IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE ANTONY DOMINIC MONDAY, THE 14TH MARCH 2011 / 23RD PHALGUNA 1932 WP(C).No. 1262 of 2009(A) ------------------------- PETITIONER(S): ------------------------ R. VISWANATHAN PILLAI, SECRETARY, CHEPPAD KANNIMEL SERVICE CO-OPERATIVE BANK, CHEPPAD.P.O. BY ADV. SRI.V.G.ARUN SRI.T.R.HARIKUMAR RESPONDENT(S): ------------------------ 1. THE ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), KARTHIKAPPALLY, ALAPPUZHA DISTRICT. 2. JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), ALEPPEY. GOVERNMENT PLEADER SMT.SUMANGALA THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 14/03/2011 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WPC NO.1262/09 APPENDIX PETITIONER'S EXHIBITS EXT.P1: TRUE COPY OF RESOLUTION NO.185 DT 18.8.2002. EXT.P2: TRUE COPY OF THE RESOLUTION NO.186 DT 18.8.2002. EXT.P3: TRUE COPY OF the ORDER NO.901/02 DT 6.1.2003. EXT.P4: TRUE COPY OF THE COVERING LETTER DT 12.11.2007. EXT.P4(a): TRUE COPY OF THE RESOLUTION NO.44 DT 18.8.2007. EXT.P4(b): TRUE COPY OF THE RESOLUTION NO.45 DT 18.8.2007. EXT.P4(c): TRUE COPY OF THE STATEMENT OF FIXATION OF PAY in the REVISED CLASSIFICATION. EXT.P5: TRUE COPY OF THE LETTER NO.1266/07 DT 1.2.2008. EXT.P6: TRUE COPY OF THE RESOLUTION NO.97 DT 25.5.2008. EXT.P7: TRUE COPY OF THE LETTER NO.1286/07 DT 24.9.2008. EXT.P8: COPY OF THE RELEVANT PAGES OF THE AUDIT CERTIFICATE IN THE YEAR 2006-07. EXT.P9: COPY OF RELEVANT PAGES OF THE AUDIT CERTIFICATE IN THE YEAR 2007-08 EXT.P10: COPY OF THE RELEVANT PAGES OF THE AUDIT CERTIFICATE FOR THE YEAR 2008-09. //TRUE COPY// P.A. TO JUDGE Rp ANTONY DOMINIC, J. ================ W.P.(C) NO. 1262 OF 2009 ===================== Dated this the 14th day of March, 2011 J U D G M E N T Petitioner is the Secretary of Cheppad Kannimel Service Co- operative Bank registered under the Kerala Co-operative Societies Act. 2. By Exts.P1 and P2 resolutions passed by the Bank on 18/8/2002, the Board of Directors resolved to classify the Bank as a Class IV Bank and to refix the salary of the petitioner at the applicable scale. This resolution of the Bank was forwarded to the 1st respondent by Ext.P3 order dated 6/1/2003 approving the scale as resolved in Exts.P1 and P2. 3. Subsequently, when the Government issued GO(P) No.220/05 revising the pay scale of the employees of the Co- operative Societies like the petitioner, Bank issued Ext.P4 communication dated 12/11/2007 enclosing Exts.P4 (a) and P4(b) resolutions and requesting for revising the pay of the petitioner suitably. That request of the Bank was rejected by the 1st respondent as per Ext.P5 communication dated 01/02/2008. The main reason stated for rejecting the request of the Bank is that WPC No. 1262/09 :2 : the reclassification of the Bank as Class IV did not have the approval of the respondents. 4. Again the Bank made Ext.P6 requesting for reconsideration of Ext.P5. That was also rejected by Ext.P7 order passed by the 1st respondent, stating that the reclassification was not approved by them. It is in these circumstances, the writ petition is filed. 5. According to the petitioner, at the time when Exts.P1 and P2 resolutions were passed by the Bank reclassifying it as Class IV, there was no provision either in the Kerala Co-operative Societies Act or the Rules requiring any prior approval of the Department. On this basis, counsel contends that, the reasoning contained in Exts.P5 and P7 are illegal. 6. Counter affidavit has been filed by the respondents. In the counter affidavit, the main reason stated to justify Exts.P5 and P7 reads as under:- As per notes 3 and 4 inserted by SRO No.283/04 dated 22.03.2004 in Rule 182, Appendix III of Kerala Co-operative Societies Act 1969 as to involve in any class the Societies/Banks, the Bank should have been worked on profit for 2 years immediately preceding 5 years. On the basis of the above circumstances the provision prescribed is that approval of the classification of WPC No. 1262/09 :3 : the Society should be obtained from Registrar of Co-operative Society. It is the correctness of the above stand taken by the respondents that calls for consideration. 7. A reading of counter affidavit therefore shows that what is now sought to be urged by the respondents to sustain Exts.P5 and P7 is the insertion of note 3 and 4 by SRO 283/04 dated 22/3/2004. By these notes inserted to Rule 182, classification or re-classification of the societies should have prior approval of the Registrar of the Co-operative Societies. Rule admittedly did not have any retrospective effect and prior to the insertion of the above notes, there was no provision in the Act or the Rules requiring such prior approval. 8. This question was considered by this Court in the judgment in Parameswaran Kartha v. Asst.Registrar (1992 (2) KLT 77) where it has been held thus:- The primary right to classify the Societies in the State into different categories, as also the right to prescribe the staff pattern and scales of pay of the employees is that of the Government. it is so laid down in the first three sub-sections of S.80. But when once the broad classification specified in S.80 has been made, it is for the particular society to decide as to the class in which it will fall. Neither the Government nor the Registrar come WPC No. 1262/09 :4 : into the picture of classifying individual societies into any particular class specified in Appendix III. No such power is vested in them. The society falls under a particular classification once it satisfies the conditions mentioned in column 3 of Appendix III. It is for the society to decide the category in which it falls with reference to those conditions. Neither the Act nor the Rules provide for any prior approval of the Registrar or the Government before the society is classified in a particular slot. Any decision of the society that it falls in a particular class will no doubt, be open to recission by the Registrar in exercise of his powers under R.176, if he is not satisfied that the working capital/ outstandings/ investments--turnover, as the case may be, of the society are such as to bring it within a particular class. It will always be open to him to examine whether the society in question does satisfy the conditions prescribed in Appendix III regarding its working capital, loan outstandings and the like, which as mentioned earlier, and as mentioned in my judgment in O.P.No.10078 of 1985, are the only matters made relevant in the matter of classification of a society. The resolutions passed by the societies involved in these cases that they fall in particular classes cannot therefore be branded as illegal or otherwise liable to be cancelled. I must mention here that the respondents have no case that based on their working capital, loan outstandings or the like, the societies concerned will not fall within the classes into which they wanted to be placed by the resolutions in question. 9. The aforesaid principle laid down in the judgment has been approved by the Division Bench in Elampal Service Co- operative Bank Ltd., v. Government of Kerala (2000(3) KLT 389). WPC No. 1262/09 :5 : 10. Admittedly, by Exts.P1 and P2, classification has been effected by the Bank, which was perfectly within its powers when Exts.P1 and P2 were passed. Exts.P1 and P2 were sent to the 1st respondent, who issued Ext.P3 recognising the classification and also approving the scale as recommended by Exts.P1 and P2. P3 was issued on 6/1/2003. If that be so, the insertion of notes 3 and 4 vide SRO 283/04 dated 22/3/2004 could not have in any manner invalidated Ext.P3. Consequently, the stand taken by the respondents in Exts.P5 and P7 cannot be sustained. For these reasons, Exts.P5 and P7 are to be quashed and I do so. Writ petition will stand allowed. The respondents are directed to approve the petitioner's salary in accordance with Ext.P4 submitted by the Cheppad Kannimel Service Co-operative Bank Ltd.No.1740 and the pay as admissible in terms of the scale of pay as applicable to the petitioner shall be sanctioned. ANTONY DOMINIC, JUDGE Rp