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CASE NO.: Appeal (civil) 3162  of  1997

PETITIONER: RAM SAHAN RAI

       Vs.

RESPONDENT: SACHIV SAMANAYA PRABANDHAK & ANR.

DATE OF JUDGMENT:       21/02/2001

BENCH: G.B. Pattanaik & B.N. Agrawal.

JUDGMENT:

L...I...T.......T.......T.......T.......T.......T.......T..J PATTANAIK,J.

   Plaintiff  is the appellant and assails the Judgment  of the  learned Single Judge of Allahabad High Court in  Second Appeal  No.683  of 1996.  The plaintiff filed the  suit  for declaration that the order of his removal from service dated 15.4.87  was  illegal, arbitrary, null and void and  without jurisdiction  and  the same may be set aside and it  may  be declared that the plaintiff is continuing in service and for all  other  consequential benefits.  It was alleged  in  the plaint  that  he  was appointed as a Clerk in  the  District Co-operative  Bank,  Defendant No.  2 and was posted in  the accounts section.  He had taken leave on medical grounds and had  left the bank after handing-over charge to one Virendra Nath.   The Acting Secretary, who according to the plaintiff was not competent to frame any charges against him, issued a set  of charges, alleging the mis-conduct of serious  nature for  illegal  absence  from  duties   and  finally,  it  was indicated  that the plaintiff has been removed from  service on  finding  him guilty of the charges, without holding  any inquiry   and  without  affording  an  opportunity  to   the plaintiff  to defend himself.  The defendant No.  2 did file a  written  statement,  denying the assertions made  in  the plaint  and further stated that continuous absence from duty without  permission  was  a  gross  mis-conduct,  which  was established  in the proceedings and, therefore, the order of termination  was valid.  Though the defendant No.  2 filed a written statement, but thereafter did not participate in the proceedings.   The  suit however was  ultimately  dismissed. Against  the  judgment  and decree of the trial  Judge,  the plaintiff preferred an appeal and even though the defendants were  served,  but they never contested and  ultimately  the appeal  was  heard  ex  parte.  The  lower  appellate  Court rejected   the  plaintiffs  contention   that  the   Acting Secretary  did  not  have the power of passing an  order  of termination.   But it came to the conclusion that the  order of  termination  casting  stigma  being based on  a  set  of charges of serious misconduct on the part of the delinquent, it  was obligatory for the competent authority to follow the procedure  prescribed  for inflicting major  punishment  and

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since in the case in hand, no charge-sheet was served and no show  cause  notice was given and as such the  principle  of natural  justice  and fair play had not been  followed,  the impugned  order  is  illegal, invalid  and  inoperative  and cannot  be  sustained.  The lower Appellate Court also  took into  consideration  the  averments   made  in  the  written statement,  which  made a reference to a serious  charge  of misappropriation  and fabrication of the account books.   On consideration  of  the relevant provisions of the U.P.   Co- operative  Societies Act as well as the service rules framed thereunder,  the lower Appellate Court came to hold that the mandatory  provisions,  not having been complied  with,  the order  of termination is vitiated.  With these  conclusions, the appeal having been allowed, the defendant-bank moved the High  Court  in Second Appeal.  The Second  Appellate  Court agreed  with the findings of the lower Appellate Court  that no   disciplinary  proceedings  had   been  taken  and   the circumstances   indicated   in    the   written   statement, culminating  in order of termination had never been  brought on  record,  and,  therefore,  the order  of  dismissal  was rightly  held  to  be without jurisdiction and  contrary  to Regulation  85  by  the lower Appellate Court.   But  having agreed  with the findings of the lower Appellate Court  that the  order of dismissal is illegal and invalid, the same not having  been  passed  after complying  with  the  prescribed procedure  under law, the High Court set aside the  Judgment and  decree  of the lower Appellate Court on a finding  that the suit is essentially one for enforcement of a contract of personal  service  and  such a suit must be held to  be  not maintainable  in  the  Civil  Court.    In  coming  to  this conclusion,  the  learned Judge relied upon the decision  of this  Court  in  the case of Executive  Committee  of  Vaish Degree  College,  Shamli and Ors.  vs.  Lakshmi  Narain  and Ors., 1976(2) SCC 58.

   Mr.  Rakesh U.  Upadhyay, the learned counsel, appearing for  the appellant, contended before us that the U.P.  State Co-operative  Land  Development Bank has been held  by  this Court to be an instrumentality of the State and an authority under  Article  12  and  it  is  controlled  by  the   State Government   and  service  conditions   of  the   employees, particularly  in regard to the disciplinary proceedings, are statutory in nature.  This has been so held by this Court in the  case  of U.P.State Co-operative Land  Development  Bank Ltd.   vs.   Chandra Bhan Dubey and Ors.  1999(1)  SCC  741. The  defendant-Bank  stands on the same footing as the  U.P. State  Co-operative  Land Development Bank and an  order  of termination  of an employee of such bank if is found to have been  passed without compliance of the principle of  natural justice  and  without following the procedure prescribed  by law,  then  the said order is null and void and,  therefore, employees  right could be enforced notwithstanding the fact that  service  is  one of contract.  Mr.   Upadhyay  further contended  that  in view of law laid down by this  Court  in S.R.   Tiwari  vs.   District Board, Agra, 1964(3)  SCR  55, indicating  the  instances  under which  an  employee  could obtain  a  declaratory  judgment   that  the  dismissal  was wrongful  and in the case in hand, the relationship  between the  plaintiff  and defendant-bank being employment under  a statutory  body, which statutory body had acted in breach of mandatory  obligation  imposed by the statute, the  ultimate order  is  null  and  void and as  such  the  plaintiff  was entitled  to  the declaration sought for and the High  Court committed  serious error in interfering with the judgment of the  lower Appellate Court.  Mr.  Upadhyay also stated  that

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the  Constitution Bench decision in Sirsi Municipality  case [1973(1)  SCC  409]  fully supports his contention  and  the order of dismissal passed by the statutory authority being a nullity  for  non-compliance  of the  principle  of  natural justice  as well as for not following the procedure provided for  imposing of a major penalty, the declaration sought for could  be granted notwithstanding the contract of employment and,  therefore,  the impugned judgment must be held  to  be unsustainable in law.

   Mr.   Sunil  Gupta, appearing for the respondent on  the other  hand  relied  upon  the judgment  of  this  Court  in Integrated  Rural  Development Agency vs.  Ram Pyare  Pandey 1995  Supp.(2) SCC 495, and submitted that the  relationship between  the  employer and the employee being one of  purely contract,  the  same cannot be enforced by the Civil  Court, even  if  the order of termination is illegal and  the  High Court,  therefore  was justified in holding that  the  Civil Court could not have granted the specific relief of contract of service.

   In  view of the rival submissions at the Bar, the  first question  that  arises  for consideration is,  what  is  the status  of  the defendant- District Co-operative Bank?   The status  of  the  said  bank is no doubt  of  a  Co-operative Society,  registered under the U.P.  Co-operative  Societies Act,  1965  and is constituted under the U.P.   Co-operative Land  Development  Bank  Act, 1964.  But an  examination  of different provisions of the rules, bye-laws and regulations, unequivocally  indicate that the State Government  exercises all-pervasive  control  over the bank and its employees  and the  service  conditions of such employees are  governed  by statutory  rules,  prescribing entire gamut of procedure  of initiation  of disciplinary proceedings by framing a set  of charges  and  culminating  in   inflicting  of   appropriate punishment,  after complying with the requirements of giving a   show  cause  and  an   opportunity  of  hearing  to  the delinquent.   This  being  the position and in view  of  the judgment  of  this  Court  in  U.P.State  Co-operative  Land Development  Bank  Ltd.  vs.  Chandra Bhan Dubey  and  Ors., 1999(1)  SCC  741, the conclusion is irresistible  that  the defendant  bank  is  undoubtedly an instrumentality  of  the State.   Once  it is held that the defendant is a  statutory body and is a State and in the matter of passing an order of dismissal  of  an employee, it did not follow the  mandatory provisions  of  the rules and regulations and the order  was passed  in gross violation of principle of natural  justice, then  the  third  exception to the  general  principle  that contract   of   personal  service   cannot   ordinarily   be specifically  enforced,  as indicated in  S.R.Tiwaris  case 1964(2)  SCR  55  which has also been relied upon  in  Vaish Degree  College  case  1976(2)  SCC   58  would  apply  and, therefore,  the conclusion of the High Court must be held to be  erroneous in the facts and circumstances of the  present case.   The  decision  of  this Court  in  Integrated  Rural Development  Agency  1995  Supp.(2)  SCC 495  will  have  no application  at all, as in that case the agency in  question was  held not to be an instrumentality of the State nor  the State had any control over the affairs of the society and in such  a  case,  therefore, the relationship  of  master  and servant  is  purely  one of contract and in that  case,  the relief of specific performance of contract of service cannot be  granted.   But the aforesaid decision in our  considered opinion, is of no application to the facts and circumstances of  the present case.  In the aforesaid premises, we have no

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hesitation  in coming to the conclusion that the High  Court committed  serious  error  of law in  interfering  with  the judgment  and  decree  of the lower  Appellate  Court.   We, therefore, set aside the impugned judgment and decree of the High  Court in Second Appeal No.  683 of 1996 and affirm the judgment of the 1st Additional District Judge, Ghazipur, and consequently, the suit is decreed.

   We,  however,  further  hold that though  the  plaintiff would  be  allowed his continuity of service and  any  other benefits,  flowing  from such continuity of service, but  he will  not  be  entitled to any salary from the date  of  his termination  on  15.4.1987  till the judgment of  the  lower Appellate  Court dated 9.9.1992.  This appeal is accordingly allowed  with  the  aforesaid directions  and  observations. There however will be no order as to costs. ..........................................J.

(G.B. PATTANAIK)

..........................................J.

(B.N. AGRAWAL)

New Delhi February 21, 2001.

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