J&K State Cooperative Bank Independent From Govt Control, Service Disputes Outside Court's Writ Jurisdiction: Jammu & Kashmir High Court

The Jammu and Kashmir and Ladakh High Court has recently ruled that the J&K State Cooperative Bank Ltd is an autonomous body with no pervasive or deep control by the government and hence the bank's actions falling within the sphere of private law, including service disputes with its employees, are not amenable to the writ jurisdiction of the court.

The ruling was made while hearing a service petition filed by Deputy General Manager Ghulam Rasool Dar, who challenged an order passed by the bank, registered under the J&K Cooperative Societies Act (CSA), which treated his suspension period as leave.

The petitioner was appointed as a Clerk in a bank in 1986 and was later promoted to the position of Assistant Accountant in 1993. In 2016, he was suspended and charge-sheeted by the respondent. The petitioner challenged this action through a writ petition. He responded to the charge sheet and was reinstated, but the enquiry's fate was not communicated to him. The petitioner retired in 2018 and was retrospectively promoted to the post of Deputy General Manager with effect from 2017. However, his retiral benefits were not released due to the pendency of the writ petition.

Subsequently the respondents released his leave salary and gratuity, but did not review the decision to treat his suspension period as on leave, which has prompted him to file the present writ petition.

Raising a preliminary objection to the plea the respondents submitted the respondent Bank, being a Cooperative Society, is an autonomous institution, whose affairs are controlled by an elected Board of Directors, without any control from the Government. The conditions of service of the employees of the Bank are governed by the rules approved by the Board of Directors of the Bank in accordance with the byelaws and, as such, the dispute between the petitioner and the respondent Bank is not amenable to the writ jurisdiction of this Court, respondents argued.

Per contra, Sr Adv Jahangir Iqbal Ganai contended that the respondent Bank, even though registered as a Cooperative Society, is, in effect, controlled by the Government, as the Government has the power to supersede the elected Board of the Bank in terms of the provisions contained in the J&K Cooperative Societies Act. He further contended that the Government has pervasive control over the affairs of the Bank and it owns a certain percentage of share capital of the Bank and, as such, it cannot be stated that the Government does not have any control over the affairs of the Bank

Justice Sanjay Dhar, who presided over the bench, held that the bank is not a creature of statute, nor does it have statutory power that would qualify it as "State." The bank has an independent existence as a registered society under the CSA and, as such, cannot be termed "State or an instrumentality of the State" within the meaning of Article 12 of the Constitution, it said.

"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 bench observed.

The court noted that in certain situations, the government can lay down qualifications and disqualifications for members of a cooperative society and contribute towards its share capital. The government or the Registrar also has the power to remove the elected Board and nominate a Transitory Board in its place. However, the court made it clear that the government cannot contribute more than 25% of the share capital of the bank, and the government or the society has the power to reduce the government subscription even below 25%.

The court emphasized that the government does not have overwhelming control over the functioning of the bank's Board of Directors. Only one government nominee, out of 13 members, is on the board, meaning that the government does not have any deep and pervasive control over the affairs of the bank, the court added.

"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 bench pointed.

Regarding the service conditions of the petitioner, Justice Dhar noted that they are governed by the J&K State Cooperative Bank Employees Service Rules, 2012, adopted by the bank in terms of Byelaw 35. However, the court held that the byelaws made by a cooperative society registered under the CSA do not have the force of law and are in the nature of a contract between the society and its members, the bench clarified.

"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.

Observing that a writ petition may be maintainable against the bank in respect of matters falling within the ambit of public law the court however clarified that the actions falling within the sphere of private law, including service disputes between the bank and its employees, are not amenable to the writ jurisdiction of the court.

In view of the said legal position the bench dismissed the petition as not maintainable.

Case Title: Ghulam Rasool Dar Vs J&K State Cooperative Bank

Citation: 2023 LiveLaw (JKL) 95

Counsel For Petitioner: Mr. Jahangir Iqbal Ganai, Sr. Advocate,with Mr. Junaid Bin Azad and Ms. Mehnaz Rather, Advocates

Counsel For Respondent: Ms. Mahira Bhat, Advocate.

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