IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN FRIDAY, THE 20TH AUGUST 2010 / 29TH SRAVANA 1932 OP.No. 8238 of 1997(E) ---------------------- PETITIONER(S): --------------- FATIMA NAGAR CO-OPERATIVE CREDIT SOCIETY NO.R.224, EAST FORT, TRICHUR-5. NOW KNOWN AS FATIMA NAGAR CO-OPERATIVE BANK LTD., REP. BY SECRETARY. BY ADV. SRI.N.SUBRAMANIAM SMT.K.E.SUNITHA SRI.M.S.NARAYANAN RESPONDENT(S): --------------- 1. THE AUTHORITY UNDER THE SHOPS & COMMERCIAL ESTABLISHMENTS ACT, (DY. LABOUR COMMISSIONER, TRICHUR.) 2. A.J.DOLPHY, S/O.A.T.JOSE, ARANGASSERRY HOUSE, EMMATTYPAVU LANE, TRICHUR - 5. 3. P.D.PAUL, PARAKKAL HOUSE, DHILHAR ROAD, NELLIKKUNNU P.O., TRICHUR. 4. P.I.SHAJU, S/O.P.K.ITTIYACHAN, PONTHURUTHARAYIL HOUSE, EAST FORT, TRICHUR-5. ADV. SRI.N.P.SAMUEL ADV.P.RAMAKRISHNAN GOVERNMENT PLEADER SHRI.V.MANU THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 16/08/2010, ALONG WITH OP NO. 14041 OF 1997 THE COURT ON 20/08/2010 DELIVERED THE FOLLOWING: O.P.No. 8238/1997 APPENDIX PETITIONER(S)' EXHIBITS P1. COPY OF THE COMMON ORDER PASSED BY R1. sdk+ ///True copy/// P.A. to Judge S.SIRI JAGAN, J. ================== O.P.Nos. 8238 & 14041 of 1997 ================== Dated this the 20th day of August, 2010 J U D G M E N T These two original petitions are filed challenging the same order of the Appellate Authority under the Shops and Commercial Establishments Act, Trichur, (“Shops Act” for short). I shall refer to the rank of parties, facts and exhibits as obtaining in O.P.No. 8238/1997. The petitioner therein is a co-operative society governed by the Kerala Co-operative Societies Act and Rules. The society engaged respondents 2 to 4 as daily wage workers in 1984 and 1982. Their services were dispensed with from 24.2.1986. Alleging denial of employment, respondents 2 to 4 filed appeals under the Shops Act. Those appeals were allowed and the petitioner herein was directed to pay compensation for illegal denial of employment. The petitioner challenged the same before the Court, which resulted in the decision in Fatima Co-op. Credit Society Ltd. v. Appellate Authority [1993 (2) KLT 903], whereby after laying down the legal principles, the matter was remanded to the Appellate Authority for fresh consideration in accordance with law. Thereafter, the Appellate Authority considered the matter again and passed Ext.P1 common order in the three shop appeals, whereby, the petitioner was directed to pay Rs.7,583/- each to respondents 2 and 4 and Rs.8,020/- to the 3rd respondent. The petitioner is challenging the said order in O.P.No.8238/1997. The 3rd o.p.8238/97 & cc. 2 respondent in that original petition has filed O.P.No.14041/1997 challenging that part of the order restricting relief to compensation and seeking a direction to the society to reinstate him in service. 2. The contention of the petitioner is that as settled by various decisions of this Court, such as Koodaranji Service Co-op. Bank 's case (supra) and Radhakrishnan & Ors. v. Handicrafts Apex Co- op. Society & Ors. [1997 (2) KLJ 718], once statutory rules have been made for appointments in an establishment, appointments made in violation of the statutory rules would not confer any right to those appointees based on such appointments. The counsel for the petitioner also refers to the decision of the Supreme Court in Hindustan Aeronautics v. Dan Bahadur Singh & Others [2007 (6) SCC 207], wherein the Supreme Court has categorically held that in respect of illegal appointment against rules, no regularisation can be ordered. According to the petitioner, if no regularisation can be ordered, no reinstatement and no compensation in lieu of reinstatement can also be ordered. The petitioner submits that the order of the Appellate Authority, holding that there is denial of employment and directing payment of compensation on the ground of denial of employment to respondents 2 to 4 is clearly illegal and unsustainable. The petitioner would further contend that the petitioner was forced to discontinue the employment of respondents 2 to 4, since the Registrar of Co-operative o.p.8238/97 & cc. 3 Societies had issued a communication on 12.8.1985, directing that the continued engagement of respondents 2 to 4 is against the provisions of the Kerala Co-operative Societies Act and Rules, and therefore, their services should be dispensed with. According to the petitioner, the petitioner cannot disobey the directions of the Registrar of Co- operative Societies, which only has been done by the petitioner by discontinuing the engagement of respondents 2 to 4. 3. In answer, the counsel for respondents 2 and 4 would contend that even assuming that the employees are not entitled to regularisation or reinstatement, they cannot be denied the compensation for illegal termination of employment, which only has been done in the impugned order. The counsel for the 3rd respondent would contend that after having appointed him, the society themselves cannot take the stand that the appointment is illegal and therefore, the 3rd respondent is entitled to reinstatement in service. 4. I have considered the rival contentions in detail. 5. I am of opinion that in view of the decisions of this Court in Lissy's case (supra) case and in Radhakrishnan's case (supra), the law on the subject is quite clear to the effect that no right can be based on an illegal appointment made in violation of the rules. Further, in the decision in Hindustan Aeronautics's case (supra), the Supreme Court has held that regularisation can only be based on in accordance with o.p.8238/97 & cc. 4 the Rules and Act de hors and if regularisation cannot be made contrary to the rules, as a corollary, an appointment contrary to the rules cannot be continued also. 6. In this case, the creation of posts in a co-operative society and appointments thereto are governed by the Kerala Co-operative Societies Act. Respondents 2 to 4 have not been appointed in any sanctioned posts and they have not been appointed in compliance with any accepted procedure for public appointment. Procedures have been prescribed by the Registrar of Co-operative Societies for appointment to posts in co-operative societies, which have not been followed while appointing respondents 2 to 4. They have not undergone any selection process with opportunity to others to compete for the same. Employment in co-operative societies being public employment, appointment without such a procedure is clearly illegal and unsustainable. Perhaps respondents 2 to 4 may be right in contending that even then, the retrenched employees would be entitled to retrenchment compensation. I am not going into that question in this original petition in view of the concession made by the learned counsel for the petitioner in this case. In view of the above findings, I am of opinion that insofar as respondents 2 to 4 have not been validly appointed in the petitioner's society and the petitioner society was forced to discontinue their services on the basis of the direction of the o.p.8238/97 & cc. 5 Registrar of Co-operative Societies, respondents 2 to 4 cannot now claim reinstatement or compensation in lieu of reinstatement. Therefore, that part of Ext.P1 order, which holds that respondents 2 to 4 have been denied employment illegally, is set aside. But the learned counsel for the petitioner fairly and graciously concedes that in view of the peculiar circumstances of the case, they have no objection in paying the amounts quantified by the Appellate Authority as ex-gratia to respondents 2 to 4. Accordingly, that part of Ext.P1 order which holds that respondents 2 to 4 have been denied employment illegally is quashed. However, in view of the concession made by the learned counsel for the petitioner, I hold that the amounts as directed in Ext.P1 can be disbursed to respondents 2 to 4 after deducting the amounts already paid to them as per the interim orders. The balance amount lying in deposit with the Appellate Authority shall be refunded to the petitioner within one month from the date of receipt of a certified copy of this judgment. O.P.No. 8238/1997 is disposed of as above. In view of the above findings, O.P.No.14041/1997 is dismissed. Sd/- sdk+ S.SIRI JAGAN, JUDGE ///True copy/// P.A. to Judge o.p.8238/97 & cc. 6