SANTHOSH SEBASTIAN v. RAMAPURAM REGIONAL SERVICE CO-OPERATIVE BANK LTD. NO.4111 and THE PART-TIME ADMINISTRATOR, RAMAPURAM REGIONAL SERVICE CO-OPERATIVE BANK LTD. NO.4111

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN** **WEDNESDAY,THE 26TH DAY OF SEPTEMBER 2018 / 4TH ASWINA, 1940** ## **WP(C).No. 18921 of 2018** ## **PETITIONER:** **SANTHOSH SEBASTIAN ACCOUNTANT, RAMAPURAM REGIONAL SERVICE CO-OPERATIVE BANK LTD. NO.4111, RAMAPURAMBAZAR P.O., KOTTAYAM- 686 576.** ## **BY ADV. SRI.P.C.SASIDHARAN** ## **RESPONDENTS:** **1 THE PART-TIME ADMINISTRATOR RAMAPURAM REGIONAL SERVICE CO-OPERATIVE BANK LTD.NO. 4111, PALA UNIT INSPECTOR, OFFICE OF THE ASSISTANT REGISTRAR (GENERAL), MEENACHIL - 686 572.** **2 THE RAMAPURAM REGIONAL SERVICE CO-OPERATIVE BANK LTD. NO.4111,RAMAPURAM BAZAR P.O., KOTTAYAM- 686 576,REPRESENTED BY ITS SECRETARY. BY ADVS. SRI.P.C.HARIDAS** **SRI BIMAL K. NATH, SENIOR GOVERNMENT PLEADER** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 26.09.2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** 2 W.P.(C) No.18921/2018 ## **JUDGMENT** The petitioner, who was working as accountant in the third respondent Service Co-operative Bank, which is a Society registered under the Co-operative Societies Act, 1969, has filed this Writ Petition under Article 226 of the Constitution of India, seeking a writ of certiorari to quash Exhibit-P1 order of suspension dated 5.6.2018 issued by the second respondent Bank and seeking a declaration that the order of suspension issued against the petitioner before issuing memo of charges is violative of sub-rule (6) of Rule 198 of the Kerala Co-operative Societies Rules,1969 and one liable to be declared illegal. The petitioner has also sought for a writ of mandamus commanding the respondents to permit him to discharge his duty without interruption. 2. On 8.6.2018, when this Writ Petition came up for admission, this Court admitted the matter on file and notice by special messenger was ordered to respondents 1 and 2. 3. On 11.6.2018, when this Writ Petition came up for further consideration, the learned counsel for respondents 1 and 2 sought time to get instructions. While adjourning the case to 19.6.2018, this Court passed an interim order to the effect that Exhibit-P1 order of suspension shall not be implemented by the respondents, for a period of two weeks. The said interim order was extended from time to time. 4. A counter affidavit has been filed by respondents 1 and 2 3 W.P.(C) No.18921/2018 opposing the reliefs sought for in this Writ Petition. The petitioner has also filed a reply affidavit. 5. Heard the learned counsel for the petitioner and also the learned counsel for respondents 1 and 2. 6. The sole issue that arises for consideration in this Writ Petition is as to whether any interference is warranted on Exhibit-P1 order of suspension issued by the second respondent Bank, whereby the petitioner, who was working as accountant is placed under suspension, invoking the powers under sub-rule (6) of Rule 198 of the Kerala Cooperative Societies Rules. 7. By Exhibit-P1 order, the petitioner was placed under suspension alleging certain irregularities detected in the preliminary enquiry conducted by the Unit Inspector. On a finding that a detailed enquiry is required and the continuance of the petitioner in service will be detrimental to that enquiry, he was placed under suspension by ExhibitP1 order dated 5.6.2018. At the time of suspension, the petitioner was working as accountant. Going by the counter affidavit filed by respondents 1 and 2, one member of the second respondent Bank preferred a complaint before the Joint Registrar of Co-operative Societies, Kottayam raising serious allegations against the petitioner. In the said complaint, it is alleged that for the purpose of verification of loan documents and giving legal opinion, the Managing Committee of the 4 W.P.(C) No.18921/2018 second respondent Bank had appointed Advocate Suneesh Joy. That person was actively engaged in various business activities and he was not in active practice as Advocate or giving legal opinions. The petitioner, who was also an Advocate earlier, was preparing legal opinions in the name of Advocate Suneesh Joy and receiving fee for the same. The legal opinions are in the hand writings of the petitioner and the amounts covered under various vouchers for payment of legal fee are seen transferred to the account of the petitioner with account No.0120000011920. Exhibit-R1(a) is the complaint dated 31.1.2018 of Jantish.M.T., a member of the second respondent Bank, and ExhibitR1(b) is the preliminary report dated 5.6.2018 submitted by the Unit Inspector, after conducting an inquiry. 8. The contention of the petitioner is that, an employee of a Co-operative Society can be placed under suspension only after commencement of disciplinary proceedings by the issuance of memo of charges along with statement of allegations. In support of the said contention, the learned counsel for the petitioner would place reliance on the decisions of the Apex Court in **P.R.Nayak v. Union of India [(1972) 1 SCC 332]** and in **Union of India v. K.V. Jankiraman [(1991)** _**4 SCC 109]**_ and also a judgment of this Court in **S.N.Sobha v. State of Kerala and others** (judgment dated 20.7.2015 in W.P.(C) No.5700 of 2015). 9. Per contra, the learned counsel for the respondents, after 5 W.P.(C) No.18921/2018 referring to the statutory provisions under sub-rule (6) of Rule 198 of the Kerala Co-operative Societies Rules, would contend that, pending enquiry an employee can be placed under suspension and as such, there is absolutely no illegality or irregularity in Exhibit-P1 order of suspension. In support of the said contention, the learned counsel would place reliance on the judgment of this Court in **Pattanakkad Coir Mats and Matting Co-operative Society Ltd. v. Project Officer (Coir) [1999 (2) KLT 474]** . 10. During the pendency of this Writ Petition, the second respondent Bank has issued a memo of charges dated 23.7.2018 to the petitioner. A perusal of the memo of charges and the supporting documents made available for the perusal of this Court would make it explicitly clear that the disciplinary proceedings initiated against the petitioner is on grave charges. However, this Court need not go into those aspects, at this point of time, since the only issue that has to be decided in this Writ Petition is as to whether Exhibit-P1 order of suspension can be sustained in view of the provisions of sub-rule (6) of Rule 198 of the Kerala Co-operative Societies Rules. 11. Rule 198 of the Kerala Co-operative Societies Rules (for brevity, 'the Rules') deals with disciplinary action. Sub-rule (6) of Rule 198 provides that an authority competent to appoint an employee may suspend him pending enquiry into serious charges against such 6 W.P.(C) No.18921/2018 employee. No employee shall, however, be kept under suspension for a period exceeding six months at a time. In no case an employee shall be kept under suspension for a continuous period exceeding one year without the prior approval of the Registrar. An employee under suspension shall be entitled to subsistence allowance payable under the Kerala Payment of Subsistence Allowance Act, 1972. Going by the proviso to sub-rule (6) of Rule 198, an employee not coming under the purview of the Kerala Payment of Subsistence Allowance Act, 1972 shall be entitled to subsistence allowance at the rate admissible to State Government employees as prescribed under the Kerala Service Rules. 12. A reading of the provisions of sub-rule (6) of Rule 198 would make it explicitly clear that the authority competent to appoint an employee in a Co-operative Society may place him under suspension pending enquiry into serious charges against such employee. Under subrule (6) of Rule 198, the power to place an employee under suspension can be exercised by the competent authority pending enquiry into serious charges and it is not the mandate of sub-rule (6) of Rule 198 that such an employee can be kept under suspension only when disciplinary proceedings are initiated against him. 13. Relying on the judgment of the Apex Court in **Jankiraman** ' **s case (supra)** , the learned counsel for the petitioner would contend that an order of suspension can be passed only after initiation of disciplinary 7 W.P.(C) No.18921/2018 proceedings. A reading of the said decision would show that, in that case, the Apex Court was dealing with sealed cover procedure adopted in the matter of promotion and one of the issues before the court was, “what is the date from which it can be said that disciplinary/criminal proceedings are pending against an employee”. Taking note of O.M.No.22011/1/79. Estt.(A) dated 30.1.1982 issued by Government of India, Department of Personnel and Training, the Apex Court held that sealed cover procedure in the matter of promotion can be resorted to only when a charge memo in a disciplinary proceedings or a charge sheet in a criminal prosecution is issued to the employee. Pendency of preliminary investigation prior to that stage will not be sufficient to enable the authorities to adopt sealed cover procedure. The Apex Court noticed that as per the existing instructions cases of officers (a) who are under suspension or (b) against whom disciplinary proceedings are pending or a decision has been taken by the competent disciplinary authority to initiate disciplinary proceedings or, (c) against whom prosecution has been launched in a court of law or sanction for prosecution has been issued, are considered for promotion by the Departmental Promotion Committee at the appropriate time but the findings of the Committee are kept in a sealed cover to be opened after the conclusion of the disciplinary/court proceedings. Therefore, the observations/findings of the Apex Court in Paragraphs 16 and 17 of the said decision, relied on by the learned counsel for the petitioner, would in 8 W.P.(C) No.18921/2018 no manner support the case of the petitioner. 14. In **P.R.Nayak's case (supra)** , a Constitution Bench of the Apex Court in the context of Rule 3 of the All India Services (Discipline and Appeal) Rules, 1969 held that the legislative scheme underlying the said Rule is clearly indicative of the intention of the rule-making authority to restrict its operation only to those cases in which the Government concerned is possessed of sufficient material whether after preliminary investigation or otherwise and the disciplinary proceedings have in fact commenced and not merely when they are contemplated. An order of suspension before the actual initiation or commencement of disciplinary proceedings is clearly outside the ambit of Rule 3 and there is no cogent ground for straining the plain language of Rule 3(1) so as to extent it to cases in which disciplinary proceedings are merely contemplated and not actually initiated or commenced. 15. A reading of the provisions of clause (a) of sub-rule (i) of Rule 3 of the All India Services (Discipline and Appeal) Rules, referred to in **P.R.Nayak's case (supra)** would show that as per the said provision, if, having regard to the nature of the charges and the circumstances in any case, the Government which initiates any disciplinary proceedings is satisfied that it is necessary or desirable to place under suspension the member of the service against whom such proceedings are started, that Government may if the member of the service is serving under it, pass an 9 W.P.(C) No.18921/2018 order placing him under suspension. Therefore, the plain language of Rule 3(1) make it explicitly clear that suspension of a member of All India Service invoking the said provision is legally permissible only after actual initiation or commencement of disciplinary proceedings. Therefore, the law laid down by the Apex Court in **P.R.Nayak's case** in the context of Rule 3(1) of the All India Service (Discipline and Appeal) Rules cannot be extended in the case on hand, in view of the statutory provisions under sub-rule (6) of Rule 198 of the Kerala Co-operative Societies Rules, which enables the competent authority to exercise the power to place an employee under suspension pending enquiry into serious charges. 16. In **S.N.Sobha’s case (supra)** , another decision relied on by the learned counsel for the petitioner, this Court was dealing with a case in which an LD Clerk in Dr.Padiar Memorial Homeopathic Medical College (presently affiliated to Kerala University of Health Sciences), who was governed by the provisions of the Kerala University Act, 1974 and the Kerala University First Statutes, in view of the provisions under Section 58 of the Kerala University of Health Sciences Act, 2010, was placed under suspension. Sub-section (2) of Section 60 of the Kerala University Act mandates that no teacher of a private college shall be kept under suspension by the educational agency except when disciplinary proceedings are initiated against him. After referring to the provisions under Section 60 of the Kerala University Act, 1974 and also the 10 W.P.(C) No.18921/2018 provisions under the Kerala University First Statutes, this Court held that, as per sub-section (2) of Section 60 of the Kerala University Act, a teacher of a private college can be kept under suspension by the educational agency only when disciplinary proceedings are initiated against him. In the absence of service of a charge sheet as contemplated under the University Statute, it could not be said that the disciplinary proceedings have been initiated against the teacher warranting an order of suspension. In that context, after referring to the law laid down by the Apex Court in **P.R.Nayak v. Union of India [(1972) 1 SCC 332]** , this Court held that, in the absence of service of a charge sheet as contemplated under the statute, it could not be said that disciplinary proceedings against the petitioner therein had been initiated and as such, the action of the respondents therein in placing her under suspension even before service of charge memo has necessarily to be seen as in violation of the statutory provisions. Therefore, the law laid down by this Court in **S.N.Sobha's case** has no application to the facts of the case on hand, since the mandate of sub-rule (6) of Rule 198 of the Kerala Co-operative Societies Rules is not initiation of disciplinary proceedings, but only pending enquiry into serious charges against an employee. 17. In **Pattanakkad Coir Mats** ’ **case (supra)** , a decision relied on by the learned counsel for the respondents, a learned Judge of this 11 W.P.(C) No.18921/2018 Court held that, the word 'charge' used in sub-rule (6) of Rule 198 of the Kerala Co-operative Societies Rules is not intended to mean that a formal memo of charges should have been issued to the delinquent employee before suspension. Normally, an employee is, suspended in order to facilitate an enquiry against that employee. For this purpose, at the time of ordering suspension, there should have been some materials in the possession of the employer, which compels him to make a detailed enquiry against the delinquent employee. It is after collecting all the materials that formal charges should be served on the delinquent employee. If the interpretation given by the Registrar is accepted, the employee cannot be suspended even if there are prima facie materials to show that the employee has committed misconduct. Paragraphs 4 and 5 of the said decision read thus : “4. Now, let us examine Ext.-P8 order and the grounds on which the resolution was rescinded. In para.12 of Ext.P8 order it is stated thus : “no charge memo has been issued to Sri.V.R.Retnappan by the Society …. A charge is a precise formulation of a definite accusation …...... Therefore, in my opinion nothing worth being called a charge has been raised or formulated against Sri.V.R.Retnappan. Only suspension pending enquiry into the serious charges is authorised by R.198(6). The usual procedure of preparing a charge memo and 12 W.P.(C) No.18921/2018 statement of allegations serving it on the employee, getting his explanation, considering it and deciding whether an enquiry is to be conducted or not and appointing an Enquiry Officer if the explanation is found unsatisfactory is not seen followed in this case. In such circumstances, I find that the order of suspension is violative of Rule 198(6) of the Kerala Cooperative Societies Rules, 1969.” Thereafter, in paragraph 13 of the order, it is stated thus : “On a perusal of the entire records of the case, I find that the Board of Directors of the Society had arrived at the decision to place Sri.V.R.Retnappan under suspension without proper application of mind to the relevant materials”. The Registrar supports her view in paragraph 14 by stating thus : “It is needless to state that the resolution of the Board of Directors of the Society to place an employee under suspension illegally is one which is calculated to disturb the peaceful and orderly working of the Society. It is also contrary to the better interest of the Society. It will have a demoralising effect on the members of the staff of the Society as a whole”. In the above order, the first ground for rescinding the resolution is that no formal charges have been made. According to the first respondent, to suspend an employee under Rule 198(6) it is necessary that a formal memo of charges should have been issued to the delinquent employee. Rule 198(6) only states that serious charges should have been levelled against the 13 W.P.(C) No.18921/2018 delinquent employee. I don't think that the word 'charge' is used to mean that a definite memo of charges should have been issued to the delinquent employee. Hence, according to me, the word 'charge' occurring in Rule 198(6) of the Rules does not mean that formal charges should have been framed against the delinquent employees. 5. In this context, I refer to the decision of the Supreme Court in Pratap Singh v. State of Punjab, AIR 1964 SC 72. There, this question was considered while interpreting Rule 3.26(d) of the Punjab Civil Services Rules. It is as follows : “A Government servant under suspension on a charge of misconduct shall not be required or permitted to retire on his reaching the date of compulsory retirement but should be retained in service until the enquiry into the charge is concluded and a final order is passed thereon”. There a Government servant was suspended, but formal charge has not been framed. Considering this, the Supreme Court held thus : “This Rule comes into pay only after a prima facie case is made out against a Government servant and not at the stage of a preliminary investigation into accusations made against a Government servant. But it does not follow that suspension is not permissible till this stage of making a formal charge arrives. Rule 3.26(d) is of general application and therefore, the expression 'charge of misconduct' in this rule is not to be interpreted narrowly as meaning 'the charges formally framed and communicated to the Government servant 14 W.P.(C) No.18921/2018 concerned' with the intimation that a formal departmental enquiry had been initiated against him on those charges. The appellant's contention does not find any support, as urged, from the last portion of this rule which reads 'until the enquiry into the charge is concluded and a final order is passed thereon'. Of course, the enquiry would be into the charges of misconduct on account of which the Government Servant has been suspended and the suspension will continue till a final order is passed on those charges. The requirements of the last portion of this rule do not in any way lead to the conclusion that the enquiry into the charges refers to a formal departmental enquiry into the charges framed and communicated to the Government servant in accordance with Rule 7 of the Punishment and Appeal Rules”. Thus, the word 'charge' does not necessarily mean that formal charges should have been delivered to the delinquent employee. Hence, in the present case, it cannot be said that suspension was violating the Rules. Thereafter, the first respondent states that the order of suspension is vitiated by errors of law apparent on the face of the record. Excepting for this bald statement, no reason has been given for arriving at such a conclusion. Finally, the first respondent is of the view that the suspension will disturb the peaceful and orderly working of the Society and it will cause financial loss to the Society. Suffice it to say that the above observations of the first respondent are irrelevant.” 18. Having considered the submissions made by the learned 15 W.P.(C) No.18921/2018 counsel on both sides, with reference to the provisions under sub-rule (6) of Rule 198 of the Kerala Co-operative Societies Rules, conclusion is irresistible that initiation of disciplinary proceedings is not a pre-requisite to place an employee of a Co-operative Society under suspension. 19. In such circumstances, I find absolutely no grounds to interfere with Exhibit-P1 order of suspension. Even otherwise, in view of the provisions under Section 69 of the Kerala Co-operative Societies Act, the remedy open to the petitioner is to challenge the order of suspension before the Co-operative Arbitration Court. The Writ Petition fails and the same is accordingly dismissed. Sd/- **ANIL K. NARENDRAN** **JUDGE** csl 16 W.P.(C) No.18921/2018 ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** - **EXHIBIT-P1** - **TRUE COPY OF THE ORDER DATED 05/06/2018 ISSUED BY THE 2ND RESPONDENT** - **EXHIBIT-P2 TRUE COPY OF THE JUDGMENT DATED 24/05/2018 IN W.P(C) 153/2018 AND CONNECTED CASES** - **EXHIBIT-P3 TRUE COPY OF THE ORDER OF TRANSFER ISSUED BY THE 2ND RESPONDENT DATED 03/01/2018** - **EXHIBIT-R1(a) TRUE COPY OF THE SAID COMPLAINT DATED 31.1.2018** - **EXHIBIT-R1(b) TRUE COPY OF THE PRELIMINARY REPORT DATED 5.6.2018 OF THE UNIT INSPECTOR.** - **EXHIBIT-R1(c) TRUE COPY OF THE LETTER DATED 9.8.2018 AND ANNEXURE** - **EXHIBIT-R3(a) TRUE COPY OF THE CERTIFICATE ISSUED BY THE SECRETARY OF THE SECOND RESPONDENT.** - **EXHIBIT-R3(b) TRUE COPY OF THE REPORT DATED 5.6.2018 OF THE UNIT INSPECTOR, RAMAPURAM.** - **EXHIBIT-R3(c) TRUE COPY OF THE STATEMENT OF ACCOUNT OF THE PETITIONER** - **EXHIBIT-R3(d) TRUE COPY OF THE MEMO OF CHARGES ALONG WITH DOCUMENTS** csl **//True copy//** ## **P.S. To Judge**