The Supreme Court has held that the Registrar is empowered not only to frame service rules governing employees of cooperative societies but also to amend, vary or rescind those rules. Setting aside concurrent decisions of the Chhattisgarh High Court, the Court restored the promotion of a District Cooperative Central Bank employee to the post of Additional Manager and held that the amendment deleting the bar on promotions for technical employees was legally valid.
The bench of Justice Sanjay Karol and Justice Augustine George Masih clarified that the principle had no application because the Registrar was not acting through mere executive instructions but was exercising statutory authority expressly conferred under Section 55 of the Cooperative Societies Act.
The dispute arose from the promotion process in the District Central Cooperative Bank, Raipur. The appellant, who was originally appointed as an Assistant Engineer—a technical post—was promoted as Additional Manager in December 2010 following recommendations of the Departmental Promotion Committee.
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Another employee challenged the promotion, contending that Rule 5(3)(a) of the Chhattisgarh District Cooperative Central Bank Employee Service Rules, 1982 prohibited employees appointed for special technical work from being appointed or absorbed into posts involving different duties. Since the post of Additional Manager was an administrative position, it was argued that the appellant was ineligible for promotion.
Although the Registrar had deleted Rule 5(3)(a) and related provisions through an amendment, the Chhattisgarh High Court held that the amendment was ineffective because it had allegedly not been carried out in accordance with the statutory procedure. Consequently, the High Court quashed the appellant’s promotion more than thirteen years after he had assumed the post.
The principal question before the Supreme Court was whether the Registrar of Cooperative Societies possessed the statutory authority under Section 55(1) of the Chhattisgarh Cooperative Societies Act, 1960 to amend or delete service rules governing employees of cooperative societies, and whether the amendment deleting Rule 5(3)(a) had been validly made.
A Bench comprising Justice Sanjay Karol and Justice Augustine George Masih held that Section 55(1) expressly authorises the Registrar to frame rules governing service conditions of employees in cooperative societies.
The Court observed that the power to frame rules inherently includes the power to amend, alter or rescind those rules. In reaching this conclusion, the Bench relied upon Section 21 of the General Clauses Act, 1897, which provides that whenever a statute confers the power to issue rules, notifications or orders, that power ordinarily includes the authority to amend or rescind them unless a contrary intention appears.
One of the objections accepted by the High Court was that the communication deleting Rule 5(3)(a) had been issued by the Additional Registrar instead of the Registrar.
Rejecting this reasoning, the Supreme Court noted that the communication specifically stated that it had been issued “by order of the Registrar.” The State itself had never disputed that the amendment had been made pursuant to the Registrar’s decision.
The Court held that there was no legal prohibition against such communication being issued through the Additional Registrar, particularly when it reflected the Registrar’s decision taken under statutory powers.
The respondent also relied upon Section 95(3) of the Act, which requires that rules framed under the Act “shall” be laid before the Legislative Assembly.
The Supreme Court held that although the provision uses the word “shall,” the requirement is directory rather than mandatory because the statute prescribes no consequence for failure to comply with the laying requirement.
Relying upon Constitution Bench decisions and earlier precedents relating to statutory interpretation, the Court observed that where legislation does not prescribe invalidation as the consequence of non-compliance, courts must examine legislative intent and the object of the provision before treating it as mandatory.
Accordingly, the Court concluded that failure to place the amended rules before the Legislative Assembly could not invalidate the Registrar’s exercise of statutory power.
The High Court had relied upon the principle that executive instructions cannot override statutory rules.
The Bench further observed that merely describing the communication as a circular or communication would not affect its legal validity when the power exercised was traceable to the statute itself.
The Court held that the High Court had committed an error in setting aside the appellant’s promotion.
It observed that the appellant had continuously worked on the promoted post for nearly thirteen years during the pendency of litigation. A public servant should ordinarily be entitled to assume that a long-standing promotion will not be unsettled after such an extended period solely because of judicial delay.
Accordingly, the Supreme Court restored the appellant’s position as Additional Manager and directed that his promoted post and status be restored; his seniority be protected, he receive all consequential promotional benefits in accordance with law, and he be paid 50% back wages within two months, failing which the amount would carry interest at 6% per annum.
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