Subhas Majhi vs State Of West Bengal & Ors.

The writ petitioner has retired from service of West Bengal State Co-operative Agricultural and Rural Development Bank Act. In terms of the

bipartite agreement of the Management and employees of the Bank, he was entitled to 240 days of leave salary upon superannuation. However, by an

amendment to the West Bengal Co-operative Societies Rules in the year 2011, particularly, Rule 106 (19)(3), 300 days of earned leave have been

allowed to such employees upon reaching the age of superannuation.

The Board of the Bank has stopped functioning by expiry of term. The affairs of the society are being managed by the highest designated employee,

in terms of Section 29 (8) of the West Bengal Co-operative Societies Act, 2006 (the said Act) . The said Manager has allowed 300 days of leave to

the writ petitioner applying the 2011 amendment to the Rules. The manager’s action has been stayed by the Registrar of Co-operative Societies.

The learned counsel appearing for the Registrar submits that in terms of Section 36(4)(b) of the said Act only a Registrar can pass such order. He

also relied upon Section 35(2)(b) of the said Act to buttress his argument that it is only the Registrar who can function or take a decision of the nature

that the Manager has taken when the Board is not functioning. To consider the objections of the Registrar, it is necessary to set out Section 35,

35(1A) and 35(2)(b), of the said Act :-

Section 35: “Notwithstanding anything contained in this Act or in any other law for the time being in force, no board shall be superseded or kept

under suspension for a period of exceeding six months; Provided that in case of a Co-operative Society carrying on the business of banking, the

provisions of this section shall have the effect as if for the words “six monthsâ€, the words “one year†had been substituted. Section 35(1A):

[If the State Government is of the opinion that ---

(a) any board---

(i) has made persistent default; or

(ii) is negligent in the performance of its duties; or

(iii) has committed any act prejudicial to the interests of the Cooperative Society or its members; or

(b) the constitution or function of any Co-operative Society has come to a statement, or

(c) the Co-operative Election Commission has failed to conduct election in accordance with the provisions of this Act, the State Government may, by

notification stating reasons therefor, supersede the board and the directors of such board shall forthwith vacate their offices and by the said

notification the State Government shall appoint one of its officers to manage the affairs of the Co-operative Society who shall be called the

administrator, for the period specified in sub-section (1):

Provided that the board of any such Co-operative Society shall not be superseded or kept under suspension where there is no Government

shareholding or loan or financial assistance or any guarantee by the Government:

Provided further that in case of Co-operative Society carrying on the business of banking, the provisions of the Banking Regulation Act, 1949 (10 of

1949) shall apply:

Provided also that the administrator appointed to manage the affairs of such Co-operative Society shall arrange for conduct of election in a general

meeting to be convened for the purpose in accordance with the Act, rules and by-lays within the period specified in sub-section (1) and handover the

management to the newly elected board:

Provided also that if an elected board cannot be reconstituted within the prriod specified in sub-section (1), the administrator shall be removed from his

office by the State Government and thereupon the provision contained in sub-section (7) of section 29, shall be followed] Section 35(2)(b): subject to

the control of the Registrar and notwithstanding the preferring of any appeal under section 147, the administrator shall exercise all the powers and

perform all the duties which may be exercised or performed by the board or any officer of the co-operative society under this Act or the rules or the

bylays. Section 36(1) and Section 36(4)(b) of the said Act are also set out hereunder;

Section 36(1): Notwithstanding anything contained elsewhere in this Act or in any other law for the time being in force, where election of the board of

directors of any Co-operative Society has not been held within a period of thirty-six months from the date of their election where such election was

held before the date of commencement of this Act or within a period of sixty months from the date of their election under sub-section (1) of section 29

of this Act, the directors of the board of such Co-operative Society shall be deemed to have vacated their offices immediately on expiry of the period

of thirty-six months from the date of their election where such election was held before the date of commencement of this Act or sixty months from

the date of their election under sub-section (1) of section 29 of this Act, as the case may be, and the State Government shall, thereupon by notification,

appoint special officer from amongst its officers for managing the affairs of the Co-operative Society for a period not exceeding six months from the

date of such expiry of the period.

Provided that in case of a Co-operative Society carrying on the business of banking, the provisions of this clause shall have the effect as if for the

words “six monthsâ€, the words “one year†had been substituted. Section 36(4)(b): subject to the control and direction of the Registrar and

notwithstanding the preferring of an appeal under section 147, the special officer shall exercise all the powers and perform all the duties which may,

under this Act or the rules or the by-laws, be exercised or performed by the board or any officer of the Co-operative Society.

A plain reading of Section 35 would indicate that the same comes into play when the Board is superseded or suspended by the State Government, on

the occurrence of the events specified in Sub-Section (1)(a). In the instant case, there is no such supersession or suspension. The Registrar, therefore,

cannot claim exclusive power to take a decision of the nature that has been taken by the Manager in the instant case. Let us now consider the scope

of Section 36. The first part of Section 36 deals with expiry of term of Board as in the instant case. The second is the relevant part, i.e., where a

Special Officer has been appointed by the State Government. It is only upon a Special Officer being appointed after expiry of the term of the Board

that would confer exclusive powers on the Registrar as indicated in Sub-Section (4)(b) of Section 36. The contentions of the Registrar, in the instant

case, therefore, do not hold water.

However, having due regard to the true scope and purport of Section 29(8), the Registrar may have been partially correct in his contention that no

major decision concerning management of the Bank can be taken by a person in charge and officiating in place of a regular Board. The contention of

the Registrar may, therefore, otherwise have force. However, the action of the Manager in releasing 300 days of earned leave in terms of the

amendment to the 2011 Rules, is not disturbed and the order of the Registrar interfering with the same is hereby set aside. The reason, therefor, is that

a statutory rule cannot under any circumstance be deviated from even by a regular Board of Directors or by the Registrar himself. The Manager has

only complied with and applied the amended rules to determine 300 days or earned leave to the writ petitioner. The writ petitioner, a retiree also has a

legitimate expectation to receive his terminal dues as soon as possible. The re-constitution of the Board may take time.

For the reasons above, the order passed by the Manager allowing 300 days of earned leave to the writ petitioner is hereby sustained and the order of

the Registrar restraining the same is hereby set aside. The Manager and the personal department of the Bank are, however, directed to calculate the

actual days of entitlement subject to the writ petitioner having availed the same by reference to his service records with the Bank. With the above

directions, WP No. 17641 (W) of 2017 is thereby disposed of. There will be no order as to costs. Encashment of earned leave to the writ

petitioner’s credit should be disbursed as soon as possible and allowed not later than 45 days from the date of communication of this order.`