BOARD OF DIRECTORS OF ANDHRA PRADESH CO~ A

OPERATIVE CENTRAL LAND MORTGAGE BANK LTD. ETC.

CHITTOR PRlMARY CO-OPERATIVE LAND MORTGAGE

BANK LTD. ETC.

Febwary 21, 1974.

[P. JAGANMOHAN REDDY, S. N. DWIVEDI AND P. K. GosWAMI, JJ.]

Audlrra Pradellr Cuoperarivl!'. Societies Act, 1964, Sections 84, 85, 93, 94, 97, I 00-109, 115, I 16A and 130-A rrdltra Pradesh Cooperatil'e Societies Rules, Rule 70(1)(13) and 04)-Act conferring srrpervisory powers 011 Central Land Mortgage Bank over Cooperative Land Mortgage Banks in the State-Rule em po;>-ering B011rd of Central Bank to constitute a centralised serTice for tire mort' gage banks and to levy contribruion from tlrem for the purpose.-R11/e :10

wlrethtr ultra vires of section 115 of the Act. ·

The Andhra Pradesh Cooperative :Societies Act, 1974 created a Qentral Land Mortgage Bank to supervise the functioning of the Cooperative ·.t.and I\lortgage Banks in the State. The scheme of the Act is that the provisions of Chapter XJII thereof relating to advancement of loans and mode of Tecovery of the amounts are made applicable to the Cooperative Land Mortgage Banks in the State. Sec. 85 permits a mortgage bank to advance lol!I)S for the purpose specified therein and to hold lands. the possession of whjch is transferred to it. By virtue of the provisions of section 100·109 any loan granted by a mortgage bank including any interest chargeable thereon and costs, if

:my, incurred in connection therewith shall, when they become due. be recoverable by the mortgage bank. All powers in respect of the recovery of loans are conferred on the mortgage banks. The Collector is empowered to make recoveries during a certain period; he. is also given the power of distraint and sale.

When the power of sale is to be exercised, thl! oowers of the mortgage bank where mortgaged property is destroyed or security becomes insufficient, the power of the Board of Trustees to distrain and sell property are also provided for. The title of the purchaser is not to be. questioned em the ground of irregularity nor can a mortgage be questioned on the insolvency of the mortgagor.

Appointment of a Receiver and his powers are provided for Section~ 93 and 94 empower a mortgage bank or the Central Mortgage Bank notwithstanding anything contained in :my law for the time being in force to purchase any mortgaged property sold under Chapter XIII of the Act and the property

o purchased shall be disposed of by such banks by sale within such period as may be fixed.

Sec. 95 provides that pa:yment of all monies rlu~ to mortgage hanks are payable to it and such payments shall be valid as if the mortgage had not been so trans.ferre<.l. The mortgage bank shall, in the absence of uny

pecific direction to the contrary, issued . by the Board of Trustee nnd com municated to the mortgage bank, "'be entitled to sue on the mortgage or take arty other proceeding for the recovery of the moneys due under the mortgage.

Sec. 115 provides that subject to the provisions of the Act the Board shall have such power of supervision over the mortgage banks including the power of appointment, transfer and disciplinary action in respect of the emplorecs of mortgage banks as may be prescribed. By section 130, the Government is empowered to make rules for carrying out all or anv of the. purpost"s of th:: Act.

Sec. 116-A empowers the Regstrar of Cooperative Societies to create

<1 common cadre of employee~ in any class of cooperative society if he consi ders it necessary in the interest of the cooperative movement to do so.

Sub-Rule (I) of Rule 70 empowers the Bonrd of Directors of the Central Lnnd Mortgage Bank to constitute a centralised. service for the mortagc banks in the St:tte and with effect from .such constitution the Board shall have power to make appointments to the posts brought under the centralised service and the

A.P. COUP. MORTGAGE BANK V. CHITTOR BANK 441

mortgage banks shall have no power to make appointments to such posts.

Sub-l<ule (13) empowersthe Board to levy contributions from the mortgage

banks towards the _cost of service rendere~ by the Central Mortgage Bank.

Sub-ntl~ . ( 14) prov1des that .on~~ . a entra!Jsed cadre is constituted all rishts

ad pnileg; es accrued and habthhes mcurred by the employee in relation to hts servtce m the mortgage bank shall stand vested with the Board.

In three writ petitions filed before the High Court by employees of different Cooperative Land Mortgage Banks and by one of the banks, it was contended, imer tlliu, that r. 70 was ultra t•ires of sec. 130( 1) read with sec. 115 of the Act. The High Court upheld the contention and allowed the

wri~ petitions. On appeals by special leave to this Court, the only question for consideration was whether the High Court was right in declaring Rule 70 of the Rules to be ultra vires of Sec. 115 of the Act.

Dismissing the appeals,

HELD : (I) There is nothing in the Act which empowers the Central Mortgage Bank notwit1lstanding the fact that it provides funds to the mortgage banks, to make collection of such advances by the mortgage banks. The rule making power conferred on the Government for carrying out all or any of the pur11oses of the Act must be confined to such of the purposes as are enumerated or indicated in the preamble or in any of the provisions of the Act.

Unaer Sec. 115, the Central Mortgage Bank does not have the power either to directly collect the loans and advances given by tbe member banks,

d.c., mortgage banks, or to create a centralised cadre of service from among the employees of the mortgage banks which are members of the Central Mort gage _bank.

That section merely confers powlo!r of upervision on the Board of the Central Mortgage Bank over the mortgage banks which power includes

the power of appointment, transfer and disciplinary action in respect of the employees of the mortgage banks. It may be that some questions may be n<ised in respect of the actions of the mortgage banks in the matter of appointment, transfer and disciplinary actions of its employees. Whenever such questions <Ire raised, the Board of Directors of the Central MC¥tgage Bank in exercise of its power of supervision can go into the question of such appointments, transfers and disciplinary action made or taken by the mortgage banks.

The power conferred by Sec. 115, therefore; can in no circumstances be construed as empowering the Board of Directors of the Central Mortgage Bank to recruit employees for the mortgage banks or to make appointments to a common cadre created by it from out of the employees of the member mortgage Banks. If the employees one appointed by the Central Mortga-ge Bank .. their salaries and other emoluments shottld be paid by it. But evidently, this

i~ not so as sub-rules ( 13) and (14) or r. 70 authorise the Central Mortgage Bank to call for contribution for the cost of the service rendered by it to be borne by the mortgage banks and provides that once a centralised service is constituted all rights and privileges accrued and liabilities incurred by the employee in relation to his service in the mortgage bank shall stand vested with

the Botrd. The key words in section 115 are "employees of the mortgage hanks''. The power of supervision including the power of appointm!nt, transfer and punitive action may be taken by the Central Mortgage Bank against

llersons who are the employees of the 'mortgage bank. But rule 70 seeks to bring into being a centralised service, the employees where of shall b~ the employees of the Central Mortgage Bank and not of the mortgage banks.

Such a centralised service is not contemplated by Sec; JlS.

[445 E-446 E)

( ll) The supervisory power in respect of the employees of the mort sage banks does not include the power of transfer of employee from one mortgage bank to another creating thereby a contract of service with a different emplover.

The word ''transfer" in Sec. US. therefore, must be read as a transfer from one branch of the same mortgage bank to another of its branch. {446 F-Gl

(Ill) While the Central Mortgage Bank may be concerned with curing its loans to the mortgage banks, the provisions of the Act do not coafer upon the Central Mortgage Bank the power to collect any loans advanced by

SUPREME COURT REPORTS

[ 1974] 3 S, C, R.

the member banks, i.e. the mortgnge banks. The security 'given to the mortg;; gc banks in respect of the loans advanced by them no doubt is deemed w have been transferred to the Central Mortgage Bank, but that is only l?Y way of securing the monies advanced by the Central Mortgage Dank to the mortgage banks.

Nevertheless, the duty to collect loans is upon the mortgage banks and notwithstanding the deemed transfer to the Cntrnl Mort gage Bank of any property. mortgaged to the mortgage banks, the amount due to the mortgage banks ts payable to the mortgage banks only and not to the Central Mortgage B'ank.

Unle's there i~ any specific provision in the Act which directly creates a contractual liability btween the Central Mortgage Bank and rhe borrowers from the mortgage banks, the liability ot the borrowers for payment of loans advanced to them is only to the mortgage banks which actually advanced the loans to them.

The borrowers have no liability to the Central Mortgage Bank.

[447 B-E)

{IV) The legislature apparently realised the absence of any power in thC Act, nd therefore provided for creation of a common ca.dre of employees when it enacted sec. !16A emoowering .the Registrar to create a common cadre of employees for any chiss of society, if he considers it necessary in the interest of the cooperative movement to do so. The power is of a general Jlatnre and is applicable to the mortgage banks as well as other societies registered under the Act.

Section 116-A also empowers the Registrar to require the affiliated sociehes to make contribution of such sum every year towards expeilditure as may bc incurred for the purpose of creation of any common c&.Jre and make such payment enforceable. The High Court is right in holding that when a centralised service or . any cadre of employees of the mortg::ge banks cannot be created y the Board in exercise of its power umkr s. 115 of the Act, r. 70 cannot vest such power in the Board. In this vic.,·. r. 70 is ultra vires the rule-maki.ng power of the State under sub.sec. (1) of sc. DO read with Sec. 115 of the A:t. [447E-F; 448B-D]

CIVIL APPELLATE JURISDICTION : Civil Appeals No. 2229-2231 of 1972.

.....

Appeals hy special leave from the Judgment and ordl'!r datd the E 24th March, 1972 of the Andhra Pradesh High Court at Hyderabad in Wtit Petitions Nos. 6005 of 1970, 1547 of 1971 and 5784 of 1970.

M. Krishna Rao. B. Balamulwnda Reddy anll B. Partha:; aralhi, for the appe11ant (in all the appeals).

M. K. Ramanwrthy a11d J. Ranwmurthi, for n; spondcnt no. 1 (:;1 C. A. No. 2230).

S. Dasaratharama Reddy and T.A. Ramc!tamlran, for respondent No.1 (in C.A. 2231).

The Judgment of the Court was delivered by

JAGANMOHAN REDDY, J.

In the three writ petitions filed by the G respective respondents challenging the vires of r. 70 of the Andhra Pradesh Co-operative Societies Act. 1964-hereinafter called 'the Act'-the Andhra Pradesh High Court held that rule to be 1tltra vires the Board of Directors of the Andhra Pradesh Co-operative Central Land Mortgage Bank Ltd.,-hereinafter referred to as 'the Central Land Mortgage Bank.

These appeals arc by special leave against that judgment.

The respondent in Civil Appeal No. 2229/72 is an Assistant Accountant in the Chittor Primary Co-operative Land Mortgage Bank

A.P. COOP. MORTGAGE BANK 'v. CHITTOR BANK (Jaganmohan Reddy, ].).

Ltd. In Civil Appeal No. 2230/72 the respondents are employees of the different Co-operative Land Mortgage Banks. The respondent in Civil Appeal No. 2231/72 is the Nellore Co-operative Land Mortgage Bank Ltd.

In the first of the appeals the petitioner/respondent complained that when he was due for promotion for the post of an Accountant, under r. 70 his right to promotion based on seniority had been taken away.

According to him, but for r. 70, he would have had a right to promotion under Bye-law 10 on the basis of his seniority among the Assistant Accountants of that Bank.

The petitioners/respondents in the second of the appeals had urged that a co-operative society was a body corporate and the ultimate authority over that Society was vested in its general body oodcr s. 30 of the Act, and the Managing Committee thereof had the right to manage all its affairs including the power to appoint, transfer and dismiss its employees.

That power of the Society is sought to be interfered with not only by vesting the Board with power r." w-.~··>·•c>., de'lce under s. 115 of the Act -out also by r .. 70 made pursuant to that section. Not only s. 115 and r. 70 but also 's. 116A of the Act according to them, were wholly

ultra vires the State Legislature. The respondent in the third of the appeals apprehends that r. 70 takes away its right of appointment, dismissal and control over certain of its employees which render them liable to be transferred by the Central Land Mortgage Bank to other ; nortgage banks elsewhere in the State which is an interference with the right of management of the Primary Land Mortgage Banks. The High Court, while negativing the contention that ss. 115 and 116A of the Act were u.'tra 1ires the State Legislatur~, has, however, held, as already adverted to, that r. 70 was ultra vires of s. 130(1) read with s. 115 of the Act.

Before us, the arguments were confined to the question whether 1he High Court was right in declaring r. 70 of the Rules to be ultra l'ires of s. 115 of the Act.

The impugr:ed r. 70 'is purported to be made under sub-s. (1) of s. 130 rca <I w1th s. 115 of the Act.

These two sections and the impugned rule arc as follows :

s. 115-"Subjcct to the provisions of this Act, the Doard shc.ll hve sch power of :; uprvision over the mortgage banks mlud!ng power of appomtment, transfer and disciplinary actton m rcpcct of the employees of mortgage banks as may be yrescnbed, and may, wih the previous approval of the R?gtstrar, make such regulatiOn as may be necessary for carrymg O\lt all or any of the purposes of this Chapter.''

s,. 130-:-"0) The Government may, by notification pubh?hed m the Andhra Pradesh Gazette, make rules for carrymg out all or any of the purposes of this Act, for the whole or any part of the State and for any class .of societies."

r. 70-(1) The Board of Directors of Central Land Mortgage Bank hereinafter referred to as 'Board' shall constitute a .centralised service for the mortgage banks in the State and Wtth effect from such constitution the Board shall have power to make appointments to the posts brought unde.r

.... i

- i··

SUPREME COURT- REPORTS [1974]3 s.c.a,

centralised service and the mortgage banks shall have no .. power to make appointments to such posts.

X X X X

 (13) The Board shall have power to call upon the mortgage banks to contribute to the cos~ <;>f service rendered . by the Central Mortgage Bank by provtdmg the services of members of the centralised service to work in the mortgage banks and the mortagage banks shall pay the cost at th.e rates prescribed from time to time b~ th_e Boad.. If any. mortgage Bank fails to pay such contnutu; m w1thm the ttme fixed, the Registrar may, on the apphcat10n of Central Mortgage Bank and after such enquiry as he may consider necessary make an order requiring the mortgage bank to pay the amount and every such order shall be enforceable againstt~

mortgage bank under section o3 (2) of the Act as if it was an award. ( 14) On constitution of centralised service all rights and privilcg.::s acrued n_nd li<!biliies incurred by the employees in relatiOn to h1s servtce 111 the mortgage bank shall stand vested with the Board.

X X X X

It may be mentioned that s. 115 of the Act is in Ch. XIU dealing with Land Mortgage Banks. Clauses (a), (b) and (c) of s. 84 in Ch. Xlll define ~'lloard''. "Central Mortgage Bank" and "Mortgage Bank" rcspctivcly.

According to these Jcfmitions the "Board" me:ms the Board of Directors of Central Mortgage Bank; "Central .Mortga:g~ E Bank" means the Andhra Pradesh Co-operative Central Land Mort gage Bank; and "Mortgage Bank" means a co-operative land mortagc bank registered or deemed to be registered under the Act and adm1tted as a member of the Central Mortgage Bank. That section also ddins

"trus~~" but it is not necessary for our purposes to rcf.:r to tlus dcfimuon. It may also be mentioned that the ruks under s. 2(!) of the Act mean the rules made under the Act. f

Under s. 85 of the Act tht; provisions of Ch. Xlll apply to the mortgage banks ad\:ancing loans for the purposes thcrei!l enumerat:u

artl under s. 97 subJect to the provisions of the Act and tn accordan': W1Lh the rules. made thereunder, it shall be comp::tcnt for a mortgl~ bank to advance loans for the purposes referred to in s. 85 and t~ ol . lands, the possession of which is transferred to it under the proVJStons G of Ch. XIII. The mode of n:covcry of the amounts advanced by~.:

mortgage banks i.o; set out in ss. 100 to 109 of the Act, und.:r ''h11:t any loan granted by a mortgage bank including any interest chargcab thereon and cots, if any, incurred in' connection therewith, shall whcll !hey become due, be rccoverablt: by the mortgage bank, All powe~ In respect of the recovery of loans arc conferred on the mortga~ banks, sch as. on an application muue by any of r11e mortgage .. tJans II the RegJ!; tr~ Js empowered to grant a certificate for recoverY of a loan due to ll. The other provisions confer power on the Collector t~ make recoveries during a certain pc_riod; and a power of distraint an<

A.P. co-oP. MQllTGAGE BANK V. CHlTTOR. BANK us (JQ[ftlnmt>han Reddy, J.) sale. When power of sale is to be exercised; powers of the mortgage bank where mortgaged property is destroyed or security becomes insufficient; power of Board or Trust~ to distrain and _sell all prope.rty are also provided for.

These provistons further prlde tha~ the tttle of purchaser is not to be questioned on ground or megulanty; mortgage is not to be q, uestioned on insolvency of mortgagor. They also deal with the appomtment of a receiver and his powers etc.

Apart from these sections, it may be noticed that ss. 93 and 94 empower, notwithstanding anything contained in any law for the time being in force, a mortgage bank or the Central Mortgage Bank t!} purchase any mortgaged property sold ulJ,.der Ch. XIII of the Act and the property _so purchased shall be disposed of by such bank by sale wiU!in such

period as may be fixed by the Trustee. By sub-s. (2) of s. 93 this power wa'l to override the maximum limit of agricultural holding fixed \tndv C the Andhra Pradesh Ceiling on Agricultural Holdings Act, 1961.

Section 94 provides that the mortgages executed in favour of, and all other assets transferred to, a mortgage bank by the members thereof shall, with effect from the date of such execution or transfer, be deemed to have been transferred by such mortgage bank to the Central Mort gage "Bank and shall vest in the Trustee. Section 95 provides t11l.\

payments of all moneys due to the mortgage bank are payable tO:: ~\ ·:~. :.· and such payments shall be valid as if the mortgage had not been, !tQ _ transferred. It is also provided that the mortgage bank shall, it! t:l\e absence of any specific direction to the contrary issued by the Boiid

or Trust'!e and communicated to the mortgage bank, be entitled tb rue on the mortgage or take any other proceeding for the recovery of the moneys due under the mortgage.

We have set out some of the relevant provisions to show that there is npthing in 'the .1\.ct which . empowers the Central Mortgage Bank, 119twithstanding the fact it provides funds to the mortgage b$nks, to make collection of the loans advanced by the mortgage banks: The ruJe..making power conferred on the Government for carrying out aU or any of the purposes of the Act 'must be confined to such' of the purposes as are enumerated or indicattd in the preamble or in any of the provisions of the Act. The oaly provision to which a refei:ce has been ronde specifically as empowering the Board of Directors of the Central Mortgage Bank tQ constitute a centralised service for the

mortgage banks is s. 115 of the Act. A , careful reading of s. ll~. however, does not justify the contention that the Central Mortga.a~ Bank either bas the power directly to collect the loans and ady~ given by the member banks, namely, tbe mortgage banks, or to crea.t.= a centralised re of service from among the employees of the mortgage banks which are members of the Central Mortgage Bank. Tbat section merely confers power of supervision on the Board of the: Central Mortgage Bank over the mortgage b.nks which power includes

th~ power of appointment, transfer and disciplinary action in res~ of the employees of the 11Wtaage be, nks. It may be that some questiOns may be J'l.ised in respect of the actic)Qs of the mohgage banks in the

mater appointment, ~"and ip\itw'y 3Ctions of its em~.

Whenevcsr such quettions are ~~d, the Board of Directot's of 'the Central, tdortgage Bank iJl exercbe of its power of supervision can go

16-L954 S.'PCf/14

SUPREME COUR1' REP<*TS [ 1974] 3 s.C, R,

into. the question of such appointments, transfrs and disciplinary acqos made or taken by the mortgage bv, nks, 'J'!U5 power, therefore,. can m no circumstances be construed as empowenng the Board of Dll'eCtors

of the Central Mortgage Bank to recruit employees for the mortgage banks or to make appotments to a common cadre created by it from out of the employees of the member mortgage banks. If the employees aie.appointed by the Central Mortgage Bank, their salaries and orher

emolutnents should be paid by it. But evidently this is not so, as subrr. (13) & (14) of r. 70 authorise the Central Mortgage Bank to call for contribution for the cost of the serviCe rendered by the Central Mortgage Bank to be b"; rne by the mortgage banks and provides that once a centralised cadre is constituted aU rights and privileges accrued and liablities incurred by the employee in relation to his service in the

mortgage bank shall stand vested with the Board. It is this power that the appellants are seeking to draw from s. 115, because only it . such a power can be found in that provision, or in any other provision

the Act, l!an be impugned r. 70 be made under sub-s. (1) of s. 130 :Of the Act. In this connection it should be observed that the key words ins. 115 .are 'employees of the mortgage banks'. The power Q( survision including the power: of appointment, transfer and punitive action may be taken by the Central Mortgage Bank against _ persons who are. the employees of the mortgage banks. But r. 70 seeks

- to bring into being a centralised service, tbe employees whereof shaH be the employees of the Central Mortgage Bank and not of the mortgage vtmks.

Such a centralised service js not contemplated by s.l15.

1t is contended by the learned Advocate for the appellants that the word 'transfer' in section 115 would indicate that -it can only be in pe(:t . .Of ·:the transfer of employees from one mortgage bank to anothet.: We canrtot read this power in the manner suggested, and if so this would authoriSe the constitution of a centralised cadre. As we

mive explained afrea:dy the power of the Central Mortgage Bank: is

ooly of. suion -, h power tosupervise is to include the powet Of ·~point'lne~_t, transfer aild disciplinary action. lt is only where what Is not inclutJed in particular term as generally understood or whert tra i~ some doubt in respect Of any particuJar matter being included,

thi~ the Legislature specifies it. by including that .matter.

The super vy power in res~ of he employees M the mortgage banks does

nut include the p()wer to .transfer an employ~ fr9m one mortgage bank to. anotHer -creating--thereby a cORtract of serviCe with a . different

empoyer. . _The wo.::cJ 'transfer', therefore, must be read as. a transfer from one branch of. the same mortga, e bank to -aQother of 1ts branch.

The learned. Advocate for the appellants stated thai the mortgage banb baw. no anches. w, e wold DOt,· however; :venture. to say so. As

ted out bythe learned.· Advocate. fdi the first respondent in Civil Appe<!l No. 2231 df 1972 -'that Bye.Law 20 of the Model"ByeLaws of

Co.<lpetative Land Mortgage Bank _Ltd. provides fonnaintaiiiing a reeuro of ser-vice -by the Bank in respeet d each emp1oyee lit whleh aU

Changes affecting ra:nk, emoluments, trusfen other aUied atters sbl]l be not~ in the fe!istet under tlte attestation of . tile Secretary.

This provision shows .that the Bye-Laws envisage a transfer of an

.·.:

' .

,..

. A.P. CD-OP. MORTGAGE BANK V."CHlTTOR BANK . 447. (/,?ganmohan Reddy, 1.) A <!mployee from one ~;.:ancil o another of a mortgage bank. This bye- Jaw is consistent with s. 115 of the Act which confers a supervisory power in respect -of transfer of an employee from one branch to another of the mongage bank and-not from one mortgage bank to another.

The learned Advocate for the appellants contends that it is the Central Mortgage Bank which advances the funds to its members,..; namely, ' the mortgage banks and the responsibility is on the Central Mortgage Bank to see that the amounts advanced by the member banks are collected and the loans advanced by it are properly secured.

While no doubt the Central Mortgage Bank may be concerned with securing its loans to the mortgage banks, the provisions of the Act do not coroier upon the Central Mortgage Bank the power to collect any Ioaris advanced by the member banks i.e. the mortgage banks. The security given to the mortgage banks in respect of tbe loans advanced by them no doubt is deemed to have been transferred to tlw Central Mortgage Bank, but that is only by way of securing the monies advanced by the Central Mortgage Bank to the mortgage banks. Nonetheless, as we have seen earlier, the duty to collect the loans is upon the mortgage banks and notwithstanding the deemed transfer to the Central Mortgage Bank of any property mortgaged to the mortgage banks, the D .amount due to the mortgage banks is payable to the mortgage banks only and not to the Central Mortgage Bank. Unless there is any specific provision in the Act which directly creates a contractual liability between the Central Mortgage Bank and the borrowers from the mortgage banks, the liability or the borrowers for payment of loans advimccd to them is only to the mortgage banks which actually advanced the

loans to them. The borrowers have no liability to the Central Mortgage Bank. ·

The l£:gisiature apparently realised the absence of any power in the Act, and therefore provided for creation of a common cadre of employees when it enacted s. 116A empowering the Registrar to create a common cadre of employees for any class of society, if he considers it necessary in the interest of the co-operative movement to. do so.

This section reads as under :

s. 116A-"(1) Notwithstanding anything in this Act where the Registrar, in the interest of the co-operative move- ··· .-: ment; considers that the creation of a common cadre of em- . ployees for any class of societies is necessary, he may, constitute an appointment committee or authorise one or more federal societies to which such class of societis is affiliated, to exercise the power of appointment, transfer and disciplinary action in respect of such categories of employees of that class of societies as may be specified by him and. make ·. such regulations as may be necessary for carrying out the said purpose. wpere such appointment committee is constituted or federal society is authorisd by the Registrar, the affiliated societies shall not have powers to deal with . such categories of employees except to theextent the regulation may permit. ·


[ 1974] 3 S.C.R.

(2) The Registrar shall have power to require the affiliated societies to make contribution o~ suoh sum every year towards expenditure, as the appoi'ntment committee or federal society is likely to incur or has incurred for the purpose. If any society fails to pay the said ~\lm tQ such authority as may be specified by tbe Registrar and within the time fixed by him, the Registrar may on. the application of the authority, and after such enquiry as he may , consider necessary, make an order requiring the society 'io pay the amount, and every such order shall be enforceable against the society as if it were a decision under section 62."

The power of the Registrar, it will be noticed is, to create a common cadre of employees for any class of societies.

The power, thercfo.rc, is of a general nature and is applicable to the mortgage banks as well as to the other societies registered as societies under the Act.

Sect-ion 116A also empowers the Registrar to require the affiliated societies to make contribution of such sum every year towards expenditure as may be incurred for the purposes of creation of any COIDII10ll cadre and make .such payment enforceable. In our view the High Clmrt is right in holding that when a centralised service or any cadre of employees of the mortgage banks cannot be created by the Board in exercise of its power under s. 115 of the Act, r. 70 cannot vest such power in the Board.

In this view, r. 70 is ultra vires the rule-making power of the State under sub-s. (1) of s. 130 read with s. 115 of the Act.

The appeals arc accordingly dismissed with costs. One set.

s.~.w.

Appeal dismissed