised as Rs. 1,300-1,900 ought to have been made applicable in the case of the petitioner also. The petitioner further states that it is illegal on the part of the second respondent to insist on the petitioner to acquire new qualifications which were not the prescribed qualifications at the time of his appointment as internal auditor, obviously on the instructions given by the first respondent, which instructions are illegal. While so, the second respondent on 2 June, 1980, purported to transfer the petitioner to work as cane accountant and posted in the place of the petitioner one Gopalakrishnan who has studied only up to S.S.L.C as internal auditor. On the representation made by the petitioner, the petitioner was informed by the second respondent that he was temporarily transferred and posted as internal auditor and that Gopalakrishnan was transferred as cane accountant. On joining duty as internal auditor, the petitioner made his objections in respect of the proceedings, dated 11 August, 1980, of the second respondent on 18 August, 1980. The petitioner further states that after his having been appointed as internal auditor in 1975 and his having successfully completed the period of probation, it is not legal and justified for the second respondent to say that the petitioner was only temporarily posted as internal auditor. After giving an increment, the respondent has fixed his scale of pay at Rs. 493-20-593-29-938-30-1090 with effect from 12 June, 1982. As the scale of pay of chief accountant officers/internal auditors, though non-chartered accountants, was fixed at Rs. 1,300-1,900, the petitioner wrote a letter to the first respondent requesting him to rearrange for the fixation of his pay as per the revised scale of pay. As no reply came from respondents 1 and 2, the petitioner addressed a letter on 23 July, 1983, to the Hon'ble Minister for Industries, with a copy to the first respondent, stating the above facts and requesting to fix his scale of pay at Rs. 1,300-1,900. Objection was taken by the first respondent stating that the petitioner was not a regular appointee as internal auditor and that he had been transferred as cane accountant, and that it was not possible to revise his scale of pay. Evidently, both respondents 1 and 2, on being aggrieved by the representation made by the petitioner, have denied him the benefit of the revision of the scale of pay though they have extended the benefits of the revised scales of pay to employees who do not possess the basic qualifications for the posts held by them.

3. On 2 November, 1983, the petitioner addressed a letter to the second respondent, setting out the entire facts and requesting to revise his scale of pay. No favourable reply was given. While so, the Special Officer of the first respondent has passed the impugned order of transfer, dated 24 February, 1984, posting the petitioner as accountant (audit) in the accounts section and transferring and posting the third respondent as internal auditor, which order, reducing the rank of the petitioner from the cadre of chief accountant internal auditor to the cadre of accountant, is punitive in character. When the third respondent is only a S.S.L.C holder, and these postings are in violation of the bye-laws of the second respondent, it is learnt that the first respondent had given exemption in favour of the third respondent by giving him a higher category, viz., the post of internal auditor. The petitioner was not given an opportunity to be heard before the impugned order was passed resulting in the reduction of his rank and hence it is violative of Arts. 14 and 16 of the Constitution of India and the said order is vitiated by mala fides. The impugned order is attacked on a number of grounds as indicated above. Hence these two writ petitions.

4. These two writ petitions were admitted on 7 March, 1984, on which date, an interim stay was granted in Writ Miscellaneous Petition No. 3471 of 1984 in Writ Petition No. 2276 of 1984, staying the operation of the impugned order of transfer.

5. The second respondent has filed a counter to this petition and has also filed Writ Miscellaneous Petition No. 4512 of 1984, praying for vacating the interim stay granted in Writ Miscellaneous Petition No. 3471 of 1984.

6. The second respondent has raised the following contentions in his counter. The writ petitioner was appointed in the sugar mills as lower division clerk-cum-typist on and from 26 December, 1963, in grade III in the scale of pay of Rs. 105-6-135-EB-7-170 and at the time of his appointment the petitioner had passed only S.S.L.C and the higher grade examination in typewriting (English). His service was regularised in the category of typist from 26 December, 1963, and his pay was fixed at Rs. 142 in the category of clerical cadre grade III. Subsequently he was appointed as assistant cashier with effect from 10 October, 1966, fixing his basic pay at Rs. 130 and, thereafter temporarily, promoted and posted as cashier with effect from 1 July, 1969, fixing his basic pay at Rs. 188 in the clerical cadre grade II. He was placed on probation for one year. On his request he was transferred and posted temporarily as accountant (in charge) in the main accounts section with effect from 7 December, 1970, without prejudice to his emoluments. He was designated as assistant accountant with effect from 21 October, 1974, and his basic pay was fixed at Rs. 300 in supervisory cadre. In this post also he was placed on probation for a period of one year. At that time one Sri V. Krishnamurthi was promoted in the mills as internal auditor on foreign service terms. Since he was relieved from the mills from 23 January, 1974, the petitioner was asked to perform the duties of the internal auditor fixing his pay at Rs. 305 in the supervisory grade, i.e, in the scale of Rs. 305-20-405-25-630 from 12 June, 1975. In this post also the petitioner was placed on probation for a period of one year. The supervisory B grade post is a transferable post from one department to another department. In the proceedings, dated 31 May, 1980, the petitioner was transferred and posted as cane accountant and one P. Gopalakrishnan, cane assistant, who is also in the category of supervisory grade B, was transferred and posted as internal auditor. After availing leave, the petitioner joined duty as cane Accountant on 2 July, 1980. After sometime, the petitioner was temporarily transferred and posted as internal auditor by order, dated 11 August, 1980, with an indication that he would be transferred from the said post at any time either till he qualified himself as prescribed by the Directorate or when a permanent person was posted as internal auditor. Meanwhile, a communication from the Director of sugars was received to the effect that the prescribed qualification for the post of internal auditor is either that he must be a Member of the Institute of Chartered Accountants, or a Member of the Institute of Cost and Works Accountants of India. Since the petitioner was not having either of the two qualifications as per the communication received from the Director of Sugars, dated 24 May, 1978, the petitioner was instructed to qualify himself with any of the above prescribed qualifications within the period ending on 30 June, 1981. The petitioner is a B.Com graduate who has failed in the Chartered-Accountants examination. The above communication from the Directorate of Sugars, dated 24 May, 1978, was acknowledged by the petitioner. In the said communication the Director of Sugars has informed that the pay revision for the post of internal auditor might be considered after he qualified himself fully. While so, by proceedings, dated 24 February, 1984, passed by the Special Officer, the petitioner, who was temporarily working as internal auditor, was transferred and posted as accountant (auditor) in the accounts section and respondent 3, accountant, was transferred and posted as internal auditor, and the respective individuals had been directed to assume charge on or before 29 February, 1984. When the proceeding was sought to be served on the petitioner, he declined to receive the same and proceeded on medical leave. The third respondent assumed charge on 29 February, 1984 itself and gave the joining report. The petitioner filed the writ petition suppressing the true facts and obtained the interim stay. Then the petitioner reported back for duty on 12 March, 1984. Since the order of transfer was given effect to even on 29 February, 1984, the question of staying the said order will not arise. Apart from that, at no point of time the petitioner was appointed as internal auditor since he did not possess the requisite qualifications; as per the proceedings of the Directorate of Sugars, the order of transfer is a routine matter and the Special Officer has got powers, for administrative reasons, to transfer the petitioner from one department to another. There is no question of any mala fides or bad intention on the part of the management. Further, the petitioner has not been fixed in the separate scale of pay applicable to internal auditors and he continues to draw, as per supervisory grade B. Finally, it is stated that since the second respondent is a co-operative sugar mill registered under the Co-operative Societies Act, the writ petition is not maintainable and hence the petitioner cannot have the indulgence of an order of stay in the miscellaneous petition.

7. The third respondent has filed a separate counter-affidavit stating that before the order of transfer, dated 24 February, 1984, he was working as accountant (audit) in the accounts section in the category of supervisory B grade and at present he is working as internal auditor, that supervisory grade B post is a transferable post and that he took charge as internal auditor from 29 February, 1984.

8. A reply-affidavit is filed by the petitioner reiterating his original stand and also explaining the reason for taking medical leave and further stating that when the petitioner reported for duty on 12 March, 1984, and showed the copy of the interim order, he was allowed by the second respondent's Special Officer to resume duty as internal auditor and in the attendance register the petitioner was continuously shown as internal auditor and had continued to work as internal auditor on 13 to 15 March, 1934 and it was only on 16 March, 1984 the Special Officer asked the petitioner to work as accountant under the pretext of having obtained legal advice.

9. When the matter came up for hearing, Sri G. Venkataraman, learned counsel appearing on behalf of Messrs Aiyar and Dolia, took me through the copy of the appointment order of writ petitioner as internal auditor on promotion, dated 7 June, 1975, the copy of the declaration of probation, dated 12 July, 1976, declaring the petitioner to have completed the period of probation satisfactorily in the category of, supervisor grade B on 11 June, 1976. The copy of the letter of the petitioner to the second respondent, dated 28 December, 1978, requesting to revise his scale of pay, the copy of the extract of the special bye-laws of the sugar mills, the copy of the letter from the first respondent to the second respondent, dated 24 May, 1978, the copy of the letter from the petitioner to the second respondent, dated 2 July, 1980, requesting the Special Officer of the sugar mills to post him as internal auditor, the copy of the proceedings of the second respondent, dated 11 August, 1980, reading that the writ petitioner is temporarily transferred and posted as internal auditor, and the impugned order of transfer, dated 24 February, 1984, all filed along with Writ Petition No. 2276 of 1984, and vehemently contended that the writ petitioner, whose probationary period has been declared to have been completed, should be deemed to have been absorbed in that post permanently, that the transfer of the petitioner from the post of internal auditor to the post of accountant (audit) is unsustainable, and that the posting of Ranganathan (third respondent) as internal auditor is an arbitary and illegal order since the third respondent does not possess the requisite qualifications and is also less qualified when compared to the petitioner.

10. Sri M.R Narayanaswami, learned counsel appearing on behalf of respondents 2 and 3, raised a preliminary objection that the writ petition itself is not maintainable in law as it is directed against a co-operative society since the co-operative society cannot be treated as an authority under Art. 12 of the Constitution of India, and as such both the writ petitions have to be dismissed.

11. This Court felt that it should be better to go into the preliminary objection before adverting to the arguments advanced by the learned counsel for the writ petitioners, because any amount of discussion on the merits of the case would be of no use if the writ petitions are found to be not maintain able. Hence, both the counsel were asked to advance their argument regarding the maintainability of the writ petitions.

12. While Sri M.R Narayanaswami would contend that a co-operative society, viz., the second respondent cannot be said to be an authority within the meaning of Art. 12 of the Constitution of India, since the said society is not an instrumentality or agency of the Government, Sri Venkataraman by drawing the attention of this Court, to S. 72 of the Tamil Nadu Co-operative Societies Act, 1961, submits that inasmuch as the Special Officer is appointed by the Registrar of Co-operative Societies to manage the affairs of the society till the constitution of a new committee in accordance with the provisions of the Act, the rules and the bye-laws, the first respondent, a statutory authority, and the second respondent, the nominee of the first respondent, can be subjected to the writ jurisdiction as both of them are statutory functionaries. Both the counsel relied upon certain decisions in support of their respective contentions.

13. Sri Venkataraman placed much reliance on the decision of the Supreme Court in Nayagarh Co-operative Central Bank, Ltd. v. Narayan Rath, [(1977) 3 SCC 576 : A.I.R 1977 S.C 112]. In that case, one Narayan Rath filed a writ petition for setting aside the order or removal passed against him by the Registrar of Co-operative Societies. The High Court in that case dealt with the question as to whether a writ petition could be maintained against a co-operative society and answered it in the affirmative. When this view of the High Court was challenged before the Supreme Court, their Lordships of the Supreme Court observed thus:

“The High Court has dealt with the question whether a writ petition can be maintained against a co-operative society, but we are inclined to the view that the observations made by the High Court and its decision that such a writ petition is maintainable are not strictly in accordance with the decisions of this Court. We would have liked to go into the question for ourselves, but it is unnecessary to do so as respondent 1 by his writ petition, was asking for relief not really against a co-operative society but in regard to the order which was passed by the Registrar, who was acting as statutory authority in the purported exercise of powers conferred on him by the Co-operative Societies Act. The writ petition was in that view maintainable.”

Basing on the above observations of the Supreme Court, Sri Venkataraman submitted that in the present case as the Board is superseded and only the Special Officer nominated by the first respondent is functioning, the writ petition will lie.

14. It is pertinent to note that the Supreme Court, in the same judgment, in the next paragraph, made the following observation:

“We would like to observe that the judgment of the High Court should not be treated as an authority for the proposition that a writ petition is maintainable against a co-operative society. That question shall have to be decided by the High Court as and when it arises in the light of the decisions of this Court”

Pointing out this observation, Sri Narayana-swami has rightly submitted that this decision cannot be availed of by the writ petitioner for the proposition that a writ petition would lie against a co-operative society. According to him, as the impugned order sought to be quashed in Writ Petition No. 2276 of 1984, is one passed by the second respondent, a co-operative socitey, the learned counsel for the petitioner cannot successfully contend, relying on the above decision, that the writ will lie. I see much force in this argument.

15. Reliance was also placed by Sri Venkataraman on the decision in Films Division, Bombay v. R.M Seshadri, [1973—II L.L.J 444], wherein Veeraswami, C.J, speaking for the Bench held that the terminology of Art. 226 was much wider than that of Art. 136(1) and that under Art. 226 of the Constitution the Court has power to issue directions to any person or authority. The general proposition laid down in this case can be distinguished on facts. Further in view of the decisions of the Supreme Court referred to in this judgment, regarding the maintainability of a writ petition against a co-operative society this judgment cannot be usefully relied upon by the petitioner.

16. Further, reliance was placed on Ganapathi (J.) v. Nellore Co-operative Spinning Mills, Ltd., [1979—I L.L.J 364]. In that case, the question that arose for consideration was whether a co-operative society notified as a relief undertaking under the Andhra Pradesh Relief Undertakings Act would be amenable to the writ jurisdiction. Having regard to the facts of the case, it has been held that the institution which was originally an ordinary co-operative society became practically an instrument or agency of the State for specific purpose of affording unemployment relief and that on and from the date of declaration as the relief undertaking, the respondent in that case, viz., the mills had undergone a complete metamorphosis and became a body constituted as such by a statute, viz., the Relief Undertakings Act and it, therefore, acquired the character of a State or authority under Art. 12 of the Constitution. However, the learned Judges have pointed out in that judgment:

“We, therefore, are unable to agree to the extreme contention of Sri Kannapiran that even treating the respondent as an ordinary co-operative society, the writ would be maintainable.”

On a perusal of the judgment, it is clear that only in view of the fact that the society had been declared as a relief undertaking, it was held that it had acquired the character of a State or authority under Art. 12. Therefore, in my view, this judgment is not helpful to the petitioner.

17. Sri M.R Narayanaswami, relied on the decision of the Supreme Court in Dhanoa (S.S) v. Municipal Carporation, Delhi, [1982—I L.L.N 271]. In that case, it was observed that there is a well marked distinction between a body created by a statute and a body which, after coming into existence, is governed in accordance with the provisions of a statute, and ultimately held that a co-operative society is not a corporation established by or under an Act of Central or State Legislature and legally speaking the Super Bazaars to which the service of the appellant was placed at the disposal of the department of co-operation, were owned and managed by the society and not by the Central Government and, therefore, the appellant was not employed in connection with the affairs of the Union within the meaning of S. 197, Criminal Procedure Code. In Para. 11 of the judgment, the Supreme Court has observed at page 276:

“The Super Bazaar at Connaught Place established together with its twelve branches in Delhi, is not an instrumentality of the State….”

Relying on this decision, Sri Narayanaswami states that the sugar mills in this case, which is a co-operative society, is not one created by or under a statute and hence it cannot be said to be an instrumentality or agency of the Government so as to bring it within the meaning of “authority” under Art. 12 of the Constitution.

18. A Division Bench of this Court consisting of Ramanujam and Padma nabhan, JJ. in Kannappan (K.) v. Sriperum budur Taluk, Co-operative Marketing Society, Ltd., Nazarathpet [Writ Petition No. 677 of 1977, dated 17 September, 1979], went in detail into the question whether a co-operative society can be subjected to the writ jurisdiction. The learned Judges, after referring to the various decisions of various High Courts and the Supreme Court on the point, ultimately held thus:

“The above decisions clearly lay down the principle that notwithstanding the wide amplitude of Art. 226 when taken with Art. 32 of the Constitution, a writ can issue only against the State or authority contemplated under Art. 12, and not a company registered under the Companies Act or the Co-operative Societies Act, the relationship between the co-operative society and its employees is that of a master and servant and that, therefore, even if there is a wrongful dismissal of the employee, the Court cannot issue a writ of mandamus directing reinstatement or a declaration that the termination of service is wrongful.”

In this connection, Sri G. Venkataraman drew the attention of this Court to an order passed by Ramanujam, J. in J.C Fernando v. Director of Sugars [Writ Miscellaneous Petition No. 8835 of 1981 in Writ Petition No. 6397 of 1981, dated 18 November, 1981]. That petition was filed by one J.C Fernando, as against the Director of Sugars and the Special Officer, Kallakurichi Co-operative Sugar Mills, Ltd., who are respondents 1 and 2 herein, and the learned Judge passed an order making absolute the interim injunction granted in the said petition restraining the second respondent from taking action against the petitioner for not acquiring the additional qualifications as contemplated in the order, dated 10 August, 1981, following the impugned order of the first respondent, dated 24 June, 1978, pending disposal of the writ petition, and submitted that in the light of the above order, the interim stay granted in this case also can be made absolute. The facts of the case and circumstances under which the above said order was passed are not fully known. However, as the learned Judge, himself, while sitting in a Bench, has clearly laid down in Kannappan (K.) v. Sriperumbudur Taluk Co-operative Marketing Society, Ltd., Nazarathpet [Writ Petition No. 677 of 1977, dated 27 September, 1979], that no writ will lie against a co-operative society, and that the above said interim order passed pending the disposal of the writ petition cannot be availed of by the writ petitioner.

19. It is pertinent to note that the Supreme Court in Executive Committee, Vaish Degree College v. Lakshmi Narain, [1976—I L.L.N 474], has observed in Para. 10, at pages 478 and 479, as follows:

“… It seems to us that before an institution can be a statutory body, it must be created by or under the statute and owe its existence to a statute. This must be the primary thing which has got to be established. Here a distinction must be made between an institution which is not created by or under a statute but is governed by certain statutory provisions for the proper maintenance and administration of the institution. There have been a number of institutions which though not created by or under any statute have adopted certain statutory provisions, but that by itself, is not, in our opinion, sufficient to clothe the institution with statutory character…”

When the facts of the present case are examined in the light of the observations made by the Supreme Court in the above case as well as the other judgments referred to above and for the reasons stated above, it is clear that the second respondent is not one created by or under any statute, but is governed by certain statutory provisions for the proper administration of the society and, therefore, the writ petition against a sugar mills, which is a co-operative society, is not maintainable.

20. As pointed out supra, the order now sought to be set aside in Writ Petition No. 2276 of 1984, is one passed by the second respondent. Only in the latter part of the prayer the petitioner is asking for a consequential relief directing respondents 1 and 2 to allow him to continue as internal auditor. Similarly, the prayer in Writ Petition No. 2277 of 1984, seeking the refixation of his pay is also a consequential relief which can be granted only if the petitioner's claim against the co-operative society is maintained. Thus it is clear that the main relief is only against the co-operative society, against which a writ cannot be granted.

21. Since I have found in favour of the respondents and against the petitioner on the preliminary point, I am not inclined to go into the other contention raised by the petitioner in these two writ petitions.

22. In the result, both the writ petitions are dismissed. No costs.