Power To Fix Age Of Superannuation In Cooperative Credit Societies Is Discretion Of Board Of Management, Not Govt: Andhra Pradesh High Court

The Andhra Pradesh High Court, in a service matter of the employees from a branch of District Cooperative Central Bank Limited, held that cooperative credit societies have complete autonomy in fixing the age of superannuation.

The Division Bench of Chief Justice Dhiraj Singh Thakur and Justice R. Raghunandan Rao went on to note that increasing the age of superannuation from June 2017 was a policy decision well within the ambit of the Bank's management, as against Section 3(1) Andhra Pradesh Public Employment (Regulation of Age of Superannuation) (Amendment) Act, 2014 governing PSUs and Institutions listed in the IX and X Schedules of the Andhra Pradesh Reorganisation Act, 2014.

“The decision taken by the Government for those entities….would not bind the district cooperative central banks, which are cooperative credit societies, who are independently required to take a call considering various factors including their financial capacity for purposes of determining as to whether there should be an extension in the age of superannuation and if at all from which date…”, the division bench held.

The petitioner employees of Prakasham District Co-operative Bank had all retired at the age of 58 years by the year 2017. The current writ petition has been filed by them with the plea that they should have been made to retire only at the age of 60 years. They argued that the bank management restricting the application of its decision to increase the retirement age prospectively alone, i.e. from June 2017, was arbitrary.

In 2016, G.O.Ms.No.112 was issued by the Government stating that the amended Section 3(1) of the 2014 Act that enhanced the age of superannuation won't be applicable to PSUs and entities in IX and X Schedules of the Andhra Pradesh Reorganisation Act, 2014, until after the division of assets and liabilities between Andhra and Telangana.

Various challenges were made to the said G.O. issued by the government before the High Court and Supreme Court. In the meanwhile, the Government went on to issue G.O. No. 102, which finally enhanced the age of superannuation of employees in the aforementioned contentious category to 60 years. This was followed by another G.O. No. 138 in 2017, making the effect of enhancement of age of superannuation retrospective from 02.06.2014. The fresh G.O. meant that if employees in the said category of institutions were superannuated upon attaining the age of 58 years, then they should be reinstated and allowed to continue in service until the age of 60 years.

Arguments

Before the High Court, the employees of the Bank challenged the action of the management that permitted enhancement of the age of superannuation prospectively, and not retrospectively, citing financial constraints. The employees argued that the enhancement should have been made retrospective in its application w.e.f 02.06.2014, as was done in the instants of institutions falling in Schedules IX and X of the Reorganisation Act by virtue of G.O.Ms.No.138.

According to the counsel for the petitioners, the Andhra Pradesh Cooperative Societies Act, 1964 doesn't mention anything about determining the age of superannuation. S.115(D) of the Act doesn't empower the Board of Management to enhance the retirement age. Moreover, Rule 28(6) of Andhra Pradesh Cooperative Societies Rules, 1964 alone refers to the age of superannuation. Hence, the Public Employment Act of 2014 must be followed, the petitioners further submitted.

On the contrary, the counsel for the respondents argued that the petitioners were not government employees nor working in public enterprises. It was urged by the counsel that cooperative credit societies are autonomous in their functioning, including in the aspects of determining the age of superannuation.

Court's Observations

The court pointed out that the employees are not working in an institution coming under Schedules IX or X of the Reorganisation Act, 2014. Hence, the Supreme Court's clarification about the application of G.O. No. 138 does not have any effect on the status of the employees, the court clarified. It cannot be said that the employees of the cooperative credit society have been discriminated against by government employees, the court held.

“In the instant case, the petitioners can certainly be not called as Government employees, as they do not fall within the definition of „Government employees‟ as defined under the Act No.23 of 1984. If that be so, it is no longer res integra that employees of corporate bodies cannot demand as a matter of right to be treated similarly as employees of the State Government…”, the court observed by placing reliance on State of H.P. v. Rajesh Chander Sood, 2016 (10) SCC 77.

Section 115D of the APCS Act gives autonomy to cooperative credit societies on a wide range of matters. Rule 28(6) stipulates the general age of superannuation as 58 years. The newly inserted Rule 28(7) of APCS Rules states that cooperative credit societies mentioned in Section 115-D of the Act are exempted from Rule 28(6) and can frame special bye-laws of service regulations. Moreover, a paid servant can retire upon attaining an age that is not in excess of the subsisting rules governing the age of superannuation of Government employees, Rule 28(7) adds.

The autonomy of the Cooperative Credit Societies is subject to the guidelines of the Reserve Bank of India/National Bank for Agriculture and Rural Development (NABARD) as per Section 115-D, the court remarked. The 2009 HR Policy guidelines of NABARD also mention that retirement age, being an administrative matter, will be at the discretion of the Board of the respective banks.

“..if the NABARD as the regulatory authority, as also Section 115D of the APCS Act and Rule 28(7) of the APCS Rules envisages complete autonomy, among others, in the matters of internal administration, then the decision to increase the age of superannuation would perhaps not lie with the Government but independently with the Credit Cooperative Society of which the petitioners were employees”, the court further explained.

For the above reasons, the court agreed with the administrative decision taken by the bank's management to make the age of superannuation '60 years' w.e.f from June 2017 instead of an earlier date. The court concluded that this decision was taken by the board after giving due consideration to the overall financial impact. Hence, all the writ petitions filed by the employees were dismissed by the court.

Counsel for the Petitioners : Mr. P. Veera Reddy, Senior Counsel, a/w Mr. Syed Arif Basha

For Respondent Nos.1 & 2: Government Pleader for Agriculture & Cooperation

For Respondent Nos.3 & 4: Ms. K. N. Vijaya Lakshmi, Standing Counsel

Case Name: Puvvada Venkata Mohana Murali Krishna Murthy v. The State of Andhra Pradesh, Rep. by its Special Chief Secretary, Agriculture and Cooperation Department

Case No: W.P. No.4861 of 2018 & Connected Matters

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