Holding

The Supreme Court held that there was no violation of Section 80(4) or Rule 187, no excess appointment, and no breach of the circular, and that the Registrar’s order rescinding the appointments was unsustainable.

Summary

The Supreme Court examined the rescission of appointments of clerks by the Registrar of Co‑operative Societies in two banks, on the ground that the banks allegedly violated Section 80(4) of the Kerala Co‑operative Societies Act, Rules 186 and 187, exceeded approved staff strength, and failed to follow a statutory circular. The Court held that the banks had not breached Section 80(4) because the required 10% SC/ST quota was respected and a fresh advertisement was issued for the remaining posts, and that Rule 187 merely gave an additional qualification to in‑service candidates, not a reservation of 50% of vacancies. It also found no evidence of excess appointments or non‑compliance with the circular, and that the Registrar’s reliance on a commission report without giving parties a chance to be heard violated natural‑justice principles. Consequently, the orders rescinding the resolutions were set aside and the appointments upheld.

Issues considered

Whether the banks appointed staff in excess of the strength approved by the Registrar.
Whether the advertisement complied with Circular No. 18/91 of the Registrar.
Whether there was a violation of Section 80(4) of the Kerala Co‑operative Societies Act, 1969 concerning the 10% SC/ST reservation.
Whether Rule 187 of the Kerala Co‑operative Societies Rules, 1969 was infringed by not reserving 50% of vacancies for in‑service candidates.
Whether the Registrar’s reliance on the Public Inquiry Commission report without affording a hearing violated the principles of natural justice.

Legislation cited

Kerala Co-operative Societies Act, 1969s. 80(4)

Subjects

recruitmentreservationSC/ST quotaco-operative societiesnatural justicerule interpretationappointment validitystatutory compliance

Judgment

BENNY T.D. AND ORS. ETC. ETC. A
v.
REGISTRAR CO-OPERATIVE SOCIETIES AND ANR. ETC. ETC.

MAY 4, 1998

[S. SAGHIR AHMAD AND G.B. PATTANAIK, JJ.] B

Service Law :

Kera/a Co-operative Societies Act, I 969/Kera/a Co-operative Societies
Rules, 1969. C

S.80 (4)/Rules 176, 186 and 187-Trissur Bank. Kera/a and District
Co-operative Bank Kottayam-C/erks-Appointment of-Appointment
rescinded by Registrar, Co-operative Societies holding that the same were
made in violation of s.80(4) and R.187-Held, Order of Registrar is
unsustainable-Jn view of fresh advertisement issued to fill up remaining D
vacancies reserved for SC/ST candidates, s.80(4) was not violated-Nor was
~ there any provision for providing lower cut-off marks for SC/ST candidates-
Rules do not provide for reserving 50% posts for in-service candidates-Non-
supply of copy of Report of Commission regarding alleged irregularities in
appointment to the Bank and affected parties would tantamount to violation E
of principles of natural justice-Orders of Registrar, Co-operative Societies
rescinding the appointments quashed-Administrative Law-Principles of
natural justice.

Resolutions passed by Trissur Bank, Kerala and District Co-operative
Bank, Kottayam, appointing clerks in the respective Banks were rescinded F
by the Registrar, Co-operative Societies in exercise of power under s.176 of
the Kerala Co-operative Societies Rules, 1969, on the grounds, inter alia, .
of violation of the provisions of s.80(4) of the Kera la Co-operative Societies
Act, 1969 and Rule 187 of the Rules.

The Registrar held that Trissur Bank appointed staff in excess of the G
strength approved inasmu'l:h, as 85 vacancies were advertised whereas
resolution was passed for appointment of 116 persons; that since the Bank
had not specified in the advertisement that 50% of the vacancies would be
reserved for candidates from the employees for the affiliated primary societies,
the same amounted to violation of statutory provisions; that the Bank appointed H
147
148 SUPREME COURT REPORTS (1998] 3 S.C.R.

A only 5 persons from Scheduled Caste/Scheduled Tribes Category whereas
keeping in view the total appointed being 116, 11 such candidates ought to
have been appointed that the Bank committed error in not giving lower cut-
off marks for the reserved category candidates to ensure their representation
as contemplated under s.80(4) of the Act, and that appointments were in
violation of Rule 187 inasmuch as 50% of the vacancies were to be reserved
B for in-service candidates serving in different primary societies but only 24
of them got appointed as against 87 general category candidates.

In the writ petitions challenging the order of Registrar, Co-operative
Societies Single Judge held that non-providing of lesser cut-off marks for
C Scheduled Castes/Scheduled Tribes candidates was arbitrary; and that under
Rule 187, 50% of the vacancies had to be filled up by candidates possessing
the additional qualification i.e., experience of having worked in primary
societies which were members l'f the Apex Society, and therefore, 50% of
the vacancies was the quota meant for candidates working in the primary
societies. On appeal, the Division Bench of the High Court affirmed findings
D of the Registrar, Co-operative Societies and of the Learned Single Judge of
Question of High Court on the infraction of s.80(4) of the Act and Rule 187
1
of the Rules but held that since the selection was not tainted with any
illegality, the first 24 candidates in the general quota, 24 candidates from
the member societies and 5 candidates from the list of Scheduled Castes/
E Scheduled Tribes candidates be retained in service. The order of the Registrar
annulling the appointment of rest of the candidates was affirmed. Aggrieved,
the general category candidates, whose appointments stood annulled filed C.
As No. 2554-2556 of 1998 and The State of Kerala filed C. As No. 2559-
2563 of 1998.

F As regards the appointments made by the District Co-operative Bank,
Kottayam, the Registrar held that there was, like the Trissur Bank, violation
of Section 80 (4) of the Act and Rule 187 of the Rules. In addition, he also
held that the entire selection of candidates was vitiated by non-compliance
of statutory provisions and large scale tampering of answer papers and
G marks list in the written test as was apparent from the report of Kerala
Public Men's (Corruption, Investigation and Enquiries) Commission. In the
writ petitions, the Single Judge of the High Court held that the Registrar
could not rely upon the report of the Commission since it was not put to
notice of the affected persons. However, he affirmed the order of the Registrar
rescinding the resolution of the Bank making the appointments because of
H the infraction of s.80(4) and Rule 187. On appeal, the Division Bench relied
BENNY T.D. AND ORS. v. REGISTRAR CO-OP. SOCIETIES 149
upon the report of the Commission and upheld the order of the Registrar A
holding that even if the candidates might not have been guilty of mal-practices,
but the entire process of selection was vitiated. Aggrieved, the direct recruit'I,
whose appointments stood annulled, and the employees belonging to the
primary societies filed C.As No. 2557-2558 of 1998 and C.A. No. 2564 of
1998 respectively.
B
It was contended for the appellants in Appeals No. 2554-56/98 that
there had been no violation of s.80(4) as out of the 11 posts required to be
filled up by Scheduled Castes/Scheduled Tribes candidates, 5 were filled by
such candidates and for remaining 6 posts fresh advertisement was issued;
that in view of Rule 187 the experience of in-service candidates was to be C
construed as an additional qualification to the extent of 50% of the vacancies
but the Registrar as well as the High Court misconstrued Rule 187 by
interpreting that there should be a reservation to the extent of 50% of
vacancies for people belonging to primary societies; that th'! Registrar erred
in holding that the Bank appointed excess staff inasmuch as though 85
vacancies were advertised initially, but by the time the selection was made D
the number of vacancies increased to 116.

For the Registrar, Co-operative Societies it was contended that a conjoint
reading of Rules 186 and 187 would mean that 50% of the vacancies have
to be filled by direct recruits and other 50% by in-service candidates serving
in different primary societies and since only 24 in-service candidates were E
appointed whereas 87 direct recruits were appointed, the Bank authorities
contravened Rule 187 and the Registrar was justified in cancelling the
appointments.

For the appellants in Kottayam Bank case it was additionally contended F
that even if Rule 187 be treated as part of Rule 186, then the entire selection
process could not be set aside as Rule 187 could be held to be mere directory
and not mandatory; and that the Division Bench of the High Court erred in
concluding that selection was vitiated by illegality and mal-practice like
tampering of marks, as neither the allegation was put to the Bank with
notice nor was the report of Public Enquiry Commission supplied to the G
Bank or to affected parties.

Allowing the appeals filed by the appointees and dismissing the appeal
of the State of Kerala, this Court

HELD : 1.1. It cannot be said that there has been any violation of sub- H
150 SUPREME COURT REPORTS (1998] 3 S.CR.

A section (4) •>f s.80 of the Kera la Co-operative Societies Act, 1969. The
provision says that IO percent of the posts which are to be filled up by direct
recruitment must be kept reserved for the Scheduled Castes and Scheduled
Tribes people. When the total number of posts to be filled up were 116,10
percent of the said posts would work out to I I. Admittedly 5 Scheduled
B Caste/Scheduled Tribe candidates were appointed and for the remaining six
posts a fresh advertisement had been issued to hold a special recruitment
so as to fill up the quota of II. There is neither any allegation nor any
finding that the quota meant for Scheduled Castes/Scheduled Tribes
candidates has been usurped either by general category candidates or by
candidates belonging to primary societies. [161-A-D)
c 1.2. From the impugned judgment of the High Court, it appears that
since the Bank did not give any relaxation in favour of Scheduled Castes/
Scheduled Tribes candidates by fixing a lower marks for passing, the court
has come to the conclusion that there has been a violation of sub-section (4)
of Section 80 of the Act. The conclusion of the High Court on the aforesaid
D basis is wholly erroneous. Neither the Act nor the Rules made thereunder
nor even the guidelines issued by the Registrar prescribing procedure for
appointment to the post in the apex society anywhere even whisper that there
should be a lesser standard of scrutiny for the Scheduled Castes/Scheduled
Tribes candidates; In this view of the matter, the conclusion of the High
E Court with regard to alleged infraction of sub-section (4) of Section 80 of
the Act is wholly unsustainable and the same must be quashed. [161-D-H)

2.1. The High Court committed serious error of law by holding that
there has been violation of Rule 187 since 50% of the vacancies have not
been filled up by the candidates serving in different primary societies. A
F combined reading of Rules 186 and 187 would lead to the only conclusion
that though the qualification for the posts of "Clerk" had been enumerated
in Rule 186 but in respect of 50% of vacancies arising in the apex society,
the in-service candidates serving in the primary societies will get the
advantage as their experience would be treated as an additional qualification.
G In this view of the matter it cannot be said that under Rule 187, 50% of the
vacancies in the apex society is kept reserved for the in-service candidates
serving in the primary societies. [165-C-D; 164-B-D)

2.2. Under the Rules as well as the guidelines issued by the Registrar
providing the procedure for making recruitment the power of the employer
H to adjudge suitability has not been taken away in any manner. While, therefore,
BENNY T.D. AND ORS. v. REGISTRAR CO-OP. SOCIETIES 151
Rule 187 gives a leverage in favour of in-service candidates serving in the A
primary societies for being considered for the posts of "Clerk" in the apex
society by taking their experience as an additional qualification but such
additional qualification, even after being taken into account if a person is
adjudged unsuitable there is no compulsion on the employer to appoint such
unsuitable person. [165-B-D)
B
3. Merely because in the advertisement issued by the Bank probable
number of vacancies had been indicated to be lesser than the number of
persons finally appointed, it cannot be said that there have been excess
appointments beyond the staff strength approved by the Registrar. It is well
known that during the time when an advertisement is issued and by the time C
when process of selection starts and ultimately appointment orders are
issued on account of several factors the numbers of posts may be increased.
There is neither any allegation nor any material to sustain the finding of
the Registrar that in fact appointment has been made in excess of the posts
approved by the Registrar. The said conclusion, therefore, must be held to
be based on no evidence and accordingly cannot be sustained. D
(165-G-H; 166-A-C)
4. The Registrar erred in coming to the conclusion that in the case
of both the banks, appointments had been made contrary to circular No. 18
dated 7.6. 1991. Clauses 4(e) of the circular stipulates that the condition
with regard to age-limit, qualifications, mode of appointment as laid down in
the rules framed under Section 80 such as rules 183, 186, 187 of the Kerala E
Co-operative Society Rules shall be strictly followed. Since there has been
no violation of Rule 187 of the Rules, the conclusion of the Registrar that
appointments have been made in contravention of the aforesaid circular No.
18of1991 also falls through and the said conclusion cannot be sustained.
(166-C-E) F
5. The Division Bench patently committed an error in relying upon the
report of the Kerala Public Men's (Corruption, Investigation and Enquiries)
Commission and in recording a finding that irregularities have been
committed in the selection notwithstanding the fact that the said report had
not been made available to the Bank or to the affected parties. It would G
tantamount to gross violation of the principle of natural justice which cannot
be brushed aside on the ground that public interest demands annulment of
the selection. That apart, in the notice issued under Rule 176 of the Rules
by the Registrar to the Kottayam District Co-operative Bank no particulars
were given and, therefore, on mere vague assertions it was not permissible
to record a conclusion that there has been any irregularity in the process H
152 SUPREME COURT REPORTS [1998] 3 S.C.R.

A of selection. The said conclusion of the Division Bench must accordingly be
set aside. 1167-A-F)

Pritpal Pal Singh & Ors., v. State of Haryana & Ors., 11994) 5 SCC
695, held inapplicable.

B 6.1. The appointments made to the post of clerks by Resolution No. 2
dated 5.2.1995 and Resolution No. IO dated 17.5.1995 passed by the Board
of Directors of Trissur District Co-operative Bank and those made by the
Board of Directors of District Co-operative Bank, Kottayam by Resolution
Nos. 3 and 4 dated 13.4.1995 are valid. The orders of the Registrar in
'
C annulling the said resolutions. of the two Banks are vitiated with manifest
error and are, therefore, quashed. 1168-G-H; 169-A-B)

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 2554-56
of 1998 Etc.

D From the Judgment and Order dated 9.4.97 ofKerala High Court in W.P.
No. 37, 50-51 of 1997.

K.N. Bhat, V.R. Reddy, Additional Solicitor Generals, F.S. Nariman, T.L.
Viswanatha Iyer, N. Santosh Hegde, P.S. Poti, P. Krishnamurty, C.S.
Vaidyanathan, K. Sukumaran, Santosh R. Hegde, K.R. Nambiar, P.R. Ramalingam,
E E.M.S. Anam, Fazlian Anam, M.P. Vinod, G.Prakash, Ms. Beena Praskash, Ms.
Malini Poduval, Roy Abraham and Ms. Baby Krishnan for the appearing
parties.

The Judgment of the Court was delivered by

F PATTANAIK, J. Leave granted in all the SLPs.

These 12 appeals are directed against the judgment dated 9th April,
1997 of the Division Bench of Kerala High Court in Writ Appeal No. 37 of
1997. The appeals titled as Benny T.D. & Ors. Etc. vs. The Registrar of Co-
operative Societies & Anr and State of Kerala and ors. vs. K.O. Sherly &
G others; relate to recruitment to the post of Clerk in Thrissur Bank, Kerala.
Appeals titled as P.J. Jose & Ors. vs. The Registrar of Co-operative Societies
& Ors. and Binu I & Ors. etc. vs. The Registrar of Co-operative Societies &
Ors. etc. relate to recruitment to the post of Clerk in the District Co-operative
Bank Kottayam. Apart from these appeals Trichur District Co-operative Bank
also had preferred special leave petition against the same judgment of the
H Kerala High Court but withdrew the same at the time of hearing.
BENNY T.D. AND ORS. v. REGISTRAR CO-OP. SOCIETIES [PATTANAIK, J.] 153
In case of Thrissur Bank an advertisement was issued on 9.11.1995 A
~ indicating the probable vacancies in the grade of Clerk as 85 and inviting
applications for filling up of the said posts. The advertisement indicated the
qualification for being eligible to apply and also indicated that the 10% of the
vacancies is reserved for Scheduled Castes/Scheduled Tribes. Pursuance to
the said advertisement 2466 General Category candidates, 432 in-service
candidates, who are already serving in different primary societies and 87 B
Scheduled Castes/Scheduled Tribes candidates applied. The Bank conducted
a written test to adjudge the suitability of the applicants for being appointed
,.I as Clerks and on the basis of the result in the written test, those of the
candidates, who secured the prescribed minimum marks were called for
interview. It may be stated that 221 General Category candidates, 75 in-service c
candidates and 6 Scheduled Castes/Scheduled Tribes candidates were called
for the interview. On the basis of their performance in the interview the Bank
authorities prepared a panel of 154 candidates and out of the said panel
decided to appoint 116 persons by Resolution of the Bank dated 5.2.1995. It
is to be noticed that though the probable vacancies as per the advertisement
was 85 but before the selection process started the vacancies came to 116 and D
as such resolution was passed to appoint 116 persons. Out of the said 116
j
~ persons 87 persons belong to the General Category, 24 belong to the in-
service category, who are the existing employees of different primary societies
and 5 belong to the Scheduled Castes/Scheduled Tribes reserved category.
Some of the applicants who could not qualify in the test held by the Bank E
made a grievance before the Registrar Co-operative Societies alleging
irregularities in the selection process. In fact, initially, they filed a writ petition
before the Kerala High Court but the High Court being of the opinion that
a writ will not be maintainable against a Co-operative Society and that statutory
remedies are available under the Kerala Co-operative Societies Act, 1969
(hereinafter referred to as 'the Act') did not entertain the writ petition. Against F
the decision of the learned single Judge holding a writ petition to be not
maintainable, a writ appeal was preferred and the said writ appeal is still
pending in the Kerala High Court. But pursuance to the representations
received by the Registrar alleging serious irregularities in the selection process,
the Registrar invoked his jurisdiction and enquired into the matter. In course
,- G
of inquiry by the Registrar the Joint Registrar, Co-operative Societies, had
informed that the selection made by the Thrissur District Co-operative Bank
has been fairly made and there was no foul play in the selection process as
~ alleged. The Registrar Co-operative Societies, however, came to hold that the
action of the Board of Directors of Thrissur District Co-operative Bank in
appointing 116 Clerks by Resolution No. 2 dated 5.2.1995 and Resolution No. H
154 SUPREME COURT REPORTS (1998] 3 S.C.R.

A I 0 dated 17.5.1995 is against the provisions of the Kerala Co-operative Societies
Act, Rules, Bye-laws and directions and instructions issued by the department
and it amounted to disturb the peaceful and orderly working of the Bank and
it is contrary to its better interest. On the aforesaid conclusion the Registrar
in exercise of his power under Rule 176 of the Kerala Co-operative Societies
B Rules, 1969 (hereinafter referred to as 'the Rules') rescinded the aforesaid two
Resolutions of the Thrissur District Co-operative Bank.

In the case of District Co-operative Bank Kottayam, the Registrar also
invoked his power under Rule 176 of the Rules and issued a notice to the
Board of Directors of the Bank indicating the allegations of irregularities
C committed by the Bank in selecting and appointing people to the post of Clerk
and called upon the Bank to show cause as to why the Resolution Nos. 3 and
4 dated 13.4.1995 making appointments to the post of Clerk should not be
rescinded. The Bank, in its tum, refuted the allegations made in the notice.
But the Registrar finally by his order dated 24th of October, 1996 came to hold
that the entire selection of candidates and appointments made by the Kottayam
D Co-operative Bank by Resolution Nos. 3 and 4 dated 13.4.1995 are vitiated by
non-compliance of the statutory provisions and large scale tampering of
answer papers and marks list in the written test and consequently rescinded
the said Resolutions dated 13.4.1995. The aforesaid two orders of the Registrar
were challenged before the Kerala High Court by 9 Original Petitions, 5 of
E which are in respect of Thrissur District Co-operative Bank and 4 of which
are in respect of Kottayam District Co-operative Bank. All these 9 original
applbations were disposed of by the learned single Judge of Kerala High
Court by judgment dated 18th December, 1996 and the learned single Judge
dismissed all the original petitions. Against the aforesaid judgment of the
learned single Judge 9 appeals were carried to the Division Bench and the
F Division Bench disposed of those appeals by the impugned judgment dated
9.4.1997. In case ofKottayam Bank the Division Bench confinned the judgment
of the learned single Judge upholding the order of the Registrar and rescinding
the Resolution of the Bank. But in the case of Thrissur Bank the Division
Bench modified the order of the Single Judge as well as that of the Registrar
and directed that the first 24 candidates in the General Category as well as >·

G 24 in-service candidates and 5 candidates from the Scheduled Castes/Scheduled
Tribes category may be retained in service and the appointment ofrest of the
persons under the two Resolutions of the Bank, referred to earlier, must be
held to be invalid. Against the aforesaid judgment of the Division Bench of
the Kerala High Court the first 3 appeals arising out ofSLP (c) Nos.9350-9352
H of 1997 are by the General Category candidates, who had been appointed by
BENNY T.D. AND ORS. v. REGISTRAR CO-OP. SOCIETIES [PA TT ANAIK, J.] 155
the Resolution of the Bank but whose appointments now stand annulled by A
the order of the Registrar and affirmed by the Division Bench of High Court.
The appeals filed by the State of Kerala are against the modified decision of
the Division Bench allowing 53 persons to be retained in service in Thrissur
Bank. The appeal arising out of SLP (c) No. 9728 of 1997 is by the employees
belonging to the Primary Society, who had been appointed as Clerks in the B
Kottayam Bank and whose appointments stood annulled by virtue of the
decision of the Registrar and affirmed by the learned single Judge and Division
Bench ofKerala High Court. The appeals arising out ofSLP (c) Nos. 10149
- I 0150 of 1997 are by the direct recruits who had been appointed as Clerks
in the Kottayam Bank and whose appointments stood annulled by the aforesaid
decisions of the Registrar and the High Court. C
In the Thrissur Bank case, the Registrar formulated following four issues:

1. Whether the Bank appointed staff in excess of the approved strength?

2. Whether the advertisement was in accordance with the circular D
instructions of the Registrar of Co-operative Societies (No. 18/91 ).

~ 3. Whether the Bank followed the provisions of Section 80(4) of the
Kerala Co-operative Societies Act and Circular Instructions Nos. 28/86 and
18/91.
E
4. Whether the Bank complied with Rule 187 of the Kerala Co-operative
Societies Rules, 1969 in the selection of staff from the employees of affiliated
Primary Societies and came to hold that material irregularities had taken place
in the appointment and the Bank appointed staff in excess of the staff
strength approved by the Registrar of Co-operative Societies on issue No. I.
On Issue No. 2, the Registrar came to hold that since the bank had not F
specified in the advertisement that 50% of the vacancies shall be reserved for
-- candidates from the employees of the affiliated Primary Societies the same
amounts to violation of the statutory provisions and is against the better
interest of the Bank. On Issue No. 3, the Registrar came to hold the Bank
committed error in not giving lower cut off marks for the reserved category G
candidates to ensure their representation as contemplated under Section 80(4)
of the Act r.nd the decision of the bank avoiding selection of candidates from
Scheduled Castes/Scheduled Tribes category is against the provisions of
Section 80(4) of the Act, which in tum, contrary to the better interest of the
Bank. On Issue No. 4 the Registrar came to hold that there has been a
violation of Rule 187 of the Rules and the said Rule has bot been strictly H
156 SUPREME COURT REPORTS [1998] 3 S.C.R.

A complied with inasmuch as while 50% of the vacancies was to be reserved
for the in-service candidates serving in different Primary Societies but only
24 of them got appointed as against 87 General Category candidates.

In the case of Kottayam Bank, the Registrar also came to hold that there
B has been an infraction of Rule 187 of the Rules and sub-section (4) of Section
80 of the Act, as in the case of Thrissur Bank. In addition, to the said infirmity
the Registrar also came to hold that there has been a large scale tampering
of the answer papers and the marks list and glaring instances of tampering
in the marks have been given as is apparent from the report of Kerala Public
men's (Corruption, Investigation and Enquiries) Commission, who has directed
C for a detailed enquiry.

The learned Single Judge came to hold that the Bank has not given full
effect to the provisions contained in Section 80(4) of the Act while making
appointments and non-providing of lesser cut off marks for the Scheduled
Castes/Scheduled Tribes candidates is arbitrary and the subsequent attempt
D of the Bank to make recruitment by way of special recruitment for the reserved
category candidates cannot cure the illegality as well as the mandate of sub-
section (4) of Section 80. So far as infraction of Rule 187 is concerned, the
learned single Judge came to hold that under the Rule 50% of the vacancies
arising in an apex society has to be filled up by candidates possessing the
E additional qualification meant in the Rule, and therefore, it must be held that
50% of the vacancies is the quota meant for candidates who are working in
the primary society. Consequently, there has been an infraction of Rule 187
of the Rules. With the aforesaid conclusion the learned single Judge did not
interfere with the order of the Registrar rescinding the Resolution of the
Thrissur Bank appJinting 116 persons to the post of the Clerk. In Kottayam
F Bank case the learned single Judge also came to hold that there has been a
violation of sub-section (4) of Section 80 of the Act as well as Rule 187 of
the Rules, and therefore, the Registrar was justified in rescinding the Resolution
of the Bank making the appointments and Registrar cannot be said to have
exceeded his jurisdiction in interfering with the decisions of the Bank. So far
G as the finding of the' Registrar on the alleged mal-practices on the basis of
the report of the Kerala Public Men's (Corruption, Investigation and Enquiries)
Commission is concerned the learned single Judge came to hold that the
above report should not be relied upon by the Registrar since it was not put
to the notice of the affected persons in the show cause notice that has been
issued under Rule 176 of the Rules. But yet the order of the Registrar
H rescinding the Resolution of the Bank making the appointments cannot be
BENNY T.D. AND ORS. v. REGISTRAR CO-OP. SOCIETIES [PATTnNAIK, J.J J57
interfered with because of the infraction of sub-section (4) of Section 80 of A
.J the Act as well as Rule 187 of the Rules .

The-Division Bench in the impugned judgment affmned the interpretation
given by the learned single Judge to sub-section (4) of Section 80 of the Act
as well as Rule 187 of the Rules and further held that in the matter of
appointments to the post of Clerk there has been violation of sub-section (4) B
of Section 80 of the Act as well as Rule 187 of the Rules by both the Banks.
In case of Kottayam Bank the Division Bench relied upon the report prepared
~ by the Kerala Public Men's (Corruption, Investigation and Enquiries)
Commission and further held that even if the said report had not been
indicated in the notice that was issued under Rule 176 of the Rules and even c
if the said report had not been put to the employees, whose appointments
have been annulled by the Registrar but the High Court would be justified
in relying upon the same in not exercising its extra-ordinary jurisdiction under
Article 226 of the Constitution. The Division Bench, therefore, ultinlately came
to hold that in case of Kottayam Bank even if the appellant may not have
been guilty to any such mat-practices but the entire process of selection was D
vitiated, and therefore, there was no other remedy than to cancel the
~ appointments made. In case of Thrissur Bank while it affirmed the views of
the Registrar as well as that of the learned single Judge that there has been
an infraction of sub-section (4) of Section 80 of the Act as well as Rule 187
of the Rules but it held "In view of the peculiar circumstances of the case E
and having regard to the fact that the selection was not tainted with any
illegality, we direct that the first 24 candidates in the general meri~ quota be
allowed to be retained and 24 candidates who have been selected under the
member society also be allowed to be retained and 5 candidates from the list.
of Scheduled Castes/Scheduled Tribes candidates may be retained in service".
The order of the Registrar annulling the appointment ofrest of the candidates, F
" however, was affmned.

Mr. F.S. Nariman, learned senior counsel appearing for the appellants
Benny T.D. & others contended, that under Sub-Section (4) of Section 80 of
the Act I 0% of the posts of employees are required to be reserved for
G
persons belonging to Scheduled Castes and Scheduled Tribes where the
method of recruitment is by direct recruitment. Consequently in case of
Thrissur Bank 11 posts were required· to be filled up by the Scheduled Castes
and Scheduled Tribes, but .the said provision cannot be interpreted to mean
that the employer-Bank is bound to recruit from amongst the applicants
belonging to the said category, 11 persons irrespective of their suitability. The H
158 SUPREME COURT REPORTS (1998] 3 S.C.R.

A Bank having found only 5 persons belonging to the s?id category suitable
and having appointed them and further having made a fresh advertisement
for 6 more persons belonging to the said category as a special recruitment
there has been no violation of Sub-Section (4) of Section 80. The Registrar
as well as the High Court in the Single Judge Bench and Division Bench
committed gross error in interpreting Sub-Section (4) of Section 80 arid in
B holding that the provisions of Sub-Section (4) of Section 80 has been infringed
as the Bank did not take steps for having a lesser cut off mark for the reserved
category and in not filling up all the 11 posts meant for the reserved category
people. The aforesaid erroneous construction of the provisions of Sub-Section
(4) of Section 80 vitiates of the ultimate conclusion. The learned senior
C counsel further urged that the Registrar as well as the learned single Judge
and the Division Bench in appeal have misconstrued the provisions of Rule
187 of the Rules by interpreting the said provisions to mean that there should
be a reservation to the extent of 50% of vacancies for the people belonging
to the Primary Society. According to Mr. Nariman, the learned senior counsel,
the only logical conclusion that can be made of Rule 187 is that the experience
D of the in-service candidates serving in different primary societies has to be
construed as an additional qualification to the extent of 50% of the vacancies.
In other words, this can be treated to be an additional weightage for the in- -f
service candidates serving in the primary society and by no stretch of
imagination it can be construed to be a reservation to the extent of 50% in
E favour of in-service candidates serving in the primary societies. In this view
of the matter the Registrar as well as the learned Single Judge and the
Division Bench of the High Court committed error in coming to the conclusion
that Rule 187 tantamounts to reservation of 50% of the vacancies in favour
of candidates serving in the primary societies and since only 24 of this
category were appointed as against 56 belonging to the general category
F
there has been an infraction of Rule 187 and ultimately the entire process of
selection gets vitiated. Mr. Nariman, learned senior counsel also urged that
the Registrar committed serious error of record in holding that the Bank
appointed staff in excess of the staff strength approved by the Registrar,
inasmuch as it was nobody's case that there did not exist 116 vacancies in
G the Bank of the date when the Resolution was passed for appointment of 116
persons and the aforesaid conclusion of the Registrar is based upon no
materials at all. According to learned senior counsel if the aforesaid conclusion
of the Registrar is based on the ground that the advertisement having indicated
probable number of vacancies to be 85 the recruitment could not have been
made beyond the said advertisement then it cannot be held that there was
H appointment of staff in excess of the staff strength. The advertisement merely
BENNY T.D. AND ORS. v. REGISTRAR CO-OP. SOCIETIES [PA TT ANAIK, J.] \ 59

indicates the probable vacancies but by the time selection is made and A
recruitment is made all subsequent vacancies have to be taken into account
and that is why appointments had been made in favour of 116 persons. The
conclusion of the Registrar, therefore, on that score is wholly erroneous. Mr.
Nariman, learned senior counsel also urged that the fact that 5 Scheduled
Caste persons were recruited is not disputed and merely because the register B
of candidates did not show against the names to be Scheduled Castes/
Scheduled Tribes it cannot be said to be an infraction of Sub-Section (4) of
Section 80. In the context of interpretation of Rule 187 Mr. Nariman urged that
Circular No. 18 of 1991 on which the Registrar relied upon and the High Court
has also relied upon nowhere indicates that there should be reservation to
the extent of 50% of the vacancies in favour of the members of the primary C
societies for being recruited as clerks in the Apex Bank and in that view of
the matter by relying upon a wrong circular the ultimate conclusion is vitiated.

Mr. V.R. Reddy, learned Additional Solicitor General appearing for the
Registrar of Co-operative Societies, however, strenuously urged that Rule 187
being an additional qualification for the purpose of appointment to the post D
of clerk in the Apex Society the said additional qualification should be treated
-"r as a part of Rule 186. According to Mr. Reddy both these Rules should be
read together and if Rule 187 is treated as a part of Rule 186, the conclusion
becomes irresistible that no person can be appointed to the extent of 50% of
the vacancies excepting those possessing additional qualification mentioned E
in Rule 187. In other words, according to Mr. Reddy a conjoint reading of
Rules 186 and 187 would mean that the 50% of the vacancies have to be filled
up by open candidates and other 50% of the vacancies have to be filled up
by in-service candidates serving in different primary societies who possess
the additional qualification. On such an interpretation being applied to the
facts in hands there cannot be any doubt that the Bank Authorities contravened F
Rule 187 in appointing only 24 in-service candidates whereas 87 open
candidates were appointed and in this view of the matter the Registrar and
the High Court was justified in cancelling the Resolution of the Bank making
the appointments.

Mr. K.N. Bhat, learned Additional Solicitor General appearing for the
G
State of Kerala further contended that the Division Bench was wholly in error
in finding out a via media after coming to the conclusion that in the matter
of appointments there has been a violation of Sub-Section ( 4) of Section 80
as well as Rule 187. According to the learned Additional Solicitor General the
recruitment to the post of clerk in the Bank having been governed by statutory H
160 SUPREME COURT REPORTS [1998] 3 S.C.R.

A provisions and the Bank Authorities having contravened those statutory
provisions the entire selection process. gets vitiated and, therefore, Division
Bench was not justified in sustaining the appointments of some in :he aforesaid
selection process.

Mr. Vaidyanathan, learned senior counsel appearing for appellants in
B Kottayam Bank case reiterated the contentions raised by Mr. Naritnan so far
as the interpretation of Sub-Section (4) of Section 80 of the Act and Rule 187.
He further urged that even if Rule 187 to be treated as part of Rule 186 then
entire selection process cannot be set aside. According to learned senior
counsel said Rule 187. can be held to be mere directory and not mandatory.
C On the conclusion of the Division Bench that the selection has been vitiated
by illegality and mal-practices like tampering of marks Mr. Vaidyanathan
contended that the said allegation neither was put to the Bank in the notice
issued under Rule 176 nor the report of the Public Enquiry Commission had
been supplied to the Bank or the affected party. Consequently, the Division
Bench committed gross error of law in holding that the entire selection
D process gets vitiated on account of irregularities and mal practices adopted.
Mr. Sukumaran, learned senior counsel appearing for the Registrar in
the said Kottayam Bank case contended, that when the selection made was
not objective and fair and even the Public Enquiry Commission found tampering
of marks in respect of several candidates the dispute cannot be treated as
E purely adversarial as it involve pu.blic interest, and judged from that stand
point the entire selection process must be held to have been vitiated and the
High Court did not commit any error in annulling the Resolution making
appointments to the posts of clerks. In support of this contention the learned
senior counsel placed reliance on a decision of this Court in Pritpal Pal
F Singh & ors., v. State ofHaryana & Ors., [1994] 5 Supreme Court Cases 695.
In view of the rival submission at the Bar, the first question that arises
for consideration is whether : the conclusion of the High Court that there has
been an infraction of sub-section (4) of Section 80 of the Act is at all correct?
For a better appreciation of the point in issue, sub-section (4) of Section 80
G ·of the Act is quoted he~inbelow in extenso:
"Notwithstanding anything contained in sub-section (I) or sub-section
(2), ten per cent of the posts of employees of every society shall be
reserved for appointment from persons belonging to the Scheduled
Castes and Scheduled Tribes were the method of appointment to such
H posts is by direct recruitment."
BENNY T.D. AND ORS. v. REGISTRAR CO-OP-SOCIETIES [PA TTANAIK, l .] 161

A plain meaning of the aforesaid provision is that I 0 per cent of the A
4 posts which are to be filled up by direct recruitment must be kept reser\ted
for the Scheduled Castes and Scheduled Tribes people. In the case in hand,
when the total number of posts to be filled up were 116, I0 per cent of the
said posts wou Id work out at 11. As has been stated earlier, pursuance to the
advertisement issued in case of Trissur Bank 87 Scheduled Castes and
Scheduled Tribes candidates had applied and after the written test only six B
of them passed the minimum prescribed standard fixed by the employer. But
one of them was disqualified for having filed a wrong declaration and five
were appointed. It is an admitted case that for six posts meant for the
aforesaid reserved category of Scheduled Castes/Scheduled Tribes persons
a fresh advertisement had been issued to hold a special recruitment so as to c
fill up the quota of 11, there is neither any allegation nor any finding that the
quota meant for Scheduled Castes/Scheduled Tribes candidates has been
usu~ped either by General category candidates or by candidates belonging to
Primary Societies. In this view of the matter, we fail to understand how can
it'be held that there has been a violation of sub-section (4) of Sectfon 80 of
D
the Act. From the impugned judgment of the High Court, it appears that since
,
...., the Bank did not give any relaxation in favour of Scheduled Castes/Scheduled
Tribes candidates by fixing a lower marks for passing, the court has come to
the conclusion that there has been a violation of sub-section (4) of Section
80 of the Act. In our considered opinion, the conclusion of the High Court
on the aforesaid basis is. wholly erroneous. Neither the Act nor the Rules E
made thereunder nor even the guidelines issued by the Registrar prescribing
procedure for appointment .to the post in the apex society anywhere even
whisper that there should be a lesser standard of scrutiny for the Scheduled
Castes/Scheduled Tribes candidates. It is well settled that when recruitment
to posts is governed by statutory. rules framed in exercise of power under
... proviso to Article 309 of the Constitution, said Rules must be strictly adhered F
to or else the appointments would be struck down for not being in conformity
with such statutory Rules. Since the statuary rules of recruitment in the
present case did not provide for a lower standard of scrutiny for the reserved
Scheduled Castes/Scheduled Tribes category !>f candidates and even the
Registrar had not issued any such direction, the Bank cannot be held liable G
for not having prescribed a lesser standard of scrutiny for reserved candidates
nor on that ground it can be said that there has been a violation of sub-
section (4) of Section 80 of the Act. In this view of the matter, the conclusion
' of the High Court with regard to alleged infraction of sub-section (4) of
Section 80 of the Act is wholly unsustainable and the same must be quashed.
It may be stated in this connection that though five of the candidates belonging H
162 SUPREME COURT REPORTS [1998] 3 S.C.R.

A to Scheduled Castes/Scheduled Tribes were appointed and this fact has not
been denied but yet the High Court erroneously came to the conclusion that
such appointments were made on the merit quota. This conclusion is based
on the fact that against these candidates there has been no mentioning of
Scheduled Castes or Scheduled Tribes. As it appears from the relevant
B materials produced, that the General category candidates in whose favour
appointments had been issued up to the 86th position and the Scheduled
Castes/Scheduled Tribes candidates who were appointed had secured the
ranks much below namely 92, 93, 95 onwards. The conclusion of the High
Court that they got the appointment from the merit quota is on the face of
it erroneous.
c The next question that arises for consideration is : whether the High
Court was justified in coming to the conclusion that both the Banks, namely,
Trissur Bank as well as Kottayam Bank has violated the provisions of Rule
187 of the Rules? In view of the contentions raised by Mr. Reddy, the learned
Additional Solicitor General, appearing fo~ the Registrar in this connection
D and the reasoning on which the High Court came to hold that there has been
a violation of Rule 187, it would be appropriate to extract Rules 186 and 187 .
y
in extenso:

"Rule 186. Qualifications :-

E (I) No person shall be eligible for appointment in any post unless he
possesses the 'qualifications prescribed for the post as shown
below:

(i) All posts other than those requiring technical qualifications, the
starting pay of which is Rs. 250/- and above:-
F
A. A Degree in Commerce or Masters Degree in Arts of a
recognised University, with Co-operation as special subject

OR
G
B. (i) B.A., B.Sc., or B.Com. degree of a recognised University
and

(ii) Higher Diploma in Co-operation (HDC of State Co-
operative Union of Kerala or HDC, and HDCM of the
H National Council for Co-operative Training) or successful
BENNY T.D. AND ORS. v. REGISTRAR CO-OP. SOCIETIES [PATTANAJK, J.] 163

completion of the Subordinate (Junior) Personnel Co- A
operative Training Course (Junior Diploma in Co-
operation).

C. Diploma in Rural Services with Co-operation as optional subject.

OR
B
D. B.Sc. (Co-operation & Banking) Degree of the Kerala Agricultural
University.

(ii) Other supervisory and Ministerial posts other than those
requiring Technical qualifications, the starting pay of which is
below Rs. 250. C
S.S.L.C. or its equivalent and successful completion of
Subordinate Personnel Co-operative Training Course (Junior
Diploma in Co-operation).

(iii) Typist: D
•
S.S.L.C. or its equivalent with Type-writing (Lower).

(iv) Stenographer:

S.S.L.C. or its equivalent with Type-writing (Lower)
E
(v) All other posts with starting pay below Rs. 100:

Seventh Standard.

Note:- (I) Nothing in this Rule shall apply to the present
incumbents for the present post they hold.
F
xxx xxx xxx

187. Vacancies in Apex Society: Notwithstanding anything contained
in Rule 186 for appointments to the 50% of the vacancies arising in
the Apex Society or (other Federal type Society having other societies
as its members) experience in the Societies which are members of the G
respective Apex Society or Federal type society, as the case may be,
· (shall be a necessary additional qualification)."

In the impugned judgment the High Court, interpreting Rule 187 of the
Rules recorded its conclusion that 50% of the vacancies in an apex society
must be filled up with persons having the additional qualification mentioned H
164 SUPREME COURT REPORTS [1998] 3 S.C.R.

A . in Rule 187, which in turn, would mean that the quota for such candidates
who are working in the member society is fixed at 50% of the vacancies. On
a plain reading of Rule 187, by itself, it is difficult for us to accept the
conclusion arrived at by the High Court to the effect that 50% of the vacancies
are reserved for employees of Primary Co-operative Societies affiliated to the
Bank. A combined reading of Rules 186 and 187 would lead the only conclusion
~ that though the qualification for the posts of "Clerk" had been enumerated
in Rule 186 but in respect of 50% of vacancies arising in the apex society, the
in-service candidates serving in the Primary Societies will get the advantages
as their experience would be treated as an additional qualification. In this view
of the matter, it is difficult for us to hold that under Rule 187, 50% of the
C vacancies in the apex society is kept reserved for the in-service candidates
serving in the Primary Societies. Mr. Reddy the learned Additional Solicitor
General appearing for the Registrar faced with this position urged that though
under Rule 187 apparently there has been no reservation for in-service
candidates but the said Rule should be read as a part of Rule 186, both the
Rules being operative in the same field, namely, prescribing qualification for
D appointment to the post of~'Clerk" and on such a construction being given
it would be logical to hold that no person would be eligible for appointment
to the 50% of the vacancies arising in the apex society unless he possesses
the necessary additional qualification as provided in Rule 187. Such a
construction cannot be given to Rule 187 in view of the opening words of
E the said Rule starting with a non-obstante clause. When a particular provision
in a statute begins with a non-obstante to the effect "n.otwithstanding anything
contained" the idea is obvious that the provision embraced in the non-
obstante clause will not be an impediment for the operation of the enactment.
It would, thus, be impermissible to construe Rule 187 in the manner as
contended by Mr. Reddy, the learned Additional Solicitor General, nor is it
F possible for us to agree with the construction made by the High Court in
coming to the conclusion that under Rule 187, 50% of the vacancies arising
in the apex society has to be kept reserved for persons belonging to the
Primary Societies. The construction put to the Rule 187 by the High Court is
wholly erroneous and the same cannot be sustained and consequently the
G ultimate conclusion that there has been an infraction of Rule 187 is
unsustainable in law. From the assertions made by the Bank in the special
leave petition which they had filed, it appears that the Bank had fixed 52 as
the cut off marks in the written test for the direct recruits both General and
.Scheduled Castes/Scheduled Tribes candidates and 44 for employees belonging
to the Primary Societies and those of the candidates who secured more than
H 44 from amongst applications belonging to the Primary Society they had been
BENNY T.D. AND ORS. v. REGISTRAR CO-OP. SOCIETIES [PA TTANAIK, J.] 165

called for interview and on the basis of the marks secured in interview the A
same being added to their marks in the written test, final selection was made.
In case of Trissur Bank, 432 candidates belonging to the Primary Society had
applied for and only 75 of them' secured marks above 44 and were called for
interview and finally 24 of them were found suitable and were appointed.
Under the Rules as well as the guidelines issued by the Registrar providing B
the procedure for making recruitment the power of the employer to adjudge
suitability has not been taken away in any manner. While, therefore, Rule 187
gives a leverage in favour of in-service candidates serving in the primary
j, society for being considered for the posts of "Clerk" in the apex society by
taking their experience as an additional qualification but such additional
qualification even after being taken into account if a person is adjudged C
unsuitable there is no compulsion on the employer to appoint such unsuitable
person. In the aforesaid premises, we are of the considered opinion that the
High Court committed serious error of law by holding that there has been a
violation of Rule 187 since 50% of the vacancies have not been filled up by
the candidates serving in different primary societies.
D
Though the High Court dismissed the writ petition as well as the writ
appeals preferred against the judgment of the learned single Judge by coming
to the conclusion that there has been violation of sub-section (4) of Section
80 of the Act and Rule 187 of the Rules but the Registrar had annulled the
resolutions of the Bank appointing persons to the post of Clerk on other E
grounds also and since the legality of the order of the Registrar invalidating
the appointment made· was challenged in the High Court by filing writ petitions,
it is necessary to examine the other grounds also. From a perusal of the order
of the Registrar and. the issues framed for consideration would indicate that
the Registrar had also struck down the appointment on two other grounds,
namely, the Bank had appointed staff in excess of the approved strength and F
secondly the advertisement was not in accordance with the Circular-instructions
of the Registrar of Co-operative Societies No. 18 of 1991. Coming to the
question as to whether appointment had been made in excess of the staff
strength approved by the Registrar, it appears that apart from the above
statement made by the Registrar in his order no material has been brought G
on to the record to support the aforesaid conclusion of the Registrar. Merely
because in the advertisement issued by the bank probable number of vacancies
had been indicated to be lesser than the number of persons finally appointed,
one cannot jump to the .conclusion that there has been an excess appointment
beyond the .staff strength approved by the Registrar. It is well known that
during the time when an advertisement is issued and by the time when H
166 SUPREME COURT REPORTS [1998] 3 S.C.R.

A process of selection starts and ultimately appointment orders are issued on
account of several factors the number of posts may be increased, the factors
being retirement of persons on attaining superannuation, death of several
employees, promotion of the employees to higher posts and for variety other
grounds. In such contingencies, when appointments are made depending
B upon the vacancies available and in excess of the vacancies advertised it
cannot be said that the appointment has been made in excess of the strength
of the cadre approved. There is neither any allegation nor any material to
sustain the finding of the Registrar that in fact appointment has been made
in excess of the posts approved by the Registrar. The said conclusion,
therefore, must be held to be a conclusion based on no evidence and
C accordingly cannot be sustained.

The next question relates to the Circular - instruction of the Registrar
of Co-operative Societies No. 18 of 1991. The said circular is dated 7th of
June, 1991. It provides the procedure relating to recruitment for appointment
of employees in Co-operative institutions. We have carefully considered the
D aforesaid circular and we fail to understand how the Registrar could come to
the conclusion that in the case of the two banks, namely, the Trissur District
Co-operative Bank as well as the Kottayam Bank appointments had been
made contrary to the aforesaid circular. Clause 4(e) of the circular stipulates
that the conditions with regard to age-limit, qualificatio;is, mode of appointment
E as laid down in the rules framed under Section 80 such as rules 183, 186, 187
of the Kerala Co-operative Society Rules shall be strictly followed. In view
of our earlier conclusion that there has been no violation of Rule 187 of the
Rules, the conclusion of the Registrar that appointment has been made in
contravention of the aforesaid circular No. 18 of 1991 also falls through and
the said conclusion cannot be sustained.
F
Apart from the aforesaid question which are common in respect of
recruitment in both the Banks, in case of Kottayam Bank the Division Bench
of the High Court had categorically found that the recruitment itself is vitiated
on account of large scale mal-practice. It may be stated that the Registrar
G while issuing notice under Rule 176 of the Rules to the Board of Directors
of Kottayam District Co-operative Bank by letter dated 24th of July, 1986 did
not indicate about any large scale mal-practice adopted in the test conducted
by the bank excepting to the effect: "The marks awarded and the consolidated
marks recorded are corrected and manipulated." Some of the candidates were
given less marks and some others were given higher marks. But while
H considering the legality of the resolutions passed by the bank appointing
~-ENNY T.D. AND ORS. v. REGISTRAR CO-OP. SOCIETIES [PATTANAIK, J.] J67
several persons the Registrar took into consideration the so-called report of A
the Kerala Public Men's (Corruption, Investigation and Enquiries) Commission
who had directed for a detailed enquiry and on that basis came to the ultimate
conclusion that the appointment of candidates made by the Kottayam District
Co-operative Bank is vitiated. The learned Single Judge came to the conclusion,
and in our opinion rightly, that in the absence of any detailed particulars of B
the alleged irregularities in the notice issued to the bank under Rule 176 and
in the absence of report of the Kerala Public Men's (Corruption, Investigation
and Enquiries) Commission being made available to the bank or the persons
appointed, it is not open to the Registrar to come to the conclusion about
the irregularity and said conclusion is vitiated on account of gross violation
of the principle of natural justice. The Division Bench, however, disagreed C
with the conclusion of the learned Single Judge on this score and relied upon
the report of the Commission and came to hold that the entire selection
process wits vitiated by illegality and irregularity and therefore there is no
other option than to cancel the appointments of all the candidates. The
- Division Bench was conscious of the fact that the persons to be adversely
. affected by the impugned decision had not been given an opportunity inasmuch D
as the relevant documents had not been put to them nor even to the bank
who made recruitment but yet brushed aside the principle of natural justice
apd did not focus its attention to the same and on the other hand came to
the conclusion that the process of selection got vitiated on account of alleged
irregularity and illegality. In our considered opinion the Division Bench patently E
committed an error in relying upon the report of the Commission and in
recording a finding that irregularities have been committed in the selection
notwithstanding the fact that the said report had not been made available to
the Bank or to the affected parties. That apart, as stated earlier in the notice
that was issued by the Registrar there was no particulars given and on such
vague assertions made, it was not permissible to record a conclusion that F
there has been any irregularity in the process of selection. The said conclusion
of the Division Bench much accordingly be set aside.

Mr. Sukumaran the learned senior counsel relied upon the decision of
this Court in Pritpal Pal Singh & Ors,. v. State of Haryana & Ors., (1994) G
5 Supreme Court Cases 696 and urged that in view of the findings of the
Public Inquiry Commission that there has been tampering of marks in respect
of several candidates and as such there has been no fair and objective
selection, the public interest demands annulment of the entire selection and
a court should not shirk its responsibility by directing annulment of selection
on the mere technicality that the Report of the said Public Inquiry Commission H
168 SUPREME COURT REPORTS [ 1998] 3 S.C.R.

A had not been given to the Bank or any of the persons to be affected. In the
aforesaid case, selection made by the Haryana Subordinate Services Selection
Board for appointment to the post of Assistant sub-Inspectors of Police was
annulled by this Court on coming to a conclusion that the selection made by
the Board was not objective and fair. This Court held that the matter which
B involved the public interest could not be treated as purely adversarial. But
in the course of hearing the Court being of the opinion that the problem to
be resolved was much too serious to be dealt with on adversarial contentions
and in view of glaring infirmities in the process of selection which the court
noticed, all the persons including those who had been selected and appointed
were directed to be duly notified, so that, the court could decide as to whether
C the entire selection process was infirm and quash the selection. To achieve
the aforesaid objective, the court had called upon the Chief Secretary to the
State Government to furnish upon affidavit particulars regarding constitution
of the Board, the names and qualification of its members and to produce the
record and minutes of the Board's meeting. Jn other words, the Court complied
with the principles of natural justice by giving notice to the affected parties
D of all the relevant materials and then on receiving explanations from those
persons by way of affidavit in this Court and taking into account the
f
contentions raised by those persons, ultimately decided the matter. The ratio
of the aforesaid case will have no application to the present case inasmuch
as neither the Bank nor any of the affected parties have been given a copy
E of the Report of Public Inquiry Commission on which Report the Registrar had
relied upon as well as the Division Bench of the High Court had relied upon
and came to a conclusion by relying upon such Report without giving any
opportunity to the parties concerned to have their submission. It would
tantamount to gross violation of the principle of natural justice which cannot
be brushed aside on the ground that public interest demands annulment of
F the selection. In our opinion, the ratio of the aforesaid decision cannot be
applied to the case in hand.

In view of our conclusions as aforesaid, we hold that the order of the
Registrar in annulling the resolutions of the Trissur District Co-operative
G Bani< Limited as well as the resolution of the District Co-operative Bank,
Kottayam is vitiated with manifest error and as such the said order of the
Registrar cannot be sustained and we accordingly quash the same. The

H
judgments of the High Court passed by the learned Single Judge as well as
the Division Bench in writ appeal are also erroneous and the same are
therefore set aside and the writ petitions filed by the respective petitioners
stand allowed. Necessaril~, therefore, the appointments made to the post of
-
;
BENNY T.D. AND ORS. "· REGISTRAR CO-OP. SOCIETIES [PATTANAIK, J.] 169

Clerk by Resolution No. 2 dated 5.2.1995 and Resolution No. 10 dated 17.5.1995 A
passed by the Board of Directors of Trissur District Co-operative Bank is held
to be valid and similarly appointment made to the post of Clerk by Resolution
Nos. 3 and 4 dated 13.4.1995 passed by the Board of Directors of District Co-
operative Bank, Kottayam must be held to be valid. Civil Appeals arising out
ofS.L.P. (c) Nos. 9350-9352of1997, Civil Appeal arising out ofS.L.P. (c) No.
9728of1997, Civil Appeals arising out ofS.L.P. (c) Nos. 10149-10150of1997, B
stand allowed and Civil Appeals arising out ofS.L.P. (c) Nos. 15444-15448 of
1997 filed by the State of Kerala stand dismissed but in the circumstances
there will be no order as to costs.
R.P. Appeals allowed/dismissed.
c