Sachiv/Samanya Prabandhak, District Co-operative Bank Ltd. vs Ram Sahan Rai and Another

S.K. Phaujdar, J.—The present appeal is directed against the judgment and decree dated 9.9.1992 passed by the First Additional District Judge, Ghazipur in Civil Appeal No. 83 of 1991. This civil appeal was filed by the present Respondent Sri. Ram Sahun Rai against the judgment and decree dated 15.3.1991 passed by the 6th Additional Munsif Magistrate, Ghazipur in suit No. 580 of 1987.

The suit was filed by Ram Sahun Rai for a declaration that the order of his removal from service dated 15.4.1987, which was served on him on 16.4.1987, was illegal, arbitrary and without jurisdiction. He had prayed for a declaration that he was continuing in service and for a direction that the Defendant or his agent or servant may recognize the Plaintiff''s status and as such afford him the consequential benefits.

In terms of the plaint, Defendant No. 2 was the District Co-operative Bank represented by the Sachiv/Samanya Prabandhak (Secretary/General Manager). The Plaintiff was initially appointed as a Clerk under Defendant No. 2 and was posted on 11.5.1972 in the Accounts Section of the Bank. The plaint indicates that he worked as a clerk in the Bank and had been on leave on medical grounds on different dates and had made over charge to one Virendra Nath under the direction of the Secretary of the Bank. It was stated that one Shri N.P. Pandey was the acting Secretary in the absence of the regular Secretary and although Sri. Pandey was not competent to record an order, he issued letter No. 1525/5/Anu-March 86-87, dated 15.4.1987 designating the Plaintiff as a Clerk/Cashier and accused him of absence from 11.10.1985. The notice charged him of misconduct of serious nature for illegally absconding from duties. This order was stated to have been passed without Jurisdiction beyond Rules 62-65(3) (kha) and 85(2) (kha). The notice indicates that he was found guilty of breach of Rule 84(6) and he was removed from service which was a major penalty. The Plaintiff was not paid his salary from 21.7.1985 to the date of alleged order of removal at the rate of Rs. 1,500 per month. The Plaintiff, due to paucity of fund, reserved his right to sue for the arrears of pay and only sued for a declaration that the removal order was illegal. For the purposes of Court fee the valuation of the suit was estimated at Rs. 300 only.

The suit was contested by Respondent No. 2. The relevant averments were denied. It was, however, stated that a Case of misconduct of serious nature was rightly proved against the Plaintiff. It was further stated that there was no cause of action. He was appointed only on a temporary basis. He remained absent and never made over charge to Virendra Nath Rai. He absented himself without leave and did not make over charge inspite of notice. He did not report to duties inspite of demand and the Bank had to serve notice by publication in the newspaper. Even inspite of that he did not give any defence and ultimately the impugned action was taken against him.

The suit was dismissed exparte and the aforesaid civil appeal was filed. Coincidentally, the appeal too was taken up exparte. However, this time it was allowed in favour of the Plaintiff which gave rise to the present second appeal.

Learned Counsels were heard on the point of admission Itself and the question on which they had advanced their arguments are as follows:

Whether the Lower Appellate Court has correctly interpreted Regulations 62, 66(iii)(c) and 85(c) of the U.P. Co-operative Societies Service Regulation, 1975.

Whether the judgment and decree of the Lower Appellate Court are nullity as the same have been passed without framing issues.

Whether the judgment and decree of the Lower Appellate Court are vitiated in law as the same are passed on misreading and misconstruing the averments in the written statement.

Whether the Lower Appellate Court was right in passing a decree for declaration and injunction is Case of contract of personal service.

The U.P. Co-operative Societies Service Rules and Regulations (in short ''Regulations'') were framed in the year 1975. Under the Regulations, the Act means the U.P. Co-operative Societies Act, 1965 as amended from time to time. The appointing authority has been defined to mean the Committee of Management or any other authority, which is empowered under the Regulations or bye-laws of the Society to make appointment. The employee means a person in whole time service of a co-operative society and does not include a casual worker, employee on daily wage or a person in part the service of the society. Chapter VI of the Regulations deals with conduct and discipline. Under Regulation 62, unless otherwise expressly provided in the order of appointment, the whole time of the employee shall be at the disposal of the co-operative society concerned and he shall serve the co-operative society in the business in such capacity and during such hours and at such place as he may from time to time be directed. Regulation 66 speaks about the ''de notes'' for an employee of a co-operative society. In Clause (iii)(c) it is stated that no employee of a cooperative shall abet or instigate any of the employees for acts of misconduct, omission or violation of duties. Regulation 85 deals with disciplinary proceedings and in Clause (i)(c) it is provided that if no explanation in respect of charge-sheet is received or the explanation submitted is unsatisfactory, the competent authority may award him appropriate punishment considered necessary. Clause (ii) of Regulation 85 speaks that where the employee has absconded and his whereabouts are not known to the society for more than three months or where he refuses or fails without sufficient cause to appear before the Inquiry Officer when specifically called upon in writing to appear or where it is otherwise (for reasons to be recorded) not possible to communicate with him, the competent authority may award appropriate punishment without taking or continuing disciplinary proceeding.

In the trial court written statement of the present Appellants indicates that the appointment of the Plaintiff was made on temporary basis on 11.5.1972. He was on leave from January, 1985 to 10th July, 1985. He was placed as a clerk with effect from 26.4.1985 and was directed to make over charge to Sri. Virendra Nath as a store keeper but he did not make over charge. It was stated that the Plaintiff absented himself without leave from 1.9.1985 to 8.9.1985 and again from 12.9.1985 to 21.9.1985. He absented himself without leave from 11.10.1985 and did not make over full charge as Store Keeper. He was asked to be present for medical examination on 5.12.1985 but he did not respond. Ultimately, a notice on him had to be published on 7.5.1985 through publication in a newspaper. The Plaintiff did not appear before the Bank inspite of the publication and did not put forward any defence. Only thereafter the appointing authority decided in a meeting dated 16.9.1985 to initiate legal proceedings against him for continuous absence without any cause and for failure to make over charge. Again a notice was published in the newspaper on 22.11.1986 but still no correspondence was made by the Plaintiff. Accordingly, he was found guilty and was dismissed from service with effect from 17.12.1986.

The trial in the court of first instance was taken up exparte. It was urged before the trial court that the incharge secretary had no authority to terminate the services of an employee. The trial court found that the decision for dismissal was taken by the Managing Committee and the order was approved by the U.P. Co-operative Societies Employee Services Board. He found no ground to interfere with the order and the suit was dismissed.

The appeal was also heard exparte. Only the Plaintiff Appellants Ram Sahun Rai was heard. The first appellate court engaged itself on a discussion if the dismissal termination order recorded by the acting Secretary was proper. He affirmed the view of the trial court that it was within the competence of the acting Secretary to exercise the power of a regular Secretary. A point was raised before the First Appellate Court that the impugned order of termination did cast a stigma and was passed on a charge of serious misconduct and the competent authority should have followed the procedure laid down under the regulations before the order of termination/dismissal was passed. It was also urged that neither any charge-sheet was served nor any notice to show cause was given to him and thus the principles of natural Justice and fair play were violated. The Lower Appellate Court made reference to the written statement also and to Chapter VII of the Regulations. He was of the view that no penalty other than the penalty of censure could be imposed without a show cause notice. He referred to Regulation 85 to hold that mandatory provisions thereof were rot complied with by the competent authority. Accordingly, the appeal was allowed and the suit was decreed and the Plaintiff was declared to be continuing in service under the Defendants who were directed to treat the Plaintiff in service and provide him all the benefits of his service. In fact, no reference was made to Regulation 62 or 66 by the First Appellate Court. The trial court also did not deal with the scope of these two regulations and simply quoted them in the concluding paragraph of his judgment that there was no averments in the written statement to the effect that by his continuous act of negligence the Plaintiff had put challenge to the administration and disturbance was created in the working of the Bank. Whether such act did amount to abetting or instigating other persons to be emboldened in not performing their duties was not found by any court and this question of fact is not to be gone into in this second appeal. Thus, Regulation 66 remains outside the scope of the present discussion. Regulation 62, however, is clear to the effect that an employee under the co-operative society is at the disposal of the employer for the whole time and it did cast a duty upon the employee to attend to his work regularly and at least as per schedule and as demanded by the rules governing the society. In fact, the question between the parties hover around the true interpretation of Regulation 85. Regulation 84 may also be seen in this connection which casts a duty upon the employer to give a show cause notice before taking any disciplinary proceedings unless proposed punishment was simply one of censure. Regulation 84 further directs that for awarding punishment of dismissal, the employer must take recourse to a disciplinary proceeding. Regulation 85(ii) further indicates the circumstances under which the competent authority may award appropriate punishment even without taking recourse to the disciplinary proceedings or, If it has been started, even without completing or continuing the same. The circumstances are that an employee Is dismissed or removed from service on the ground of his conduct which had led to his conviction of a criminal charge or that he has absconded and his whereabouts are not known to the society for more than 3 months or that the employee had refused or failed without sufficient cause to appear before the Inquiry Officer when specifically called upon in writing to appear or even otherwise if it was not possible to communicate with him. No doubt, in this Case a disciplinary proceeding was not taken. The written statement sets out the circumstances under which notices were published in the newspaper but these circumstances were never brought in record. The trial was held exparte. The Defendant took up a plea within its special knowledge. It was the onus of the Defendant to show that the circumstances spoken under Regulation 85(ii) did exist. In the absence of discharge of that onus, it must be stated that the dismissal order was an order without any disciplinary proceedings violating the positive direction in Regulation 84. The First Appellate Court, in my view, had rightly interpreted Regulation 85.

The second point urged before this Court was on the point of absence of framing issues or points for decision. The judgment of the appellate court indicates that it had narrated the Cases of the parties and had discussed the points concerning the competence of the acting Secretary to record the dismissal. It has also discussed Regulations 84 and 85 of the services rules. But the trial court had failed to frame any formal point for decision. It was in ex parte decree impugned before the First Appellate Court and the matter was also heard exparte. He decided only those points which the Appellants had urged before it and had answered the points.

On the question of absence of framing of issues, learned Counsel took me through several decisions. In this connection attention was drawn to Order XX, Code of Civil Procedure. Under Rule 4(2) of this Order, a judgment of the Court is to contain concise statement of the Case, the points for determination, the decision thereon and the reasons for such decision. Under Rule 5 the Court is required to state its finding or decision upon each separate issue. In the first appeal u/s 96, CPC the requirement of judgment are indicated in Order XLI, Rule 31, CPC and one of the requirements is that the court shall state the points for determination together with the decision thereon and reasons for the decision. In the Case reported in 1993 SCC (1) 531 (538), it was held that the points for determination for the purposes of a small causes court are nothing but issues. The same analogy was proposed to be drawn up for points of determination to be framed by the court of appeal as observed above. The trial court had passed an exparte decree and the First Appellate Court had also heard the appeal exparte. He had considered the points raised before him and the absence of framing the points for determination does not affect the appellate judgment. In fact, the reading of the judgment shows that he had taken up the points one by one although he had not formulated the same in a separate paragraph.

The third point that was agitated before the court was whether the judgment and decree of the lower appellate court were vitiated in law as the same were passed on misreading and misconstruing of the averments made in the written statement. The written statement sets out the defence and unless proved, the facts stated therein cannot be read as evidence. If there is any averment, in the written statement touching the maintainability of the suit/plaint, certainly the court was liable to decide such question, for example resjudicata, rejection of plaint under Order VII, Rule 11 or like. But if any decision was sought for by making out special plea in the written statement and the Defendant allowed the suit to be heard ex parte, it may not be open for the Defendant to urge again that the Defendant''s Case, made out in the written statement, was misread or misconstrued. In the Case at our hand, there was an allegation in the plaint that the dismissal order was against the requirements laid down. The Defendant had set up the plea to plead a Case of exception under Regulation 85(ii) and supported the Case of dismissal even without a disciplinary proceeding. The Defendants did not come forward to bring on record these circumstances. It is not open for the Defendants now, in this second appeal, to agitate misreading and misconstruing of the defence when not only the trial but also the first appeal was allowed to be heard ex parte. However, a plea was there in the plaint that the service of statutory notice u/s 117 of the Co-operative Societies Act was duly made on the Defendant prior to the institution of the suit. At page 5 of the Judgment, the trial court made reference to this notice u/s 117 which was marked as Exhibit-1. As such the sole legal plea available to the Defendant even in the exparte proceedings was found to have been discussed and decided upon although without a specific issue. The absence of issue on that point, in fact, did not prejudice the Defendant as he had not chosen to contest the suit at all at the subsequent stage of the trial.

In fact the fourth and the last point is the real bone of contention between the parties as to whether a decree for declaration and injunction in Case of contract of personal service could have been passed as done by the First Appellate Court. To recapitulate we may be back to the plaint again. It was Indicated In the plaint that a major penalty was awarded to the Plaintiff without going through the procedure laid down. It was specifically mentioned in paragraph 7 of the plaint that the Plaintiff, due to paucity of fund, was not in a position to pay the court fees on the amount of salary withheld from 21.7.1985. It was further stated that the claim was dependant on a declaration that the removal order was illegal. Accordingly, the Plaintiff stated in paragraph 7 of his plaint that he was reserving his claim under Order II, Rule 2, CPC and beaded leave of the court to claim it in future. According to him, cause of action arose when the removal order was received by him and payment of salary was withheld. The suit was valued for the purposes of jurisdiction and Court fee at notional value of Rs. 300. The Plaintiff prayed for relief for decree of declaration that the order of his removal from service was illegal, arbitrary and without Jurisdiction and for a further declaration that he was continuing in service and that the Defendant be directed to recognize his status as such and to afford him all the consequential benefits. To recapitulate the defence, as per written statement, the averment of notice u/s 117 of the U.P. Co-operative Societies Act was denied. A special plea was taken why dismissal was ordered without a disciplinary proceedings. This aspect has already a disciplinary proceedings. This aspect has already been discussed above. There was a further plea in the written statement that the suit was not maintainable before the civil court. The Plaintiff should have gone to the Labour Court for seeking relief.

Under the fourth point, that has been in question between the parties, this Court is to see If the civil court could grant a decree for declaration and injunction under the circumstances of the present Case when there was a Case of contract of personal service. In this connection reference was made to Section 70 of the Co-operative Societies Act read with Section 111 of the said Act. Section 70 of the aforesaid Act speaks of settlement of dispute and requires that notwithstanding anything contained in any law for the time being in force, if any dispute relating to the constitution, management or the business of a cooperative society OTHER THAN A DISPUTE REGARDING DISCIPLINARY ACTION taken against a paid servant of the Society arises, the dispute is to be referred to the Registrar. A plain reading of this section Indicates that reference u/s 70 of the Act does not cover a dispute regarding the disciplinary action against a paid servant of the Society. Where such a dispute would come within the expression "Management or the business of a co-operative society" was discussed by a Division Bench of Allahabad High Court in the Case of M.F, Farooqui (1982) AWC 209. The Court had also considered Section 111 of the U.P. Co-operative Societies Act in this connection which, under Clause (c). bars the Jurisdiction of the civil court to take up any dispute, which is required u/s 70 to be refeired to the Registrar. But the Court was of the view in this judgment that the question of validity of termination of service of an employee of a co-operative society was in no way related to the business of a co-operative society. Such question was not covered by Section 70 and accordingly Section 111 would not be attracted and the civil court had Jurisdiction to entertain the suit. This view was expressed in the course of a second appeal that arose from a suit filed by an employee whose services were illegally terminated by a Cooperative Society, but the Plaintiff had prayed for a declaration that the termination was illegal and he claimed damages as well. The trial court had decreed the suit, but the first appellate court found it barred by Sections 70 and 111 of the U.P. Co-operative Societies Act. The matter came up before a single Judge in second appeal. In view of an earlier decision of a single Judge Bench, to which the Hon''ble single Judge did not agree, the matter was referred to a Division Bench. The aforesaid view was expressed at this stage only and the First Appellate judgment in the question of jurisdiction was set aside and the matter was sent back to the First Appellate Court for decision according to law. In addition to the question of Sections 70 and 111 as aforesaid, no other point was decided. It was a suit, as Indicated above, for declaration that the termination was illegal and for damages. On this prayer nothing was spoken in this judgment.

Reference was also made to another single Bench decision of the Allahabad High Court as reported in 1980 (6) ALR 532. There was a Case of termination of the services of a permanent employee of an intermediate college and the termination was effected by a simple letter without abolition of the post held by the employee and without any charge of misconduct. The termination was held invalid, and it was further held that the civil court had jurisdiction to issue a declaration that the services of the employee still continued. A plea was taken in the defence that a suit for specific performance of a contract of service was not maintainable. The Hon''ble Judge had observed that the First Appellate Court had held that the suit was based upon breach of mandatory provisions of the Intermediate Education Act and as such a relief as prayed for could be granted to the Plaintiff. The Court observed that the view of the First Appellate Court was in consonance with the Full Bench decision of the Allahabad High Court in the Case of Alay Ahmad v. District Inspector of Schools. The Full Bench was constituted upon the reference to it a question" whether the Committee of Management of an Intermediate College is a statutory body and if so, whether a writ petition filed against it will be maintainable?" Thereupon the Hon''ble Judges of the Full Bench held that the Committee of Management of an Intermediate College was not a statutory body. However, it was held that a writ of mandamus could be issued to the Committee of Management if the petition was based upon a complaint that statutory obligations and duties imposed upon the Committee had been violated. Upon this view of the Full Bench the Hon''ble Judge held that the suit for enforcement of a contract of service was maintainable in the civil court.

A reference was made further to a decision of the Supreme Court as reported in AIR 1976 SC 888. It was a Case of termination of services of a Principal of a college by the Executive Committee thereof. The Executive Committee was registered under the Co-operative Societies Act and the college was affiliated to the Agra University. The Executive Committee was not a statutory body. It had terminated the services of the Principal even without the approval of the Vice-Chancellor of the University as required by Agra University Act. The grounds for termination were that he was habitually and perpetually remaining absent from his duties without permission. The Supreme Court took up the matter in a 3 Judges Bench. By a majority judgment it was held that a contract of personal service cannot ordinarily be specifically enforced and a court normally would not give a declaration that the contract subsists and the employee even after having been removed from service cannot be deemed to be in service against the will and consent of the employer. The Supreme Court further observed by a majority view that the above rule was subject to three well recognized exceptions:

Where a public servant is sought to be removed from service in contravention of the provisions of Article 311 of the Constitution of India.

Where a worker is sought to be reinstated on being dismissed under the Industrial Law.

Where a statutory body acts in breach or violation of mandatory provisions of the statute.

The majority view further opined that the relief of declaration and injunction under the provisions of Specific Relief Act was purely discretionary and the Plaintiff could not claim it is of right. Under the circumstances of the Case set out above, it was the view of the Supreme Court that the ease of termination of the Principal by the Executive Committee of the College, as indicated, was not a Case falling within any of the aforesaid exceptions to the rule of non-enforcement of contract of service and hence prima /acie the Plaintiff was not entitled to any declaration or injunction in view of special peculiar circumstances of the Case. It was held not to be a proper exercise of discretion to grant a decree for declaration or injunction In favour of the Plaintiff. The majority of the Hon''ble Judges had allowed the appeal of the Executive Committee and had set aside the orders passed by the Hon''ble High Court and the First Appellate Court. The suit of the Plaintiff was dismissed and the judgment of the trial court was restored.

In recording the above order, the Supreme Court kept in consideration certain facts: (i) that the Plaintiff had served the Institution for about two years and did not work in the college thereafter for a single day; (ii) that on the declaration sought for if the order of injunction was granted to the Plaintiff the result would be that he had to be paid full salary with interest and provident fund for full 9 years from 1966 to 1975 even though he had not worked in the Institution for a single day during that period; (iii) that consequent upon declaration the Executive Committee of the college would have:o pay a very huge amount running into lac of rupees or perhaps more as a result of which the institution would perhaps be completely wiped out and that would undoubtedly work serious Injustice to the Appellants as it was likely to destroy its very existence. The Supreme Court was aware of the fact that the Plaintiff principal was not at fault, but the stark realities, hard facts and extreme hardships also did not escape the notice of the Supreme Court, and certain sum of compensation was held proper to meet the hardship of the Plaintiff.

Reference was also made to a recent decision of the Supreme Court as reported in AIR J995 SC 175. Here also a question came before the Court concerning a dispute between the employer and the employee and a question also arose as to whether civil court would have jurisdiction to take up the ma tier. The Respondent before the Supreme Court were employed under the Appellants Rajasthan State Transport Corporation. Pursuant to disciplinary enquiry held against these employees on the charge of misconduct, their services were terminated. They preferred civil suits for declaration that the order terminating their services were illegal and invalid and for a further declaration that they must be deemed to have continued and are still continuing in the service of the Corporation with all consequential benefits. The Corporation contested the suit on the ground inter alia that the civil court had no Jurisdiction to entertain the suit. The trial court decreed the suit. The appeal as also the second appeal preferred by the Cooperation were dismissed at the levels of the District Judge and the High Court. The appeal in Supreme Court originally came up before the Bench of the two Hon''ble Judges of the Supreme Court and the decision in the Case of Premier Automobiles Limited v. Kamlekar Shantaram Wadke of Bombay J.N. Biswas v. Empire India and Ceylone Tea Co. were discussed. The two Judges'' Bench of the Supreme Court agreed with the decision in the Case of Jitendra Nath Biswas and was of the opinion that the civil court had no Jurisdiction to entertain the suit but in view of the order in connection with another Special Leave Petition, holding that civil suit was maintainable under similar circumstances, the two Judges'' Bench though its priper that the appeal be heard by the Bench of three Judges. Accordingly, the appeals were heard by a Bench consisting of three Hon''ble Judges of the Supreme Court.

The main question before the Supreme Court in this Case was the Jurisdiction in the civil court vis-a-vis the Industrial Tribunal and answers were given in that aspect and the question of maintainability of civil suit for enforcement of contract of service was not a question before the Supreme Court in this Case. However, It was observed in paragraph 32 of this judgment:

The policy of law emerging from Industrial Disputes Act and its sister enactments is to provide an alternative dispute resolution mechanism to the workmen, a mechanism which is speedy, inexpensive, informal and unencumbered by the plethora of procedural laws and appeals upon appeals and revisions applicable to civil courts. Indeed, the powers of the Courts and Tribunals under the Industrial Disputes Act are far more extensive in the sense that they can grant such relief as they think appropriate in the circumstances for putting an end to an industrial dispute.

From what has been discussed above and from the reading of the Case laws cited it appears that the Allahabad High Court in recording the judgment reported in 1980 (6) ALR 542 had not kept in view the decision of the Supreme Court as reported in AIR 1976 SC 888. This Supreme Court decision covered the Case which was almost similar on the facts of the present Case. There was termination for continuous absence from duty and there was a violation of the University Statute in making the termination order. There was a prayer before the civil court that not only the order of removal from service be declared illegal but there should be further declaration that the Plaintiff would be deemed to be continuing In service, in the Case at our hands also the situation is almost similar. The Plaintiff-Respondent was dismissed for his continuous absence and for certain other irregularities but there was no disciplinary enquiry against him in violation of the provisions of the regulations covering his services. He also made prayer for declaration that the dismissal was bad in law and for further declaration that he would be deemed to be in service and be entitled to all the consequential benefits. The employer was a Co-operative Society. It was not a statutory body although it had performed certain statutory duties.

In view of the decision of the Supreme Court, it must be held that the suit for declaration, as prayed for, was not maintainable in the civil court.

The Allahabad High Court decision may be distinguished in this connection. The decision was given on the basis of a Full Bench decision reported in Aley Ahmad Abidi Vs. Dist. Inspector of Schools, Allahabad and Others, . There also the employer was declared not to be a statutory body but because there was a duty cast upon ii to perform certain statutory obligations, a writ of mandamus was maintainable against the employer. The right to issue a writ of mandamus. In my view, could not be equated with the right to entertain a suit for performance of a contract of personal service.

On the aforesaid findings, it is held that the Plaintiff in his suit basically desired the enforcement of a contract of personal service, which he could not have done in view of the decision of Supreme Court in the Case reported in AIR 1976 SC 888. The suit must be held to be not maintainable before the civil court. The appeal accordingly stands allowed. Thus judgment and decree of the First Appellate Court is set aside. The suit of the Plaintiff stands dismissed as not maintainable. The parties shall bear their own costs.