Karnataka State Co-operative Agricultural and Rural Development Bank Ltd. vs Workmen of PLDB Common Cadre Authority

Rama Jois, J.—Writ Appeal No. 2825 of 1986 is presented by the Karnataka State Co-operative Agricultural and Rural Development Bank Limited aggrieved by the Judgment of the learned Judge allowing the Writ Petition and setting aside the award of the Industrial Tribunal, Bangalore, holding that there was no relationship of employer and employee between the workmen of the Primary Land Development Banks and the Common Cadre Authority and the appellant-Bank and remanding the matter for disposal of the Reference, in accordance with law. Writ Appeal No. 2995 of 1986 is presented by the Common Cadre Authority against the same Judgment.

Learned Counsel for the appellants submitted that during the pendency of these Writ Appeals, in a reference made to the Full Bench u/s 7 of the Karnataka High Court Act, 1961, the Full Bench has held that after substitution of new Section 128A of the Act in place of old Section 128A, the Common Cadre Authority ceased to exist. Learned Counsel for the workmen does not dispute that in view of the Judgment of the Full Bench, the Common Cadre Authority itself did not exist on and after the substitution of old Section 128A by new Section 128A of the Act and therefore there is no question of relationship of master and servant between the workmen of the Primary Land Development Banks and the Common Cadre Authority,

As far as the Karnataka State Co-operative Agricultural & Rural Development Bank Ltd., is concerned, the stand of the Bank is that the workmen of the Primary Land Development Banks (re-designated as Agricultural & Rural Development Bank by Amending Act 5 of 1984 and referred as "Rural Development Bank" for short hereinafter in this Order), are not their employees but they were the employees of the respective Primary Land Development Banks. The factual position is that the workmen concerned in the reference are all employees of the Rural Development Banks concerned, is also not in dispute. Therefore, we are of the view that no useful purpose will be served by remitting the matter to the Tribunal for disposing of the reference.

Realising the above insurmountable hurdle, namely, absence of employer-employee relationship between the respondent and the appellant, who are the first and second party in the Reference, the workmen have filed an application in which they have sought for amendment of the Writ Petition by way of adding an additional prayer seeking a direction to the State Government to fix the conditions of service of the employees of the Rural Development Banks. In support of the application, it is stated that the Rural Development Banks have been established under Chapter X of the Karnataka Co-operative Societies Act, in that Chapter, the appellant-Bank has got the statutory power and duty to fix the conditions of service of the employees of Rural Development Bank. Relevant part of Section 98(f) reads:-

"98. POWER TO COMMITTEE OF STATE AGRICULTURE AND RURAL DEVELOPMENT BANK TO SUPERVISE AGRICULTURE AND RURAL DEVELOPMENT BANKS AND MAKE REGULATIONS: The Committee of the State Agriculture and Rural Development Bank shall have a general power of supervision over Agriculture and Rural Development Banks and may, with the previous sanction of the State Government, by notification in the Official Gazette, make regulations, not inconsistent with this Act or the Rules made thereunder, for all or any of the following matters, namely:-

xxx xxx xxx (f) the conditions of service of employees of such banks."

Sri M.C. Narasimhan, learned Counsel for the workmen submitted that the conditions of service, in particular the salary and allowances of the employees had been fixed some time in 1978 and that more than 12 years have elapsed and there has been no revision of any scales. The learned Counsel submitted that having regard to the fact that during the last 12 years there has been steep escalation in the cost of living index and there has been revision of pay scales in various other sectors including the Government, it is the duty of the appellant-Bank to fix the salary and allowances of the employees of the Rural Development Banks on a rational basis in exercise of its power u/s 98(f) of the Act on a rational basis.

The learned Counsel for the appellant, however, relied on Section 128A(1) of the Act, which reads:-

"128A. CONSTITUTION OF A COMMON CADRE:- (1) Notwithstanding anything contained in this Act, the Rules or the Bye-laws, where the Registrar, in the interest of the co-operative movement, considers that the creation of a common cadre of employees for any class of co-operative societies is necessary, he shall authorise one or more federal societies to which such class of co-operative societies is affiliated to exercise the power of appointment, transfer and disciplinary action in respect of such categories of employees of that class of co-operative societies as may be specified by him and make such regulations as may be necessary for carrying out the said purpose. Where such federal society is so authorised by the Registrar, the affiliated co-operative societies shall not have powers to deal with such categories of employees except to the extent the regulations may permit."

He submitted that though Common Cadre Authority ceased to exist, in view of substitution of old Section 128A(1) of the Act, the conditions of service of the employees of the Rural Development Banks has to be fixed by the Common Authority designated under the Section. He submitted that steps have been taken by the Registrar to designate the appellant-Bank itself as the Federal Society for purpose of Section 128A of the Rural Development Banks and therefore it would have the power to regulate conditions of service u/s 128A of the Act.

Learned Counsel for the workmen submitted that as can be seen from Section 128A of the Act, the power conferred on a Federal Society, designated by the Registrar u/s 128A of the Act in respect of such of the Rural Development Banks coming within its jurisdiction was, the power to make appointments, transfer and to exercise disciplinary control and not the power to regulate the conditions of service of the employees of the Co-operative Societies brought under its control.

Even assuming that the learned Counsel for the Bank is correct in saying that u/s 128A of the Act, the appellant-Bank which is the designated Federal Society itself can fix the conditions of services of respondent-workmen, we are unable to agree that the power of the Bank u/s 98(f) of the Act is taken away. In our opinion, therefore, u/s 98 the appellant-Bank has not only the power but is under a duty to fix salary and allowances of the employees of the Rural Development Banks on a rational basis and if it is so fixed by the appellant-Bank u/s 98 of the Act, it would be binding on all the Rural Development Banks. Alternatively, even if the position is as contended for the appellant-Bank, in our opinion, it makes no difference to the relief sought for by the workmen, for, whether pay scales are revised u/s 98(f) of the Act or u/s 128A of the Act, it is immaterial. But the pay scale has to be revised, as it is stagnating for over 12 years, and therefore the pay scales fixed 12 years before, on a rational basis, ceased to have a rational basis after long lapse of time during which there has been steep rise in the cost of living index and lowering of the purchasing power of a Rupee. (See: the Ratio of the Decision of the Supreme Court in RATTAN ARYA v. STATE OF TAMIL NADU ILR 1986 Kant 2069 and of this Court in H. Padmanabha Rao Vs. State of Karnataka, Therefore, continuing the Old pay scale even after long lapse of time is violation of Article 14 of the Constitution. Whether the power to revise the conditions of service is vested in the appellant-Bank either u/s 98(f) or u/s 128A of the Act, it is bound to revise the pay scales of the respondent-workmen.

For the reasons aforesaid, we allow the application for amending the petition by adding the additional prayer and make the following order:

(i) The Writ Appeals are allowed.

(ii) The Order made by the learned Judge in Writ Petition No. 6107 of 1986 is set aside.

(iii) In substitution of the order made by the learned Judge in the Writ Petition, the appellant-Bank is directed to fix the revised pay scales of the respondent-workmen, namely the employees of the Agricultural and Rural Land Development Banks, as also other conditions of service on a rational basis within a reasonable time, either in exercise of its power u/s 98(f) of the Act or u/s 128A of the Act or any other power enabling the Bank in this behalf.