S.S. RANA versus REGISTRAR, CO-OPERATIVE SOCIETIES AND ANR.

Citation: [2006] SUPP. 1 S.C.R. 311 · Decided: 25-04-2006 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Dismissed

Judgment (excerpt)

S.S. RANA 
v. 
REGISTRAR, CO-OPERATIVE SOCIETIES AND ANR. 
-• APRIL 25, 2006 
[S.B. SINHA AND P.P. NAOLEKAR, JJ.] 
A 
B 
Constitution of India-Article 12-Himachal Pradesh Co-operative 
Societies Act, 1968-Sections, 31, 34 & 35-B & 36-Himachal Pradesh Co-
operative Societies Rules, 1971-Rule 56---0rder of termination passed against C 
delinquent employee-Writ Petition by the employee before High Court-Writ 
Petition dismissed as not maintainable holding that the Co-operative Bank is 
not a State-Correctness of-Held, regulations of a Co-operative bank under 
the Act does not render its activities as subject to control of the State-On 
facts, the co-operative bank is not created under any Statute-State does not 
exercise any direct or indirect control over the bank-Hence, the bank is not D 
a State-Delinquent employee has not proved any violation of any provisions 
of the Act by the Bank in passing the order of termination-Hence, the order 
of termination upheld. 
Respondent-Co-operative bank initiated disciplinary proceeding 
against appellant, who was working as a Branch Manager, under Rule E 
56(b) of the Kangra Central Co-operative Bank Employees (Terms of 
Employment and Working Conditions) Rules, 1980 read with Section 35-
B(4) of the Himachal Pradesh Co-operative Societies Act, 1968. The 
appellant was found guilty and an order of termination was passed against 
him. The appellant filed an appeal before appellate authority which was F 
dismissed. A Writ Petition filed by the appellant before High Court was 
dismissed as not maintainable on the ground that the co-operative bank 
is not a 'State' under Article 12 of the Constitution of India. 
In appeal to this Court, the appellant contended that the respondent-
co-operative bank is a 'State' under Article 12 of the Constitution since G 
its activities is to lend money to the agriculturists; that the respondents 
did not comply with the principles of natural justice as required under 
the Rules and the Act; and that the order of termination is violative of 
the provisions of the Rules since a copy of inquiry report was not furnished 
to him. 
311 
H 
312 
SUPREME COURT REPORTS [2006] SUPP. I S.C.R. 
A 
The respondents contended that the Co-operative bank is not a 
'State' under Article 12 of the Constitution; and that the State has no deep 
and pervasive control over the affairs of the Society. 
Dismissing the appeal, the Court 
B 
HELD: 1.1. Respondent Co-operative bank has not been created 
under any statute. Its functions, like any other Co-operative Society, are 
mainly regulated in terms of the provisions of Himachal Pradesh Co-
operative Societies Act, 1968 except as provided in its bye-laws. The State 
has no say in the functions of the bank. Membership, acquisition of shares 
and all other matters are governed by the bye-laws of the bank framed 
C under the Act. Rule 56 of the Himachal Pradesh Co-operative Societies 
Rules, 1971 does to contain any provision in terms whereof any legal right 
as such is conferred upon an officer of the Society. 1321-G, G; 322-AI 
1.2. It has not been shown that the State exercises any direct or 
D indirect control over the affairs of the Society. The State is not a majority 
shareholders. The State has the power only to nominate one director. It 
cannot, thus, be said that the State exercises any functional control over 
the affairs of the Society in the sense that the majority directors are 
nominated by the State. The general regulations under an Act, like 
Companies Act or the Co-operative Societies Act would not render the 
E activities of a company or a society as subject to control of the State. Such 
control in terms of the provisions of the Act are meant to ensure proper 
functioning of the Society and that State or statutory authorities would 
have nothing to do with its day-to-day functions. The respondent-bank is 
not a State within the meaning of Article 12 of the Constitution of India. 
F It has not been shown that in terminating the services of the appellant, 
the respondent has violated any mandatory provisions of the Act or the 
Rules framed thereunder. (322-A, B, E, F; 324-B; 325-FI 
Pradeep Kumar Biswas v. /ndian Institute of Chemical Biology and Ors., 
(200215 SCC 111 CB; Ajay Hasia v. Khalid Mujib Sehravardi, (198111 SCC 
G 722; Zoroastrian Coop. Housing Society Ltd. v. District Registrar, Coop. 
Societies (Urban) and Ors., 120051 5 SCC 632; Sabajit Tewary v. Union of 
India and Ors .. [1975) I SCC 485; G

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