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CASE NO.: Appeal (civil)  4481 of 2007

PETITIONER: M.P. State Coop. Bank Ltd., Bhopal

RESPONDENT: Nanuram Yadav & Ors

DATE OF JUDGMENT: 25/09/2007

BENCH: Tarun Chatterjee & P. Sathasivam

JUDGMENT: JUDGMENT

CIVIL APPEAL NO. 4481   OF 2007 (Arising out of SLP (C) No. 12236 OF 2006) WITH CIVIL APPEAL NO. 4483 OF 2007 (Arising out of SLP (C) NO. 19499 OF 2006)  AND CIVIL APPEAL NO. 4482 OF 2007  (Arising out of SLP (C) NO. 3979 OF 2007)

P. Sathasivam, J.

1)      Leave granted in all the special leave petitions.  

2)      How public appointments to be made, whether Lokayukt  constituted under the M.P. Lokayukt Evam Up-Lokayukt  Adhiniyam, 1981 has jurisdiction to go into the appointment  of employees of the M.P. State Cooperative Bank and whether  60 clerks-cum-typists appointed by the said Bank were in  accordance with the service rules are the questions to be  decided in these appeals?   3)      The Madhya Pradesh State Cooperative Bank Ltd.,  through its Managing Director challenges the order dated  19.04.2006 passed by the Division Bench of High Court of  Madhya Pradesh at Jabalpur in Writ Petition No. 1421 of  2005, by way of Special Leave Petition No. 12236 of 2006  before this Court.  Questioning the very same order, some of  the writ petitioners, numbering 26, who earlier approached the  High Court, filed Special Leave Petition No. 19499 of 2006  before this Court.  The other writ petitioners, numbering 27,  who also agitated the matter before the High Court  questioning certain directions filed another special leave  petition No. 3979 of 2007 before this Court.  Inasmuch as the  issues raised and challenge in all these petitions relate to the  very same order of the High Court and are interconnected,  they are being disposed of by the following common judgment.  4)      The brief facts, in nutshell, are as follows: On 24.06.1994, the Managing Director of the M.P. State  Cooperative Bank Ltd., (hereinafter referred to as ’the Bank’)  requested the Cooperative Commissioner and Registrar of the  Cooperative Societies, M.P., Bhopal for appointment of 60 ad- hoc clerks-cum-typists in the Bank.  By letter dated  29.06.1994, conditional sanction was granted for appointment  of 40 clerks-cum-typists on ad-hoc basis for 6 months  mentioning that in the meantime the Bank has to take steps  to fill up the vacant posts by issuing advertisement and  comply the Rules keeping in view the reservation under the

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Government Rules.  Again, by letter dated 25.10.1994, the  Managing Director of the Bank requested for sanctioning the  appointment of another 20 clerks-cum-typists on ad-hoc  basis.  By letter dated 11.11.1994, the Cooperative  Commissioner and Registrar sanctioned the appointment of  another 20 clerks-cum-typists on ad-hoc basis for 6 months  on the condition as mentioned in the earlier letter dated  29.06.1994.  5)      Pursuant to the aforesaid sanction letters, on  31.01.1995, the Bank appointed 60 clerks-cum-typists on ad- hoc basis for a period of six months.  After appointment, two  employees left the services of the Bank.  6)      After expiry of six months, as envisaged under Rule 22(a)  of the Staff Service Rules, 1976, all the appointed persons  (writ petitioners before the High Court) were required to  appear in the written examination so that they could be  appointed for a period of one year as probationers.  All of them  took the written examination and became successful.  Those  persons were required by the Bank to appear for an interview  on 21.07.1995 before the Selection Committee.  The Selection  Committee, after satisfying itself, recommended their names  for appointment on regular basis.  All the appointed persons  were asked by the Bank to furnish service-cum-security Bond  for a period of three years with a deposit of Rs.5,000/- as  security in the form of FDRs.  All the appointees complied with  the said condition.  While they are discharging their duties,  taking into consideration of their performance etc., the  appointing authority, under Rule 14(b), confirmed their  services on the post of clerks-cum-typists on 30.10.1996.   When the matter stood thus, according to the writ petitioners,  all of a sudden, without any notice or assigning any reason,  the Managing Director of the Bank issued termination order  under Rule 61 of the Rules on 27.10.1997.  Aggrieved by those  orders, the affected persons approached the High Court.  It is  also the claim of the affected persons that after getting the  order of termination they came to know that the termination  order was issued by the Bank on the basis of the direction  dated 01.08.1997 issued by the Commissioner Cooperatives- cum-Registrar to the Managing Director of the Bank on the  foundation that the Lokayukt had found 58 clerks-cum-typists  had been illegally appointed on the post, hence it was  imperative to terminate their services taking aid of Rule 61 of  the Staff Service Rules.  7)      The Division Bench of the High Court, by impugned  order, while allowing the writ petition, came to the following  conclusion:- "i.     The Rule 61 of the Staff Selection Rules is ultra- vires and unconstitutional. ii.     The order dated 04.02.2005 passed by the  Tribunal vide Annexure.P4 is quashed.  iii.    The issue as to the status earned by the writ  petitioners is remanded to the M.P. Cooperative  Tribunal for adjudication. iv.     The M.P. Cooperative Tribunal shall finalise the lis  within a period of four months from the date of  order."  Questioning the above-said conclusions/directions, as stated  earlier, the Bank as well as their employees/writ petitioners  filed the above appeals.  8)      We heard Mr. S.K. Gambhir and Mr. S.K. Dubey, learned  senior counsel and Mr. Krishna Mohan Shukla, learned  counsel for the appellant and Mr. B.S. Banthia and Mr.  Ramesh Babu M.R., learned counsel for the respondents. 9)      Mr. S.K. Gambhir, learned senior counsel, appearing for  the Bank, raised the following contentions:

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(i)     The appointment of 58 employees is not only contrary to  the directions of the Commissioner Cooperative and  Registrar, Cooperative Societies dated 29.6.1994 for  holding regular appointments after advertisement etc.  but also contrary to Rule 21 of the Rules; (ii)    The process adopted was a farce as only these candidates  were put to written test and interview in which none of  them was unsuccessful.  The selection itself was a result  of favourtism and nepotism and contrary to the  provisions of Arts. 14 and 16 of the Constitution of India; (iii)   When the initial appointment itself was illegal and void  ab initio, such appointments could not be made regular  and there was no question to determine their status; (iv)    Lokayukt, who has jurisdiction upon enquiry, found that   all the appointments were farce, pre-planned and  intended to help the favoured persons.   Since the said  report has not been set aside, the recommendation of the  Lokayukt is binding on the Government; (v)     The validity of Rule 61 was not called for because the  employees were not entitled to any notice and their  services deserve to be dispensed with straightaway. 10)     Mr. S.K. Dubey, learned senior counsel and Mr. Krishna  Mohan Shukla, learned counsel, appearing for the employees,  raised the following contentions: (i)     The High Court having found Rule 61 invalid, there is no  need to remit the matter to the Tribunal to find out the  status of employees; (ii)    Lokayukt has no jurisdiction to go into the appointment  of these employees; (iii)   Inasmuch as the employees concerned were subjected to  written test, interview, executed security bond,  successful in their probation period, satisfied Staff  Service Rules, the order of the Managing Director  terminating their services without notice and enquiry  merely based on the direction of the Registrar of the  Cooperative Societies, cannot be sustained; (iv)    In any event, the Registrar is obliged to examine the  report of the Lokayukt before accepting the  recommendations made therein; 11)     We have considered the rival contentions and the  relevant materials. 12)     Before analyzing the claim of both the parties, it is useful  to refer to relevant provisions of the Staff Service Rules of  Madhya Pradesh Rajya Sahakari Bank Maryadit which were  approved by the Registrar, Co-operative Societies, M.P. Bhopal  and made applicable with effect from 19th November, 1976.   Chapter-3 deals with ’Classification of Employees’.  Rule 3 (b)  defines "Permanent Employees" which reads as follows: "3(b)  A "Permanent Employee" means an employee who has  been appointed as permanent employee or who has been  confirmed on a vacant permanent post as such."

13)     Chapter-6 deals with selection of personnel in the Bank.   Rules 21 and 22(a), which are relevant, read as follows: "21.  All vacancies falling within the purview of the  employment exchange (Notification of vacancies) Act, 1959  shall be duly notified to the employment exchange  concerned.  The post/posts may also be advertised in the  local or All India Newspapers at the option of the appointing  authority.  The advertisement should give scales of pay,  dearness allowance, the essential and preferential  qualifications, age limit etc."

" 22(a) Candidates for the posts in Grade Vth and such other  posts shall have to undergo a written test in the manner

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prescribed by the ’Staff Committee’.  Candidates passing at  such test shall be eligible for appointment only after the  selection at personal interview by the ’Selection Committee’  consisting of Chairman of the Bank or his nominee Director,  Registrar, Cooperative Societies M.P. or his nominee not  below the rank of Joint Registrar, Cooperative Societies, M.P.  & Managing Director of the Bank for deciding the selection of  employees.

Provided further that for the selection of technical staff Chief  Engineer of the Bank shall additional member of the  committee.  It is also provided that when elected board  ceases to function, by any reason, Chairman of the Bank  shall be replaced by the Officer-In-Charge of the Bank  remaining members of the ’Selection Committee’ will remain  the same.  The meeting of ’Selection Committee’ will be  presided by the Chairman of the Bank/Officer-In-Charge of  the Bank as the case may be.  Presence of all the members of  the committee shall be necessary for the meeting."

14)     As per Rule 23(a)(iv), employees in Grade III, IV and  V, the Selection Authority is Selection Committee and the  Appointing Authority is Managing Director/General  Manager/Deputy General Manager or any person  authorized by the Managing Director. Rule 23(c) makes it  clear that appointment made to fill a vacancy of a  permanent post shall be made on probation unless  otherwise specifically mentioned in the order of  appointment given to the employee.   15)     Under Section 55(1) of the Madhya Pradesh  Cooperative Societies Act, 1960 (hereinafter referred to as  "the Act"), the Registrar of Cooperative Society has been  given power to frame Service Rules of the employees  working under different cooperative institutions and in  furtherance of the powers given under the aforesaid  provision, the Registrar has framed the service conditions  for the employees of the appellant-Bank, which are called  Madhya Pradesh Rajya Sahakari Bank Employees (Terms of  Employment and Working Conditions) Rules, 1976.  It is  also brought to our notice that these Staff Service Rules  have since been amended from time to time.  We have  already referred to the Rules which are applicable to the  issues raised in these appeals. 16)     Mr. S.K. Gambhir, learned senior counsel appearing  for the appellant-Bank, by drawing our attention to the  principles laid down by this Court in various decisions in  respect to public appointments, submitted that inasmuch  as the entire procedure and the selection made are contrary  to the Rules, first those persons are not entitled to any  notice in compliance with principles of natural justice and  secondly all of them are liable to be sent out without further  enquiry.  In support of his submission, he relied on the  decision of this Court in Krishan Yadav & Anr. Vs. State  of Haryana & Ors., (1994) 4 SCC 165.  While considering  fraud, nepotism, favouritism and arbitrariness in public  appointments, this Court, in paragraphs 19 and 20 of the  judgment, laid down the following principles which read as  under: "19. It is highly regrettable that the holders of public offices  both big and small have forgotten that the offices entrusted  to them are sacred trusts. Such offices are meant for use  and not abuse. From a Minister to a menial everyone has  been dishonest to gain undue advantages. The whole  examination and the interview have turned out to be farcical  exhibiting base character of those who have been responsible

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for this sordid episode. It shocks our conscience to come  across such a systematic fraud. It is somewhat surprising  the High Court should have taken the path of least  resistance stating in view of the destruction of records, that  it was helpless. It should have helped itself. Law is not that  powerless.  20. In the above circumstances, what are we to do? The only  proper course open to us is to set aside the entire selection.  The plea was made that innocent candidates should not be  penalised for the misdeeds of others. We are unable to  accept this argument. When the entire selection is stinking,  conceived in fraud and delivered in deceit, individual  innocence has no place as "Fraud unravels everything". To  put it in other words, the entire selection is arbitrary. It is  that which is faulted and not the individual candidates.  Accordingly we hereby set aside the selection of Taxation  Inspectors."  17)     In the case of Union of India & Ors. Vs. O.  Chakradhar, (2002) 3 SCC 146, this Court following the  law laid down in Krishan Yadav’s case (supra), upheld  the Railway Board’s decision to cancel the selection on the  ground of fraud committed by the Selection Authorities.   This Court, in paragraph 12 of the judgment, concluded as  under: "12. As per the report of the CBI whole selection smacks of  mala fides and arbitrariness. All norms are said to have been  violated with impunity at each stage viz. right from the stage  of entertaining applications, with answer-sheets while in the  custody of Chairman, in holding typing test, in interview and  in the end while preparing the final result. In such  circumstances it may not be possible to pick out or choose  any few persons in respect of whom alone the selection could  be cancelled and their services in pursuance thereof could be  terminated. The illegality and irregularity are so inter-mixed  with the whole process of the selection that it becomes  impossible to sort out the right from the wrong or vice versa.  The result of such a selection cannot be relied or acted upon.  It is not a case where a question of misconduct on the part of  a candidate is to be gone into but a case where those who  conducted the selection have rendered it wholly  unacceptable. Guilt of those who have been selected is not  the question under consideration but the question is could  such selection be acted upon in the matter of public  employment? We are therefore of the view that it is not one  of those cases where it may have been possible to issue any  individual notice of misconduct to each selectee and seek his  explanation in regard to the large scale widespread and all  pervasive illegalities and irregularities committed by those  who conducted the selection which may of course possibly  be for the benefit of those who have been selected but there  may be a few who may have deserved selection otherwise but  it is difficult to separate the cases of some of the candidates  from the rest even if there may be some. The decision in the  case of Krishan Yadav (supra) applies to the facts of the  present case. The Railway Board’s decision to cancel the  selection cannot be faulted with. The appeal therefore  deserves to be allowed." 18)     In the case of A. Umarani vs. Registrar,  Cooperative Societies & Ors., (2004) 7 SCC 112, this  Court has reiterated the principles to be followed in the  matter of public employment.  In that case, in the State of  Tamil Nadu, a large number of employees of Cooperative  Societies were appointed without notifying the vacancies to  the employment exchange and without following the other  mandatory provisions of the Act and the Rules framed

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thereunder relevant to recruitment.  A large number of  appointees furthermore did not have the requisite  educational qualification or other qualification like  cooperative training, etc.  The reservation policy of the State  was not followed by the cooperative societies.  The  recruitments were made beyond the permissible cadre  strength.  With a view to condone the serious lapses on the  part of the cooperative societies in making such  appointments in illegal and arbitrary manner, the State  Government issued various orders from time to time, in  terms whereof such appointments were sought to be  regularized fixing a cut-off date therefor.  Latest order was  G.O. Ms. No. 86 dated 12.3.2001 by which the cut-off date  was extended up to 11.3.2001 and which sought to  regularize appointments made after 8.7.1980 without  notifying the employment exchange in respect of those  employees who had completed 480 days of service in two  years, purported to be in terms of the T.N. Industrial  Establishments (Conferment of Permanent Status to  Workmen) Act, 1981.  The legality and validity of the said  Government order was challenged before the High Court.   The High Court, inter alia, held that the said order shall not  operate for regularization of any employee recruited by the  cooperative societies in violation  of sub-rule (1) of Rule 149  of the T.N. Cooperative Societies Rules, 1988, as amended  by G.O. Ms. No. 212 dated 4.7.1995.  The primal question  for consideration in that appeals before this Court was  whether the State had the requisite authority to direct  regularization of services of the employees of the cooperative  societies by reason of the impugned order.                     While dismissing the appeals, this Court, in paragraphs       39, 40, 41, 45, 68 and 69, held as under:  

"39. Regularisation, in our considered opinion, is not and  cannot be the mode of recruitment by any "State" within the  meaning of Article 12 of the Constitution of India or any  body or authority governed by a Statutory Act or the Rules  framed thereunder. It is also now well-settled that an  appointment made in violation of the mandatory provisions  of the Statute and in particular ignoring the minimum  educational qualification and other essential qualification  would be wholly illegal. Such illegality cannot be cured by  taking recourse to regularisation. (See State of H.P. v. Suresh  Kumar Verma and Anr., (1996)7 SCC 562). 40. It is equally well-settled that those who come by  backdoor should go through that door. (See State of U.P. and  Ors. v. U.P. State Law Officers Association & Ors.,(1994) 2  SCC 204). 41. Regularisation furthermore cannot give permanence to  an employee whose services are ad-hoc in nature.  45. No regularisation is, thus, permissible in exercise of the  statutory power conferred under Article 162 of the  Constitution if the appointments have been made in  contravention of the statutory Rules. 68. In a case of this nature this court should not even  exercise its jurisdiction under Article 142 of the Constitution  of India on misplaced sympathy. 69. In Teri Oat Estates (P) Ltd. v. U.T., Chandigarh and  Ors.(2004) 2 SCC 130, it is stated: "We have no doubt in our mind that sympathy or sentiment  by itself cannot be a ground for passing an order in relation  whereto the appellants miserably fail to establish a legal  right. It is further trite that despite an extra-ordinary  constitutional jurisdiction contained in Article 142 of the  Constitution of India, this Court ordinarily would not pass

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an order, which would be in contravention of a statutory  provision." 19)     In the case of Indian Drugs & Pharmaceuticals  Ltd. vs. Workmen, Indian Drugs & Pharmaceuticals  Ltd., (2007) 1 SCC 408, after referring the decision in Uma  Devi’s case (supra) and other decisions, this Court  observed that the appointments made without following the  appropriate procedure under the Rules/Government  Circulars and without advertisement or inviting application  from the open market was held to be in fragrant breach of  Arts. 14 & 16 of the Constitution of India.  It was further  held that the Rules of recruitment cannot be relaxed and  the Court/Tribunal cannot direct regularization of  temporary appointees de hors the Rules, nor can it direct  continuation of service of a temporary employee (whether  called a casual, ad hoc or daily-rated employee) or payment  of regular salaries to them. 20)     It is clear that in the matter of public appointments,  the following principles are to be followed: 1)      The appointments made without following the  appropriate procedure under the Rules/Government  Circulars and without advertisement or inviting  applications from the open market would amount to  breach of Arts. 14 & 16 of the Constitution of India. 2)      Regularisation cannot be a mode of appointment. 3)      An appointment made in violation of the mandatory  provisions of the statute and in particular, ignoring  the minimum educational qualification and other  essential qualification would be wholly illegal.  Such  illegality cannot be cured by taking recourse to  regularization. 4)      Those who come by back door should go through  that door. 5)      No regularization is permissible in exercise of the  statutory power conferred under Art. 162 of the  Constitution of India if the appointments have been  made in contravention of the statutory Rules. 6)      The Court should not exercise its jurisdiction on  misplaced sympathy. 7)      If the mischief played so widespread and all  pervasive, affecting the result, so as to make it  difficult to pick out the persons who have been  unlawfully benefited or wrongfully deprived of their  selection, it will neither be possible nor necessary to  issue individual show-cause notice to each selectee.   The only way out would be to cancel the whole  selection. 8)      When the entire selection is stinking, conceived in  fraud and delivered in deceit, individual innocence  has no place and the entire selection has to be set  aside. 21)     Keeping in mind the abovementioned principles, we have  to consider whether the appointments were made in  accordance with the Rules by following the procedure?  If our  answer is in the affirmative, all appointments have to be  upheld and the orders terminating their services are to be  quashed. 22)     By letter dated 24.6.1994 (Annexure P-1), Mr. Balram  Prasad Sharma, Managing Director of the Bank requested the  Cooperative Commissioner and Registrar, Cooperative  Societies, M.P. that against 100 vacant posts of Clerks-cum- Typist, at least 60 posts should be filled up from ad hoc  appointment of eligible persons so that work of the Bank may  be executed efficiently.  Pursuant to the said request, Mr. R.N.  Sharda, Additional Registrar, by his reply dated 29.6.1994

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(Annexure P-2), after considering the request of the Managing  Director of the Bank permitted to appoint 40 persons on ad  hoc basis for six months.  In the same proceedings, the  Additional Registrar reiterated that the posts should be filled  up within six months after issuing legal advertisement and  according to Rules and keeping in view the reservation under  Government Rules. 23)     By letter dated 11.11.1994 (Annexure P-3), the Joint  Registrar accorded permission to fill up 20 more posts for six  months on ad hoc basis under prescribed qualifications.   24)     Annexures P-1, P-2 and P-3 make it clear that based on  the large number of vacancies in the post of Clerk-cum-Typist,  and on the request of the Managing Director of the Bank, the  Registrar who is empowered to sanction, permitted the Bank  to fill up 60 vacant posts by following the procedure.      25)     Mr. Gambhir, learned senior counsel, submitted that it  was the complaint of the Bank that all the above-mentioned  vacant posts were filled up without following the procedure  prescribed in Rules 21,22,23 of the Rules.  In other words,  according to the Bank, without proper intimation to the  employment exchange and advertisement in the newspapers  mentioning all the details and without following the rule of  reservation, these persons were appointed and subsequently  regularized in the cadre of service.  Rule 21 which we have  already extracted in the paragraphs (supra) makes it clear that  the vacancies should be notified to the employment exchange.   In other words, intimation to the employment exchange and  calling for a list of candidates is a mandatory one.  On the  other hand, the above Rule makes it clear that advertisement  in the local or all India newspapers is at the option of the  appointing authority.  To put it clear, if there is proper  intimation to the employment exchange regarding the vacancy  and a request for eligible candidates, that would satisfy Rule  21.  It is the specific case of the Bank that the said Rule was  not fully complied with.  In support of his submission, learned  senior counsel appearing for the Bank, heavily relied on the  report of Lokayukta.  We shall deal with the complaint,  enquiry and ultimate decision by the Lokayukt in the later  paragraphs.   26)     Insofar as the compliance of the Rules is concerned,  learned counsel appearing for the employees, by drawing our  attention to the statement made by the officers of the Bank  before the Additional Registrar, contended that there was no  violation of any of the Rules.  One Mr. S.Kumar, former  General Manager of the Bank was examined as witness No.2  before the Additional Registrar wherein he specifically deposed  to the effect that all qualified applicants were invited as per the  service rules, have to undergo written examination and who  found successful were required to face interview by the  Selection Committee of the Bank based on the report of the  Selection Committee.  According to him, those persons were  appointed by the competent authority under the service Rules.   In respect of a specific question, namely, whether the Bank  had written a letter to the employment exchange for the names  to be sent for the vacant posts, he answered "yes, the letter  was sent two months before".  When he was asked whether  any list was received from the employment exchange, he  answered "No".  In respect of another question whether the  Bank had given advertisement prior to the regular  appointment, he answered "No, because as per the Rules, it  was necessary to write to the employment exchange and that  was done".  When he was confronted with the letter dated  27.04.1996 of the employment exchange wherein it is stated  that no such letter calling for a list was ever received, he  emphatically denied and asserted that "false entry is not done

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by the Bank".  After verifying the records, he concluded that  all those persons who possess the necessary qualifications as  per the service Rules of the Bank alone were given  appointments after completing the formalities in accordance  with the Rules.  27)     One Mr. A.K.Parsi, then Assistant Manager (Admn.) in  the Bank deposed before the same authority that from the  year 1995, the writ petitioners were working with the Bank.   According to him, initially they were appointed on ad-hoc  basis in the post of clerk-cum-typist, thereafter, in the month  of July, 1995, the employment exchange was informed and  they were appointed on a regular pay-scale.  In the cross- examination, after explaining the procedures to be followed, he  asserted that in the case of the petitioners also those  procedures were adopted and prior notice was published.  He  further reiterated that all the candidates who were successful  in the interview were appointed and only then the Selection  Committee selected those persons and all the selected  candidates were kept under probation for a period of one year.   He also informed before the Addl. Registrar that all the  successful candidates who completed their probation period  were asked to execute a bond.  He highlighted that as per the  bond, the appointees are to serve the Bank at least for three  years and in fact deposited Rs.5,000/- as security.  He also  highlighted that though some of the selectees sought  permission to pursue higher studies but permission was not  granted due to the undertaking given by them by way of  executing a security bond.  28)     The above-mentioned statement of General Manager and  Assistant Manager (Admn.) of the Bank cannot be lightly  ignored.  If we consider the correspondence between the Bank  and the Registrar in respect of large number of vacancies,  permission by the Registrar, who is none else than the  competent authority, coupled with assertion of two responsible  officers, it cannot be said that the procedures have not been  strictly followed.  No doubt, the employment exchange had  intimated Lokayukt that there was no such  information/request from the Bank, however, the fact remains  that there was no such communication to the Registrar and  under what circumstance, the same was intimated to the  Lokayukt.  The above-mentioned particulars show that  procedures have been complied with before selecting those  persons in the vacant posts.  The private respondents/writ  petitioners demonstrated that taking note of large number of  vacancies in the post of clerk-cum-typist and urgency in filling  up the same due to administrative reasons, after getting  proper sanction from the competent authority i.e. Registrar,  intimating the same to the employment exchange, they were  initially appointed for a period of six months on ad-hoc basis  and thereafter by conducting written examination followed by  interview, they were selected.  It is also brought to our notice  that after completion of probationary period of one year, these  persons were posted in the regular cadre.  Though few  selectees were related to the then Managing Director of the  Bank, on this ground alone, their appointments cannot be  interfered with.  The High Court has lost sight of relevant  material aspects and confirmed the order of termination  mainly based on the report of the Lokayukt.  29)     Now, let us consider complaints, proceedings and the  ultimate decision/recommendation of Lokayukt.  The  Government of Madhya Pradesh in order to make provision for  the appointment and functions of certain authorities for the  enquiry in the allegations against public servants and for  matters connected therewith, enacted the M.P. Lokayukt Evam  Up-Lokayukt Adhiniyam, 1981.  As per definition 2(f)

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Lokayukt means a person appointed as the Lokayukt under  Section 3.  Public servant as defined in Section 2(g) reads  thus:  "2. (g) "Public servant" means person falling under any of the  following categories, namely,-

       (i) Minister;

(ii) a person having the rank of a Minister but shall not  include Speaker and Deputy Speaker of the Madhya Pradesh  Vidhan Sabha and Neta Pratipaksha;           (iii) an officer referred to in clause (a);  

(iv) an officer of an Apex Society or Central Society within the  meaning of clause (t-1) read with clauses (a-1), (c-1) and (z)  of Section 2 of the Madhya Pradesh Co-operative Societies  Act, 1960 (No. 17 of 1961);          (v) Any person holding any office in, or an employee of-

(i)     a Government company within the meaning of Section  617 of the Companies Act, 1956; or  (ii)    a Corporation or local authority established by State  Government under a Central or State enactment.  

       (vi) xxx xxx xxxx"      

Sections 7 and 8 speak about matters which may be enquired  into by Lokayukt or Up-Lokayukt and matters not to be  enquired by the said authorities.  Section 10 makes it clear  that both Lokayukt or Up-Lokayukt in each case before it,  decide the procedure to be followed for making the enquiry  and in so doing ensure that the principles of natural justice  are satisfied.  Section 12 mandates that after enquiry into the  allegations, the Lokayukt or Up-Lokayukt is satisfied that  such allegation is established, submit a report in writing,  communicate his findings and recommendations along with  the relevant documents, materials and other evidence to the  competent authority.  Though detailed arguments were  advanced pointing out that Lokayukt was not competent to go  into the appointments that were made, in view of Section  2(g)(iv), we are of the view that officers of the apex society or  central society under M.P. Cooperative Societies Act are  amenable and there is no need to elaborate the said aspect in  this matter since we are concerned about the validity or  otherwise of the appointment of the employees in the Bank.  It  is seen from the materials that after the appointments of the  aforesaid 58 employees, a complaint was lodged with Lokayukt  by one Shri N.K. Saxena and the said complaint was  investigated by the Lokayukt.  Though it is stated that the  Lokayukt afforded an opportunity of hearing to the Chairman  of the petitioner Bank as well as officials of the Bank and  Cooperative Department, admittedly the employees were not  afforded notice or opportunity of being heard in the enquiry by  the Lokayukt.  It is not in dispute that on receipt of the report  of Lokayukt, the competent authority forwarded the same to  the Registrar of Cooperative Societies who, in turn, without  taking a decision or an order by following the service rules or  any of the provisions of the M.P. Cooperative Societies Act  mechanically directed the Managing Director of the Bank to  terminate all the appointees.  We are of the view particularly,  as observed earlier, though the officers of the apex society  under M.P. Cooperative Societies Act are amenable to the  jurisdiction of the Lokayukt, the persons concerned who are

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lower-grade employees i.e. clerks-cum-typists cannot be  terminated without following the service rules applicable to  them.  It is not in dispute that elaborate procedures are to be  followed before terminating the service of an employee under  the provisions of the M.P. Cooperative Societies Act and the  service rules made thereunder.  In those circumstances, in the  absence of opportunity to the employees, the termination order  which was sent at the instance of Commissioner, Cooperative  Societies based on the report of Lokayukt cannot be sustained.   30)     In the light of the factual details, while reiterating the  above-mentioned principles in the matter of public  appointment, we are of the considered view that the  authorities were not justified in terminating the services of  these workmen.  In view of our conclusion, it is unnecessary to  go into the correctness or otherwise of Rule 61 of the Rules  and the said issue is left open.  We are also of the view and as  rightly pointed out by counsel appearing for the employees  that there is no need to remit the matter to the Registrar or  any other authority for determination of their status.  The said  direction of the High Court is also liable to be set aside.  31)     In the light of the above discussion, we pass the following  order:- i)      The conclusion with regard to Rule 61 of the Staff  Selection Rules is not warranted and the issue is  left open; ii)     The decision of the Bank as well as Registrar of the  Cooperative Societies terminating the services of the  employees based on the report of the Lokayukt  cannot be sustained and the same is liable to be set  aside.   iii)    In view of our above conclusion, there is no need to  remand the issue to the Registrar or any other  authority for adjudication with regard to the status  earned by these employees, consequently the said  direction of the High Court is also set aside.  32)     In the result, Civil Appeal No. 4481 of 2007 arising out of  SLP (C) No. 12236 of 2006 filed by the Bank is disposed of on  the above terms.  Civil Appeal No. 4483 of 2007 arising out of  SLP (C) No. 19499 of 2006 and Civil Appeal No. 4482 of 2007  arising out of SLP (C) No. 3979 of 2007 filed by the employees  are allowed.  However, there shall be no order as to costs.