HC rules J&K State Cooperative Bank as autonomous body
• Immune to writ jurisdiction in private law disputes
• Govt has no pervasive control with regard to running of its affairs
Post by Syed Rukaya on Tuesday, April 18, 2023
Srinagar, Apr 17: The High Court of Jammu & Kashmir and Ladakh ruled that J&K State Cooperative Bank Ltd is an autonomous body upon which the government has no pervasive or deep control, with regard to the running of its affairs.
A bench of Justice Sanjay Dhar held that actions of the Bank which fall within the sphere of private law, which includes a service dispute between the Bank and its employees, are not amenable to the writ jurisdiction of the Court.
The court passed the observations in a service petition filed by Deputy General Manager, Ghulam Rasool Dar challenging an order passed by the Bank, registered under the J&K Cooperative Societies Act (CSA), whereby his suspension period has been treated as on leave of whatever kind due to him.
Justice Dhar while holding the plea "not maintainable" held that the Bank is neither a creature of the Statute nor is it having any statutory power so as to qualify as “State”.
"The respondent Bank does not have the brooding presence of the government from which it can be inferred that the government has pervasive control over it," the court said
The bench underscored that the Bank has an independent existence flowing from its status as a registered Society under the CSA.
"Thus, it cannot be termed as ‘State or an instrumentality of the State’ within the meaning of Article 12 of the Constitution," the court held.
Analyzing law on the subject, the court underscored that in certain situations, the government can lay down qualifications and disqualifications of the members of the Cooperative Society and it can contribute towards the share capital of the Cooperative Society.
It also noted that the government or the Registrar has power to remove the elected Board and to nominate a Transitory Board in its place.
"The provisions of the Act (CSA) also provide for nomination of a government member in the Board of Directors of the respondent Bank and it is also provided that the government can advance loans, grants and guarantee the repayment of loans etc. in respect of a Cooperative Society but then these circumstances do not afford an indication that the government enjoys a deep and pervasive control over the affairs of the respondent Bank," the court pointed out.
However, the court made it clear that the government cannot contribute more than 25% in the share capital of the Bank.
In fact, the court said, the government or the Society has the power to reduce the government subscription even below 25%.
Thus, the government can never be a majority shareholder of a Cooperative Society in terms of the provisions of the Act, the bench noted.
"Only one government nominee, out of 13 members, is on the Board of Directors of the respondent Bank. Therefore, the government does not have any overwhelming control over the functioning of the Board of Directors of the respondent Bank," the court said.
Regarding the service conditions of the petitioner, who happened to be an employee of the Bank, Justice Dhar noted that the same are governed by the J&K State Cooperative Bank Employees Service Rules, 2012, which have been adopted by the Bank in terms of Byelaw 35.
The court held that the Byelaws made by a Cooperative Society (Bank) registered under the CSA do not have force of law.
"These are in the nature of a contract between the Society and its members. Therefore, service conditions of the employees of a Society governed by the Byelaws cannot be enforced through a writ petition," Justice Dhar held.
"...it is clear that even though a writ petition may be maintainable against the respondent Bank in respect of the matters that fall within the ambit of public law acts, yet those actions of the respondent Bank which fall within the sphere of private law, which includes a service dispute between the Bank and its employees, are not amenable to the writ jurisdiction of this Court," the court said while dismissing the plea.