* THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN + WRIT PETITION NO. 36073 OF 1998 % 04.04.2007 # H. Rajender ….. Petitioner Vs. 1. $ The Managing Director, The Hyderabad Agricultural Co- operative Association Limited, HACA Havan, Hyderabad – 500 004 and another. ….Respondents. ! Counsel for the Petitioner: Sri T.V.V.S. Murthy ^ Counsel for the Respondent-society: Sri G. Bhaskar < Gist: >Head Note ? Citations: [1] 1996(1) SLR 762 2 1986 ALT Short Notes 30 – judgment in W.P.14119 of 1984 dated 22.11.1985 3 2002 Delhi Law Times 435 4 (2002)5 SCC 111 5 (2005)4 SCC 649 6 (2006) 8 SCC 212 7 (1999)7 SCC 209 THE HON'BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION NO. 36073 OF 1998 ORDER: The petitioner, a junior Assistant in the Hyderabad Agricultural Cooperative Association Limited, (herein after referred to as HACA), seeks promotion as a senior assistant, with retrospective effect from 14.12.1994, against the backlog vacancies reserved in favour of the scheduled castes, contending that the respondent – Society had failed to comply with the rule of reservation and had kept four posts of senior assistants, reserved in favour of the scheduled castes, unfilled despite qualified and eligible junior assistants, in the scheduled castes category, being available for being considered for promotion to these posts. Facts, in brief, are that on the petitioner’s name being sponsored by the employment exchange, he was considered for selection and was appointed, vide proceedings 6.6.1988, as a junior assistant in HACA with effect from 10.6.1988. Petitioner is a graduate, having obtained his B.Com. degree from Osmania University in May, 1983, and belongs to the scheduled caste category. He claims to have put in about 10 years of service as a junior assistant, to have worked in all sections such as the business counter, accounts and audit, administration etc., and to have worked in the Adilabad Branch of HACA for one year. The 1st respondent, vide memo dated 14.12.1994, promoted seven junior assistants, (six from the OC category and one from the B.C. category), as senior assistants with effect from 14.12.1994 stipulating that they should get themselves qualified and acquire a junior diploma in cooperative management (JDC) or a higher diploma in cooperative management (HDC) within three years of their promotion. Petitioner would claim that, while these seven promotees were matriculates, and not graduates, he was not promoted as a senior assistant though he had put in much more than the requisite service of 5 years, had worked in all the wings, possessed a bachelor’s degree in commerce and belonged to the scheduled caste category. Petitioner would contend that, out of the 16 posts of senior assistants, (including the seven posts for which promotions were effected in December, 1994), there was not even a single person from the scheduled castes and that the 1st respondent had failed to provide reservation, in favour of the scheduled castes, in promotion to the posts of senior assistants despite repeated instructions from the State Government to fill up backlog vacancies reserved in their favour. Petitioner would submit that he was deputed to undergo training for HDC in the Institute of Cooperative Management, Rajendranagar, Hyderabad from 6.6.1997 to 4.12.1997, that he was awarded Higher Diploma in Cooperative Management by the Institute of Cooperative Management, in its proceedings dated 2.7.1998, and that he had passed the diploma in first class. Petitioner would submit that Rule 1(d), under the second category of posts in Chapter II of the HACA Service Regulations, relates to the posts of senior assistants and that Rule 4, under Chapter II, provides that the rule of reservation, as specified from time to time by the government, shall be applicable for making direct recruitment. Petitioner would also refer to Rule 1(h) which provides that other terms like the period of service, the period of duty, pay, shall carry the same meaning, emoluments etc., as in the case of State government employees service rules unless otherwise expressly defined under the Rules. Petitioner would submit that he was placed under suspension from 29.11.1989 to 21.01.1990 for one month and 23 days and was imposed the minor penalty of censure and recovery, vide proceedings dated 19.01.1990, on the ground that there was shortage of stock of Rs.14,338-15, and that the entire amount was recovered from the petitioner in instalments till the end of August, 1991. Petitioner would contend that the minor penalty of censure is not be a bar for promotion nor did imposition of such a penalty necessitate his promotion being deferred. Petitioner would submit that, in any event, the rigour period of the minor penalty expired by August, 1991 when the entire amount was recovered and that he was eligible for being considered for promotion as a senior assistant thereafter. According to the petitioner, the action of the respondents in denying him promotion to the post of senior assistant in December, 1994 was arbitrary and illegal. Petitioner would submit that the Managing Director had endorsed, on the petitioner’s representation dated 23.3.2006 that he deserved promotion and had recommended his case, that he had subsequently acquired HDCM qualification in July, 1998 and while the Person-in-charge committee, which corresponds to the Departmental Promotion Committee, met on several occasions in 1998, he was not considered for promotion to the post of senior assistant. In the counter affidavit, filed by the 1st respondent–society, it is stated that the 1st respondent–society was established under the Multi-State Cooperative Societies Act and was an apex premier cooperative society serving the farming community in the Nizam area which consists of Telangana and parts of Karnataka and Maharashtra and that the society is under the administrative control of the State Government. Respondents would contend that the writ petition is not maintainable as the respondent–society is an autonomous body and is not a “State” under Article 12 of the Constitution of India. Respondents would state that the petitioner has an alternate remedy under the Multi State Cooperative Societies Act, as the Act provides for adjudication of disputes between the society and its employees, and since the petitioner had not exhausted the alternative remedies available to him, the writ petition is liable to be dismissed. It is also stated that the post, to which the petitioner was seeking promotion, was a selection post, that there was no clear vacancy, that the issue of promoting the petitioner as a senior assistant was still under consideration of the management, that his case had not been rejected and that the present writ petition was premature. Respondents would submit that the petitioner was suspended in the year 1989. According to the respondents the seven junior assistants, who were promoted in the year 1994, were senior to the petitioner in the cadre of junior assistants and that the petitioner was neither by-passed nor overlooked for promotion. It is stated that though the order of suspension was revoked, since the period of suspension was held as not to count for earn leave or increments as he was not eligible for any emoluments other than subsistence allowance during the period of suspension and his conduct was censured, it could not be said that the suspension period was not a penalty. Respondents would also submit that the petitioner was directed to repay the deficit amount within 12 months and as such he was not considered for promotion along with the other seven candidates who were promoted in December, 1994. Respondents would submit that the HACA service Rules do not provide for reservation in promotion, that seven junior assistants were promoted as per their seniority, that the cadre strength of senior assistants is 16 and in the 16 posts of senior assistants five employees were working, and as four posts were earmarked to be filled up by direct recruitment of SC and ST candidates, the remaining seven posts of senior assistants were filled up by promotion of eligible junior assistants strictly in accordance with their seniority. It is stated that the respondent society maintains a roster and that promotion to the post of senior assistant in the year 1994 was made strictly in the order of seniority of the eligible junior assistants and persons, who were senior to the petitioner, were alone given promotion. Respondents would submit that service of five years, as prescribed in the Service Rules for promotion to the post of senior assistant, was only the minimum prescribed qualifying service to be eligible for promotion and a person who had put in this prescribed service was not automatically entitled to be promoted as a senior assistant. Respondents would further submit that completion of HDCM course did not confer any right on the petitioner to claim promotion. According to the respondents, the HACA Service Rules provided for reservation in appointments only by way of direct recruitment, that there was no connection between the petitioner’s promotion and the previous disciplinary proceedings except that this aspect would be considered by the DPC at the time of screening of candidates as a parameter to assess their past performance and that such a stage had not yet come. It stated that there is no vacancy in the post of Senior Assistant under the promotees quota. In his rejoinder, the petitioner would state that the respondent-society is an instrumentality of the State under Article 12. Petitioner would contend that, since the 1st respondent issued a notification in 1996 to fill up the posts of senior assistants by direct recruitment of SC/ST candidates, it could not be said that there was no clear vacancy and that the punishment of censure, and recovery of Rs.14338-15, imposed on the petitioner by the 1st respondent on 19.1.1990, was not a bar for his promotion on 14.12.1994 when seven others were promoted. Petitioner would contend that the adverse remarks in his annual confidential reports, if any, after imposition of the penalty on 19.1.1990 could not be taken into consideration for the purpose of depriving him of promotion as these adverse remarks were never communicated to him. Reliance is placed on Rule 1(h) of the HACA Employees Service Regulations to contend that the rule of reservation in favour of SC/STs is to be followed in respect of HACA employees not only for direct recruitment but also for promotion. Petitioner would contend that, if a roster had been maintained, he would have been entitled for promotion on 14.12.1994 when seven other employees were promoted as senior assistants and that there was not even a single scheduled caste candidate among the 12 senior assistants working in the respondent society. Petitioner would contend that there is no separate quota for direct recruitment and promotion and that the four posts, earmarked for being filled up by SC/STs by way of direct recruitment, should be made available for promotion from the scheduled caste junior assistants category. In his additional affidavit dated 15.1.1994 the petitioner would state that HACA is an apex cooperative organization formed and registered in the erstwhile Hyderabad State in the year 1949, that it became a Multi State Cooperative Society in the year 1980, that the State Government had invested about 62% of the share capital of HACA and that, from out of the total share capital of Rs.11,33,156/-, the Government held shares of Rs.7.00 lakhs. Besides the share capital, the State Government was granting financial aid by giving loans to HACA for Rs.2.31 Crores, that HACA is required to have a full time Managing Director, that an employee of the State Government, from the Cooperative Department not below the rank of a Joint Registrar of Cooperative Societies, is required to be appointed as the Managing Director and that the General Manager of HACA is appointed from the A.P. Agricultural University or the Agriculture Department of the State Government not below the cadre of Associate Professor or Special Cadre Deputy Registrar. It is also stated that the State Government has the power to nominate Directors to the Board of Directors of HACA. Petitioner would contend that the respondent is an instrumentality of the State under Article 12 of the Constitution of India and that the writ petition, as filed, is maintainable. The petitioner also filed an additional affidavit dated 21.12.2006 giving details of the service rendered by him in various branches of HACA. He would submit that he satisfies the conditions prescribed in Rule 1(d) of HACA employees Service Rules for being promoted to the post of senior assistant, that he satisfies the eligibility criteria for promotion as a senior assistant and that his name was considered by the Person-In-Charge Committee (DPC) in its meeting held on 23.9.1994 as the petitioner had completed the minimum five years of service, but his promotion was deferred on the ground that he was imposed the punishment of censure on 19.1.1990. Petitioner would contend that the punishment of censure imposed on him on 19.1.1990 was not a bar for his being considered for promotion either on 23.9.1994 or when others were promoted shortly thereafter. Petitioner would emphasise that not even a single senior assistant in HACA was directly recruited and that the petitioner has been deliberately discriminated against in being denied promotion as a senior assistant. In their reply to the addition affidavit, respondents would state that the petitioner has an alternate remedy under Section 47 of the A.P. Shops and Establishment Act, that the powers of the general body of the society are wide and include the power to amend or repeal any of the service rules, that as per the byelaws of HACA its business activities cannot be termed as functions of public importance closely related to governmental functions and that HACA is not engaged in any activity which is akin to State activity nor does it discharge any public duty or public operations performed by any government agency, that HACA does not enjoy any monopoly status and that no subsidy is given to HACA by the government. It is further stated that no Government department was transferred to HACA and as such HACA is neither a State nor an instrumentality or agency of the Government. It is stated that the Government does not exercise deep and pervasive control over HACA, that the ultimate power vests with the general body under Clause 29 of the byelaws of the Society and the Committee constituted as per Clause 47 of the byelaws, and that HACA cannot be considered a State or other authority within the meaning of Article 12 of the Constitution of India. According to the respondents, it is not mandatory for them to provide reservation in promotion and that the respondent-society has not violated the rule of reservation in not providing for reservation in promotions in favour of the scheduled castes and the scheduled tribes. It is stated that the four posts in the senior assistants cadre, reserved in favour of the scheduled castes and the scheduled tribes, are required to be filled by way of direct recruitment and not by promotion. It is stated that, while the earlier promotions were made in 1994, no promotions have been effected subsequent thereto and that the petitioner’s turn had not yet come. It is stated that it was only after promotions were effected in 1994 was Clause 4(a) inserted in Article 16 of the Constitution of India by a Constitutional Amendment on 17.6.1995 and that, in effecting promotions on 4.12.1994, the respondent had not violated the rule of reservation. It is stated that on 7.3.1996 the respondent had sought to fill up the four backlog vacancies of senior assistants by direct recruitment and that, from out of these four backlog vacancies, three were reserved in favour of the scheduled castes and one for the scheduled tribes. It stated that these vacancies could not be filled up as HACA was continuously running in losses and that the petitioner’s case for promotion could not be considered as there was no scope for future promotion of senior assistants as all the 12 posts in the promotion quota had already been filled up. It is stated that the remaining four posts are required to be filled up with eligible candidates by way of direct recruitment and not by promotion, that while the Public Enterprises Department of the State Government had initially recommended liquidation of HACA, it had subsequently recommended three options (i) HACA should repay the government share capital of Rs.7.00 lakhs (ii) should discuss with NCDC and arrange to release government guarantee and (iii) HACA should submit proposals for VRS to its 32 employees. It is stated that the group of Ministers, appointed for taking a decision on State Public Sector Undertakings and other institutions like HACA, had also examined the matter and had recommended for VRS being extended to 24 employees of HACA and that, in such circumstances, HACA had not taken up further promotions or direct recruitment. Sri T.V.V.S. Murthy, learned counsel for the petitioner, would submit that failure on the part of the respondents to provide reservation in promotion, in favour of the scheduled castes, violated the rule of reservation and the protection conferred on the scheduled castes under the Constitution. Learned counsel would submit that Rule 4, which requires the respondents to follow the rule of reservation, as applicable to state government employees by direct recruitment, would automatically apply for promotions also. Learned counsel would place reliance on The Commissioner of Commercial Taxes, Andhra Pradesh Vs. G. Sethumadhava Rao[1] in this regard. Learned counsel would submit that the respondent – society is an instrumentality of the State and, since it is required to follow similar rules as are applicable to the state government, it is duty bound to provide reservation in favour of the scheduled castes and scheduled tribes while effecting promotions also. Learned counsel would place reliance on G.O.Ms. No. 5 dated 14.2.2003 wherein the state government provided for reservation, in promotion, in favour of the scheduled castes and the scheduled tribes. Sri G. Bhaskar, learned counsel for the respondent–society, would submit that the writ petition as filed is not maintainable. Learned counsel would place reliance on the judgments of this Court in T. Narasimha Reddy Vs. The Managing Director A.P State Cooperative Marketing Federation[2] and the Delhi High Court in R.K. Mishra Vs. Krishak Bharati Cooperative Limited[3] in this regard. Learned counsel would submit that the petitioner has an effective alternative remedy under the provisions of the Multi-State Co-operative Societies Act and the A.P. Shops and Establishment Act, that the service rules of the Respondent– Society requires the rule of reservation, as applicable to government employees, to be provided only in matters of direct recruitment and that the said rule had no application for effecting promotions. Learned Counsel would submit that, since the respondent–society is not duty bound to provide reservation in promotions, as it is not the case of the petitioner that any person junior to him was promoted as a senior assistant and since four posts in the senior assistants cadre, reserved in favour of the scheduled castes, are to be filled up only by way of direct recruitment and not by promotion, the question of considering the petitioner’s case for promotion to the post of senior assistant, treating the post as being reserved to be filled up by promotion, from amongst candidates belonging to the scheduled castes, does not arise. The HACA Employees Service Rules apply to all employees of HACA. Under the proviso to Rule 1(h), of Chapter II, of the Service Regulations, other terms like the period of service, period of duty, pay, emoluments, special pay etc., shall carry the same meaning as in the case of the state government employees service rules unless otherwise expressly defined in the HACA Rules. Rule (ii) relates to category of posts and under clause (1) (d) thereof Branch Managers/Senior Assistants shall be appointed by promotion from amongst regular junior assistants/typists/stenos, with JDC or HDC, who have put in at least 5 years of regular service as junior assistant/typist/stenos of which not less than 2 years of service shall be in the accounts wing, one year in audit and one year in departmental stores and for promotion from the junior assistants cadre to the Senior Assistants cadre merit cum seniority is the criteria prescribed. Rule 4 provides that the rule of reservation, as specified from time to time by the state government, shall be applicable for making direct recruitment. For a body to be considered a “State”, within the meaning of Article 12, the question in each case would be whether in the light of the cumulative facts as established, the body is financially, functionally and administratively dominated by or under the control of the Government. Such control must be particular to the body in question and must be pervasive. If this is found, then the body is a State within the meaning of Article 12. On the other hand, when the control is merely regulatory, whether under a statute or otherwise, it would not serve to make the body a “State”. (Pradeep Kumar Biswas Vs. Indian Institute Of Chemical Biology[4]; Zee Telefilms Ltd Vs. Union of India[5]) The undisputed facts in the present case are that the Government of Andhra Pradesh holds 62% of the share capital of Hyderabad Agricultural Cooperative Association Limited (HACA) i.e. Rs.7.00 lakhs from out of the total share capital of Rs.11,33,156-00. The State Government has been providing financial aid by giving loans to HACA of more than Rs.2.31 Crores. The Managing Director of HACA is an employee of the State Government from the Cooperative Department not below the rank of Joint Registrar of Cooperative Societies and its General Manager is to be appointed either from the A.P. Agricultural University or the Agriculture Department of the Government of A.P. not below the cadre of an Associate Professor or a Special Cadre Deputy Registrar. Under the bye-laws, the State Government has been conferred the power to nominate Directors to the Board of HACA. These facts would establish that HACA is financially and administratively under the control of the Government of Andhra Pradesh and such control is not merely regulatory. As the tests prescribed in Pradeep Kumar Biswas4, to determine whether HACA should be considered a State within the meaning of Article 12, are satisfied, and as HACA is a “State” within the meaning of Article 12, a writ petition filed thereagainst is maintainable. I n T. Narasimha Reddy2 a Single Judge of this Court held that the A.P. State Cooperative Marketing Federation is an instrumentality or agency of the State Government and is an authority within the meaning of Article 12 of the Constitution of India. In R.K. Mishra3, a Single Judge of the Delhi High Court held that M/s. Krishak Bharati Cooperative Limited, a society registered under the Multi-state Cooperative Societies Act, 1984, was not a “State” within the meaning of Article 12 of the Constitution of India, and that the State Government did not exercise deep and pervasive control over M/s Krishak Bharati Cooperative Limited as it did not control the actual day to day working of the society. The judgment of the Supreme Court in Pradeep Kumar Biswas4 is subsequent to the judgment of the Delhi High Court in R.K. Mishra3. Further, as held in Pradeep Kumar Biswas4, each case has to be examined in the light of the cumulative facts established whether the body is financially, functionally and administratively dominated by or is under the control of the Government. The mere fact that, in R.K. Mishra3, M/s Krishak Bharati Cooperative Limited was held as not to be financially, functionally and administratively under the control of the government, would not automatically necessitate it being held that HACA is also not an instrumentality of the State under Article 12 of the Constitution of India. Reliance placed on R.K. Mishra3 is, therefore, of no avail. Sri G. Bhaskar, learned counsel for the respondent, would contend that the petitioner has an effective alternative remedy both under the provisions of the Multi-State Co-operative Societies Act and the A.P. Shops and Establishment Act. The questions which arises for consideration, in the present writ petition, whether the respondents were justified in keeping the backlog