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D.V.V. Satya Prasad and ors. Vs. the Government of Andhra

Pradesh, Rep. by Its Secretary, Food and Agriculture (Co-op.)
Department and ors.

LegalCrystal Citation : legalcrystal.com/438911

Court : Andhra Pradesh

Decided On : Nov-16-1995

Reported in : 1996(1)ALT390

Judge : M.N. Rao and ;Syed Saadatulla Hussaini, JJ.

Acts : Andhra Pradesh Co-operative Societies Rules, 1964 - Rule 73;

Andhra Pradesh Co-operative Laws (Amendment) Act, 1987 - Sections
11, 11(2) and 130(1); Constitution of India - Articles 14 and 16; Andhra
Pradesh Co-operative Societies Act, 1964 - Sections 15A and 15A(1)

Appeal No. : Writ Petition No. 13389 of 1990

Appellant : D.V.V. Satya Prasad and ors.

Respondent : The Government of Andhra Pradesh, Rep. by Its

Secretary, Food and Agriculture (Co-op.) Department an

Advocate for Def. : Government Pleader and ;C. Sidasiva Reddy, K.

Muralidhar Reddy, K. Narsimham, P.M. Gopal Rao, M. Panduranga Rao,
R. Radhakrishna Reddy, M. Rama Rao, C. Panduranga Rao, I. Sreerama
Murthy, K. Sesharaj

Advocate for Pet/Ap. : M.R.K. Choudary, M.V. Durga Prasad, L.

Ravichander, S. Ramachandra Rao, K. Lakshminarasimha, G. Veera
Reddy, S. Niranjan Reddy, A. Gopal Reddy, V.V.S. Rao and G. Dharma
Rao, Advs.

Disposition : Petition dismissed

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Judgement :

M.N. Rao, J.

1. At issue in this batch of writ petitions is the validity of Rule 73 of the

Andhra Pradesh Co-operative Societies Rules, 1964 issued in
G.O.Ms.No. 132, Agriculture and Co-operation (Co.-op. III) Department
dated 3-3-1993 as amended by G.O.Ms.No. 212, Agriculture & Co-
operation (Co-op III) Department dated 7-5-1994, which concerns the
transfer of employees of the erstwhile Primary Agricultural
Development Banks (for short 'PADBs') to the service of the District Co-
operative Central Banks (for short 'DCCBs'). Primarily, Rule 73
incorporates the guidelines for equation of posts and integration of
services covering the gamut of cadre strength, notional and future
promotions, options to be exercised by the employees, inter se
seniority, continuity of service and other related matters. Certain
employees of the D.C.C.Bs., have been resisting the absorption of the
staff of the erstwhile P.A.D.B. employees on the ground that such
absorption would affect, adversely, their service conditions and the
statutory rule incorporating the principles for equation of posts and
integration of services has travelled beyond the scope of Section 11 (2)
(d) of the Co-operative Societies (sic. Laws Amendment) Act (for short
'the Act'), Act No. 1 of 1987 by which the principal Act - the Andhra
Pradesh Co-operative Societies Act, 1964 - was amended.

2. The controversy in these cases centres around the equation of posts

in the cadres of Manager, Accountant and Supervisor prior to 1-4-1987,
the following was the staff pattern in the respective organisations:

P.A.D.B.(L.T.)

D.C.C.B.(ST.)

Cadre

Payscale

Totalemoluments
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Cadre

Payscale

Totalemoluments

minimum

maximum

minimum

maximum

Manager

675-40-995-45-1400

2,096

3,547

Asst. Gen. Manager

560-31-622-37-770-41934-52-1142-61-1264

2,077

4,560

Secretary

460-25-610-30-730-35-940

1,539

2,906

Manager

454-25-504-31-628-37776-42-944-52-1048

1,689
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3,799

Asst. Manager, E.O., Engg.Supervisor

410-20-490-35-640-28-780-30-870

1,452

2,710

Accountant

332-17-366-21-450-25-550-31-674-37-748-38-824

1,230

3,011

Accountant

340-18-412-20-492-25-617-28-757

1,262

2,394

Supervisor/ Typist

300-15-360-18-432-20-552-25-702

1,134

2,220

Clerk/ Supervisor/ Typist

264-11 -286-13-312-18-384-22-472-26-576-33-708

983

2,603

Driver
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220-11-330-13-434

834

1,512

Driver

211-4-247-6-286-8-318-9-336-10-376

995

1,773

Peons/ Watchman

200-7-255-10

757

1,353

Peon/ Watchman

163-171-4-21 6-5-249-6-288

768

1,357

3. Even before the Rule 73 was framed, writ petitions were filed in this
court challenging the action of the Government in accepting the
recommendations of the One Man Commission headed by Sri V.
Sunderesan, IAS., a senior civil servant, which went into the question
and submitted its report. As all these cases are inter-linked, involving
common questions for adjudication, we are inclined to dispose of the
same by this common judgment.

4. Prior to 1-4-1987, credit facilities were made available to the rural

agriculturists by two organisations with different staffing pattern. The
short term credit was serviced by a three tier structure: at the village

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level, the unit was Primary Agricultural Co-operative Society (PACS); at
the District level, it was District Co-operative Central Bank (DCCB); and
at the apex level, it was designated as the Andhra Pradesh State Co-
operative Bank. The long term credit facilities were made available by
a two-tier structure: at the taluk level, the organisation was Primary
Agricultural Development Bank (PADB) and at the apex level, the
organisation was the Andhra Pradesh Co-operative Central Agricultural
Development Bank Ltd. The Legislature of the State of Andhra Pradesh
enacted Act No. 1 of 1987 introducing what was commonly called
'Single Window System' integrating the long term and short term co-
operative credit structures in order to revitalise co-operative
institutions, as stated in the statement of objects and reasons. To
achieve this objective, the statement of objects and reasons says, 'It is
necessary to reorganise the various co-operative institutions on the
new pattern to ensure financial viability and easy access by the
members to the co-operative institutions in the interest of better
administration of democratic function. In the process, certain classes
and levels of societies will be abolished and the functions, funds, assets
and liabilities will be transferred to the newly formed Single Window
Institutions....' Section 15-A of the principal Act was amended by
Section 2 of Act 1 of 1987 conferring power on the Registrar 'to
amalgamate or merge any society with any other such society or to
divide and restrict or transfer the area of operation of a society or to
liquidate a society for any of the purposes mentioned therein. Section
11 of Act 1 of 1987 relates to abolition of Primary Agricultural
Development Banks. Omitting the immaterial points, it reads:

'Section 11. Abolition of Primary Agricultural Development Banks: (1)

With effect on and from the date appointed by the Government under
Sub-section (2) of Section 1, the Primary Agricultural Development
Banks registered under the Principal Act or deemed to have been
registered under that Act shall stand abolished.

(2) On such abolition of a Primary Agricultural Development Bank

under Sub-section (1),-

(a) ... ... ....(b) ... ... ....(c) ... ... .... (d) the Registrar may transfer the

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officers and other employees who immediately before such abolition
were in the service of the said Bank (including those belonging to a
centralised service) to the service of the Financing Bank or to a Primary
Agricultural Cooperative Society in the manner prescribed,

Provided that-

(i) the terms and conditions applicable to such officers and other
employees, consequent on their absorption in the service of
Cooperative Central Bank or the Primary Agricultural Cooperative
Society shall not be less favourable than those applicable to such
employees immediately before such abolition as respects pay and
allowances, leave, gratuity, provident fund and age of superannuation;
and

(ii) the service rendered by any such officer or other employee under
the said bank upto its abolition shall be deemed to be service under
the Co-operative Central Bank or, as the case may be, the Primary
Agricultural Co-operative Society and he shall be entitled to count that
service for purpose of increment, leave or provident fund and gratuity.'

5. The aforesaid provisions came into force on 1-4-1987. The Primary

Agricultural Development Banks stood abolished with effect from date
because of the legislative scheme contained in Section 11 (1). At
present, both long term and short term loans are being serviced by the
District Co-operative Central Banks through the Primary Agricultural
Co-operative Societies. The Primary Agricultural Co-operative Society
serves a group of villages; the District level body - the Co-operative
Central Bank - is controlled by the Andhra Pradesh State Co-operative
Bank. There are now 22 District Co-operative Central Banks.

6. As the implementation of the single window service scheme required

integration of services of the personnel coming under the long term
(PADBs) and short term (DCCBs) credit structures, the Commissioner of
Co-operation had reported to the Government that as the 'interests of
the employees of the short term and long term structures appears to
be at variance he proposes the appointment of One Man Commission
to examine dispassionately all the issues relating to the integration of
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the services of employees of the Cooperative Central Banks and of the
erstwhile Primary Agricultural Development Banks keeping in view the
representations from the service Unions.' The Government, therefore,
acceding to the request, appointed by G.O.Ms.No. 384, Food and
Agriculture Department dated 19-5-1988 a One Man Commission with
Sri V. Sunderesan, IAS (Retd.) as Chairman to examine all the issues
relating to integration of the services of the employees of Co-operative
Central Banks and of erstwhile Primary Agricultural Development
Banks'. The terms of reference of the Commission are incorporated in
Paragraph 7 of the G.O., which reads:

'7. The terms and references of the Commission shall be as follows:-

(1) In the context of integration of District Co-operative Central Banks,

Primary Agricultural Co-operative Societies and Primary Agricultural
Development Banks, to study the integration of services including pay
scales and recommend possible common pay structure, duly keeping
in view the various demands of employees associations and viability of
the future organisation and appropriate norms of expenditure.

(2) To make recommendations regarding fixation of inter-se seniority of

the employees of the District Co-operative Central Banks and erstwhile
Primary Agricultural Development Banks in the integrated cadre of the
future.

(3) To keep in view the equation of various posts of erstwhile cadre and
make suitable recommendations.

(4) To make such other recommendations as may be necessary for

appropriate organisation structure, staffing pattern, future service
regulations, time frame for the implementation and other relevant
matters.'

The Commission was asked to make its recommendations within a

period of two months as far as possible.

7. Commission received representations from the service Unions

afforded a personal hearing to the representatives and submitted on

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elaborate report after considering the qualifications of the two sets of
employees the method of appointment, the nature of duties performed
by them and the pay structure. The principles evolved under Section
115 (5) of the States Reorganisation Act for equation of posts and
integration of services among the employees of the States affected by
the States Reorganisation constituted the basic guidelines for the One
Man Commission. Although the Government accepted in the beginning
in toto the recommendations of the One Man Commission, later on,
agreed for deviation in one particular respect viz., to equate the post of
Manager, P.A.D.B. with that of the Manager D.C.C.B., instead of with
the higher post of Assistant General Manager, D.C.C.B. and this was
done because of the agreement reached between the rival associations
To set right any imbalance that would creep in because of this
deviation, the State Government, at the request of the two service
unions, had agreed for creation of 107 posts of Assistant General
Managers in the District Co-operative Central Banks, equivalent to the
number of Managers of the erstwhile P.A.D.Bs., as on 31-3-1987 and to
fill up these posts on the basis of common seniority of the Managers of
the D.C.C.Bs., and the Manager and Secretaries of the erstwhile
P.A.D.Bs., and accordingly, this was inserted in Rule 73.

8. Even as far back as 1987, a writ petition - W.P.No. 10846 of 1987 -

was filed in this court challenging the action proposed to be taken by
the Government- at that stage, the Government was finalising the
scheme for absorption Quite surprisingly, a learned single judge of this
court, by an interlocutory order dated 4-9-1987 in W.P.M.P.No. l4477 of
1987 directed the authorities 'not to finalise the scheme for integration
of services until the agreed draft scheme is placed before the court,
which should be in three months from today' When W.P.No. 10846 of
1987,12744 of 1989 and 14115 of 1989 came up for hearing before a
Division Bench of this court consisting of one of us (M.N. Rao J.) a
representation was made on be half of the Government that be cause
of the above order of the learned single judge, the statutory rule could
not be framed finalising the scheme. The learned Government pleader
also represented that a draft scheme prepared by the Government
entitling it as Rule 73 was placed before the learned judge for his
approval. As such a course of action suggested by the learned judge
9/42
was impermissible in law, the Division Bench while declining to
adjudicate upon the legality of the draft scheme submitted to this
court, directed the State Government:

'without reference to the interlocutory order passed in WPMP No.

14477 of 1987 to finalise the matter and issue an appropriate rule
within four weeks from the date of receipt of a copy of the order'.

Subsequently, Rule 73 was issued and later on, in certain respects, it

was modified. Rule 73 as it stands now incorporating the principles for
equation of posts and related details is in the following terms:

RULE 73: TRANSFER OF EMPLOYEES OF ERSTWHILE PRIMARY

AGRICULTURAL DEVELOPMENT BANKS TO THE SERVICE OF THE
DISTRICT CO-OPERATIVE CENTRAL BANKS:

Consequent on the abolition of the Primary Agricultural Development

Banks with effect from 1-4-1987, the Registrar shall transfer under
Clause (d) of Sub-section (2) of Section 11 of the A.P. Co-op. Laws
(Amendment) Act, 1987 (Act 1 of 1987) the Officers and Employees of
erstwhile Primary Agricultural Development Banks (Including those
under centralised cadre) to the services of the District Co-op. Central
Banks concerned in which they are working as on the date of
notification of this Rule. On receipt of such orders from the Registrar,
the General Managers of the District Co-operative Central Banks shall
communicate the same to all the concerned employees of the
erstwhile primary Agricultural Development Banks. Thereafter, the
General Managers of the District Co-op. Central Banks shall take the
following action for integration of the services.

1. Equation of cadres: The Employees in the erstwhile Primary

Agricultural Development Banks shall be equated with the cadres in
the Co-op. Central Banks as hereunder and after integration, they shall
be known by such designations as specified below namely:-

CADRES IN THE ERSTWHILE PRIMARY AGRL. DEV. BANKS

EQUATED CADRE IN THE DISTRICT CO-OP. CENTRAL BANKS

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1.

Manager and Secretary

Manager

2.

Asst. Manager, Executive Officer

No equated post. This post will be kept as distinctfading category.

3.

Engg. Supervisors

No equated post. This post will be kept as distinctcategory.

4.

Accountant

Accountant

5.

Asst. Accountant, Supervisor, Typist

Supervisor, Clerk, Typist

6.

Driver

Driver

7.

Jamedar,Attender to be kept as distinct category.

8.
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Peon/ Watchman

Peon, Watchman.

II. CADRE STRENGTH (Amendment dt. 7-5-1994)

All the officers and employees of the erstwhile Primary Agricultural

Development Banks working as on the 1st April, 1987 be absorbed in
the equated cadre posts in the Dist. Co-op. Central Banks where they
were working as on the 1st April, 1987. This will not apply to
employees of erstwhile Primary Agrl. Dev. Banks already transferred by
the Managing Director, A.P. Co-op. Central Agrl. Dev. Bank after 1st
April 1987from one Dist. Co-op. Central Bank to another or employees
in respect of whom issues transfer orders on requests received by him
before the 23rd April, 1993 keeping in view the guidelines issued by
the Commissioner for Coop. and Registrar of Co-op. Societies and they
shall be absorbed in the District Co-op. Central Banks in which they
joined later as per such orders. The total strength of each cadre in the
Dist. Co-op. Central Banks shall stand increased to the extent of the
number of employees of Primary Agrl. Dev. Banks absorbed in the
cadre.

The posts of Assistant General Managers in the Dist., Co-op. Central

Banks shall stand increased by 107 posts i.e., equivalent to the number
of posts of Managers of erstwhile Primary Agrl. Dev. Banks in the
District as on the31st March, 1987. These posts shall be filled on the
basis of common seniority of the Managers of Dist. Co-op. Central
Banks and the Managers and the Secretaries of the erstwhile Primary
Agrl. Dev. Banks in the integrated cadre of managers of the Dist. Co-
op. Central Banks duly observing the norms for promotions. The posts
vacated by the 107 employees shall stand abolished on their
absorption as Assistant General managers. The revised integrated
cadre strength of the Dist. Co-op. Central Bank shall, however, be
subject to revision according to any re-organised staffing pattern
evolved for each District Co-operative Central Bank and also taking into
account the legitimate business requirements of the Dist. Co-op.
Central Banks, interest margins available and viability of the Dist. Co-

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op. Central Bank.

III. NOTIONAL PROMOTIONS:-

(a) The Managing Committee of the Dist. Co-op. Central Banks may fill
up operational vacancies upto cadre IV as existing as on the 1st April,
1987 in the erstwhile Primary Agrl. Dev. Banks and in the Dist. Co-op.
Central Banks by notionally promoting employees from the respective
streams duly following the service regulations and general norms for
promotions. The said operational vacancies shall be reckoned in terms
of the posts in the Dist. Co-op. Central Banks and erstwhile Primary
Agrl. Dev. Banks which were once filled by the institutions but became
vacant later. The operational vacancies under short term and long term
streams, that arose between 1st April 1987 to 31st October 1991 shall
be filled up from the respective streams following the principle
governing promotions. The posts required to be filled by direct
recruitment shall not be considered while determining the operational
vacancies for notional promotions.

(b) The consequential vacancies arising subsequent to the 31st

October, 1991 from out of such promotions in all the cadres shall not
be filled up till revised staffing pattern is evolved duly taking into
account the legitimate business requirements, interest margins
available and financial viability of District Co-op. Central Banks.

(c) The promotions will have only notional effect for reckoning the
seniority in the integrated cadre and monetary benefit will be extended
to the employees with effect from 1-1-1993.

(d) This process of the filling up promotional vacancies shall be

completed by the Managing Committee of the Dist. Co-op. Central
Banks within a reasonable time frame.

IV FUTURE PROMOTIONS:

The future vacancies of Managers in the Dist. Co-op Central banks shall
be filled in by promotion from the common pool of Asst. Managers,
Executive Officers or Accountants of erstwhile Primary Agrl. Dev. Banks

13/42
and Accountants of the Dist. Co-op. Central Banks duly following the
service regulations and general norms governing the promotions. The
posts required to be filled in by direct recruitment shall not be
considered for promotion. V. OPTION:

(a) After receipt of orders of transfer to the services of Dist. Co-op.

Central Banks, the employees of erstwhile Primary Agrl. Dev. Banks
shall exercise option either to continue in the erstwhile Primary Agrl.
Dev. Bank service regulations in respect of pay and other allowances
as governing them as on the 1st April, 1987 or opt to the pay and
allowances of Dist. Co-op. Central Banks till such time uniform pay
scales and allowances are evolved. In such cases where they opt for
pay and allowances of Dist. Co-op. Central Banks, the employees of
erstwhile Primary Agrl. Dev. Banks shall be given wage parity with
reference to the length of service in the equated cadre with the
employees of the Dist. Co-op. Central Banks with effect from the 1st
Jan. 1993. In case of non-monetary items such as disciplinary action,
promotions and such other matters, the existing regulations as
applicable to the employees of corresponding cadres of Dist. Co-op.
Central Banks shall apply.

(b) The General Manager of the Dist. Co-op. Central Bank shall call for
options of all the erstwhile primary Agrl. Dev. Banks personnel, by
issue of individual notices, as well as by affixture on the notice board of
the Dist. Co-op. Central Bank Head Office and its branches in the
district. The erstwhile Primary Agrl. Dev. Bank personnel shall send
their options to the General Manager within one month from the date
of notice calling for such options.

(c) If the erstwhile Primary Agrl. Dev. Bank personnel opt for Dist. Co-
op Central Bank pay and allowances, they shall be so governed with
effect from the 1st January, 1993. If they opt for pay and allowances,
gratuity and provident fund of erstwhile primary Agrl. Dev. Banks, they
shall be so giverned till they get next promotion in the next cadre in
the Dist. Co-op Central bank in the integrated set up. On such
promotion they shall be governed by the District Co-op. Central Bank
pay and allowances.

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(d) If any one does not give any option either to the Dist. Co-op. Central
Bank pay and allowances or erstwhile P.A.D. Bank pay and allowances
within the time prescribed, they shall be governed by the erstwhile
Primary Agrl. Dev. bank pay and allowances till such time they get
promotion as per norms and on such promotion they shall be governed
by the Dist. Co-op. Central Bank pay and allowances.

(e) The General Manager of the Dist. Co-op Central bank shall finalise
the options of all the employees of erstwhile Primary Agrl. Dev. Banks
within a period of two months from the date of receipt of such options
from the employee.

VI. INTER-SE SENIORITY:

(a) The Inter se seniority of the erstwhile Primary Agrl. Dev. Bank
employees of the Dist. Co-op. Central Bank employees in the equated
cadres in each district shall be fixed by the General Managers, Dist. Co-
op. Central Bank on the basis of dates of their appointment in the
cadres in which they are working on regular basis including notional
promotions. If the dates of such appointments happens to be the same,
the seniority shall be fixed on the basis of the age, the elder being
placed above the younger. However, in this process, inter se seniority
of the Primary Agrl. Dev. Bank personnel and the inter se seniority of
the District Co-op. Central Bank personnel shall not be disturbed.

(b) The General Manager, shall initiate action for fixation of inter se
seniority, within six months of issue of order by Registrar of
Cooperative Societies transferring the Co-operative Central Banks and
give opportunity to all concerned to file objections, if any, within one
month of publication of the inter se seniority and, after considering
objections, issue the final list within four months.

VII. DISCIPLINARY CONTROL:

The Managing Committee of the District Co-op. Central Bank or the

officer authorised but it, shall have powers over the employees of
erstwhile PADBs transferred to the service of the Dist. Co-op. Central
Banks in respect of disciplinary action, transfers promotions, sanction
15/42
of leave etc., as per Dist. Co-op. Central Bank Employees Service
Regulations. VIII. CONTINUITY OP SERVICE:

132 The services rendered by the officers and employees of erstwhile

Primary Agrl. Dev. Banks upto and from 1-4-1987 shall be deemed to
be the service rendered in the DCC Banks to which they were
transferred. IX. APPEAL: Any person aggrieved by any order of the
General Manager of the DCC Bank may appeal to the Managing
Committee of the District Co-op. Central Bank concerned and its
decision shall be final and binding.'

9. The petitioners' case was argued by M/s M.R.K. Choudhary, V.V.S.

Rao, M.V. Durga Prasad, G. Veera Reddy, M.L. Narsu and others, while
that of the respondents other than the State Government, by M/s N.
Subba Reddy, K.V. Narasimham and R.M. Gopal Rao. The learned
Government pleader advanced arguments for the State Government.
The submission of all the learned counsel covered the entire gamut of
the controversy.

10. For the petitioners, it was urged that the One Man Commission had
committed a serious error at the threshold stage itself in adopting the
principles evolved under the State Reorganisation Act with regard to
equation of posts and integration of services of the employees of
different States affected by the States Reorganisation. The Commission
went beyond its terms of reference in the matter of equation of posts
and integration of services between the two classes. The principles
evolved under the States Reorganisation Act have no relevance at all
in resolving the conflicting interests of the employees of D.C.C.Bs., and
the erstwhile P.A.D.Bs. Section 11 (2) (d) of the Act protects only
certain conditions of service of the employees of the erstwhile
P.A.D.Bs., viz., pay and allowances, leave, gratuity, provident fund and
age of superannuation. Although the second proviso to Clause (d)
speaks of service as one of the protected conditions, the service
rendered by the employees in P.A.D.Bs., was intended to be counted
only for the purpose of retirement benefits but not intended to be
reckoned for the purposes of promotion and seniority. Rule 73, which
provided these benefits to the former P.A.D.B. employees, has

16/42
travelled beyond the legislative prescription incorporated in Section 11
(2) (d) and, therefore, it is ultra vires the section. The service
conditions of the petitioners were adversely affected by reason of the
principles incorporated in Rule 73 for equation of posts and integration
of services; the promotional prospects of the existing D.C.C.B
employees have been marred to a very great extent thereby infringing
their fundamental right under Article 16 of the Constitution of India.
The posts of Manager, Accountant and Supervisor in the D.C.C.Bs. are
fair higher than the posts of Manager, and Secretary, Accountant and
Supervisor of the erstwhile P.A.D.Bs., in the case of the former, the
duties performed, responsibilities shouldered and functions discharged
are of a higher nature when compared with those of the latter. The
superiority of the former is also reflected in the qualifications
prescribed and the emoluments drawn vis-a-vis the latter. Rule 73 has
treated both the categories irrationally; unequals cannot be treated as
equals and, therefore, Rule 73 is liable to be struck down as violative of
Articles 14 and 16 of the Constitution. Section 11 (2) (d) of the Act,
which is claimed as the source of power for Rule 73, is at variance with
the legislative prescription contained in Section 116-A of the Act
conferring power on the Registrar of Co-operative Societies to
constitute common cadres for posts in certain co-operative societies
mentioned therein including co-operative banks. Section 15-A is a
separate code by itself conferring power on the Registrar of Co-
operative Societies to amalgamate or merge one society with another
society or liquidate a society for reasons specified therein and in that
process only he can change the service conditions of employees
affected by such amalgamation or liquidation. Under Section 11 (2) (d),
the Registrar has power to transfer officers and other employees of the
P.A.D.Bs., who were in service before 1-4-1987, the date of abolition,
'to the service of the financing bank or to a Primary Agricultural
Cooperative Society in the manner prescribed'. Rule 73 is concerned
only with the equation of posts and integration of services between the
employees of the D.C.C.Bs., and the employees of the erstwhile
P.A.D.Bs. As the D.C.C.B. is not the financing Bank of the P.A.D.B., Rule
73, in its entirety must be struck down. Although proviso 1 to Clause
(d) of Sub-section (2) of Section 11 refers to the absorption of the

17/42
erstwhile P.A.D.B. employees with those of D.C.C.B. employees and
proviso 2 deals with reckoning of the earlier service in the P.A.D.Bs. for
certain purposes, these two provisos cannot control the provisions in
the main Clause (d), and therefore, in the interpretation of Clause (d),
the provisos must be totally excluded.

11. In opposition to these submissions, it was urged by the learned

Government Pleader that when posts are equated and services
integrated, there cannot be any mathematical precision. After
considering all the aspects, the One Man Commission had submitted its
report and the Government, excepting in one respect, had accepted
the report of the One Man Commission. The exception was made
because of the agreement between the rival service unions. The
controversy which was raging from 1987has been amicably resolved
when the rival unions came to an agreement in the interests of the
members of both the unions, and the Government felt greatly relieved.
But now a few disgruntled individual officers have approached this
court advancing untenable pleas.

12. The learned counsel for the other opposite parties urged that the
employees of the D.C.C.Bs. in the equated posts are in no way superior
to the officers in the erstwhile P.A.D.Bs.

13. A general contention, obviously not intended to be pursued

seriously, advanced at the threshold stage for the petitioners is that
the Government have no power under the Act to frame a rule
concerning the seniority of the employees. Sub-section (1) of Section
130 of the Act empowers the Government to make rules by notification
published in the Gazette 'for carrying out all or any purposes of this Act
for the whole or any part of the State and for any class of societies'.
Undoubtedly, the P.A.D.Bs. and D.C.C.Bs., are societies under the Act.
Interpreting Section 58 (1) of the Reserve Bank of India Act, 1934
which conferred power on the Central Board to make regulations
consistent with the Act 'to provide for all matters for which provision is
necessary or convenient for the purpose of giving effect to the
provisions of this Act', the Supreme Court held in V.T. Khanzode v.
Reserve Bank of India, : (1982)ILLJ465SC :

18/42
'It seems to us clear that it is not only convenient but manifestly
necessary to provide for the service conditions of the Bank's staff in
order to give effect to the provisions of the Act.... It is, in our view, not
open to any question either on the basis of reason or authority that the
power to provide for service conditions of the staff is at least incidental
to the obligation to carry out the purposes for which the Bank was
constituted.' We, therefore, unhesitatingly, reject this contention.

14. The first contention so vigorously advanced for the petitioners that
the One Man Commission went beyond its terms of reference is without
any actual basis. G.O.Ms.No. 384 dated 19-5-1988 by which the One
Man Commission was appointed lays down in specific terms in
paragraph 4 that the Commission will examine 'all the issues relating
to the integration of services of the employees of Co-operative Central
Banks and the erstwhile P.A.D.Bs.' The other contention concerning the
One Man Commission is that it committed a grievous error in adopting
the guidelines evolved in regard to equation of pests and integration of
services at the time of the States Reorganisation. In paragraph 4.04 of
the report, it was stated:

'... the Commission also examined the principles and the guidelines
which governed the equation of posts of the erstwhile Hyderabad
Government and the erstwhile Andhra Government at the time of the
formation of the enlarged Andhra Pradesh State. The principles which
were laid down in this behalf were mainly as follows:

(i) The qualifications prescribed for direct recruitment to such posts;

(ii) The powers and the responsibilities of the posts.

(iii) The position in the hierarchy of the system.

(iv) Pay and allowances.

It may be seen that the factors that have been taken into consideration
by this Commission in this regard are more or less in agreement with
the principles which governed the equation of posts of Andhra and
Telangana services though the dimensions of the two problems are not

19/42
quite comparable.'

The terms of reference as mentioned in paragraph 7 of G.O.Ms.No. 384

by which the Commission was constituted, extracted supra, are very
comprehensive: the Commission after adverting to the terms of
reference and after detailed discussions with the officials of the
concerned departments, stated in para 2.02;

'After detailed discussions, I came to the conclusion that the terms of

reference as set out in the G.O., are too wide in some respects and
cover some issues which cannot possibly be the subject matter of
study by this Commission'.

The Commission, therefore, decided that its 'task should be restricted

only to the following two issues.'

'(1) formulation of a possible common pay structure duly keeping in

view various demands of employees' associations and viability of
future organisation and appropriate norms of expenditure'.

(2) make recommendation in regard to the appropriate organisational

structure, staffing pattern, future service regulations, time frame for
their implementation, etc.'

15. The legality of the reasons stated by the Commission for confining
its consideration only to these two issues is outside the purview of this
batch of cases. We, therefore, do not propose to go into that question.

16. The issues formulated by the Commission are very pertinent

covering the range of controversy between the two classes of
employees and in the context of consideration of these issues, the
Commission examined the guidelines followed with regard to the
equation of posts and integration of services in the wake of the
formation of the State of Andhra Pradesh on 1-11-1956 and expressed
that the factors taken into consideration by the Commission were more
or less in agreement with the principles evolved at the time of the
formation of the State of Andhra Pradesh, 'though the dimensions of
the two problems are not quite comparable'. The qualifications, powers

20/42
and responsibilities, position in the hierarchical system and pay and
allowances are undoubtedly crucial factors that must go into the
estimate when posts are equated and norms are evolved for the
purpose of consequential inter se seniority. In what respects these
considerations are beyond the permissible range of the Commission,
none of the learned counsel appearing for the petitioners could
substantiate. The problem was viewed by the Commission, in our
considered opinion, from the correct perspective. In a large number of
cases arising under the States Reorganisation Act concerning equation
of posts and integration of services of the employees affected by the
re-organisation of the States, the Supreme Court upheld the principles
as just and fair. Subba Rao v. Union of India - : [1973]1SCR945 ; State
of A.P. v. Rameshwar Prasad - : (1976)ILLJ295SC .

17. The report of the Commission is an exhaustive one running into 65

pages exclusive of the annexures. It consists of 8 chapters. The first
chapter deals with the structure of the two organisations, the service
conditions of the employees and the position obtaining prior to Act 1 of
987. Chapter 2 deals with the scope of the report and the views of the
associations are incorporated in Chapter 3. Chapters 4 and 5 relate to
equation of posts and inter se seniority. What pay scales should be
given to the former P.A.D.B. employees on absorption is dealt in
Chapter 6. The other issues which are incidental like regularisation of
certain number of employees, withdrawal of junior officers, payment of
interim relief, sanction of selection grades for C.C.B. employees and
other related matters are covered by Chapter 7. Chapter 8 contains the
summary of the conclusions. In the final form, as incorporated in Rule
73, the equation is as follows:

'Cadresin the erstwhile Primary Agrl. Dev. Banks

EquatedCadre in the Dist. Co-op. Central Banks.

1. Manager and Secretary

Manager

2. Asst. Manager, Executive Officer

21/42
No equated post. This post willbe kept as distinct fading category.

3. Engg. Supervisors

No equated post. This post willbe kept as distinct category.

4. Accountant

Accountant'.

The reason for the change at the level of the Manager, as already
stated supra, is the agreement of the two service associations and the
creation of 107 posts in the cadre of Assistant General Managers in the
D.C.C.Bs., equivalent to the number of Managers in the P.A.D.Bs., as on
31-3-1987.

18. The Commission taking the view that the protection of service
given to P.A.D.B. employees under Section 11 of the Act should
'logically be extended to cover seniority also' and after rejecting the
plea of the D.C.C.B union that only to the extent of 2/3rds of the
service of the P.A.D.B. employees should be counted, concluded in
Chapter V that 'the inter se seniority of the P.A.D.B. employees should
be fixed in the equated cadres on the basis of the dates of their
appointment in the cadres in which they were working on a regular
basis including notional promotions, if any, on 1-4-1987'.

19. The following comparative tables show the qualifications prescribed

and the pay structure as on 1-4-1987 in respect of the posts in
question as stated by the Commission:

STATEMENT SHOWING THE PAYSTRUCTURE OF L.T.

AND ST. CADRES AS ON 1-4-1987

P.A.D.B.(LT.)

D.C.C.B. (S.T)

Cadre

22/42
Pay scale

Total emoluments

Cadre

Pay scale

Total emoluments

minimum

maximum

minimum

maximum

Manager

675-40-995-15-1400

2,096

3,547

Asst. Gen. Manager

560-31-622-37-770-41 934-52-1142-61-1264

2,077

4,560

Secretary

460-25-610-30-730-35-940

1,539

2,906

Manager
23/42
454-25-504-31 -628-37 776-42-944-52-1048

1,689

3,799

Asst. Manager, E.O., Engg. Supervisor

410-20-490-35-640-28-780-30-870

1,452

2,710

Accountant

332-17-366-21-450-25-550-31-674-37-748-38-824

1,230

3,011

Accountant

340-18-412-20-492-25-617-28-757

1,262

2,394

Supervisor/ Typist

300-15-360-18-432-20-552-25-702

1,134

1,512.

Clerk/ Supervisor/ Typist

264-11-286-13-312-18-384-22-172-26-576-33-708

983
24/42
2,603

STATEMENTSHOWING QUALIFICATIONS, DUTIES ETC., OF LONG TERM &

SHORT TERM CADRES ASON 1-4-1987

P.A.D.B.(L.T.)

D.C.C.B.(S.T)

Cadre

Methodof appointment

Qualifications

Natureof duties

Levelof responsibility

Cadre

Methodof appointment

Qualifications

Nature ofduties

Levelof responsibility

25/42
8

10

Manager

(a) By promotion

Serviceof not less than 5 years as

Chiefof all Bank

No.1 inhierarchy Chief Executive

Asst.Gen Manager

By promotion

(i) A matriculate with 5 years service as Manager

Assistingand CM

No.3 inhierarchy

(b) By Transfer

Senior officer/Jr. officer of APCCADB Post. Grad.

(ii) Graduate with 2 years service as Manager

(c) By Direct recruitment

Second class/Degree l class with M.B.A.

(iii) Post Graduate with 1 year service as Manager

Secretary

(a) By promotion

Serviceof 3years as Asst. Manager/ Executive Officer

26/42
Chiefof all functions in the Bank

No.2 inhierarchy Chief Executive

Manager

(a) By promotion

(i) A matriculate with 5 years as Accountant

Head of Branch Head or Head of

No.4 inover-all incharge of Branch

Section inthe Office

(b) By transfer

StaffAsst. in APOCAD Bank

(ii) Graduate with. 2 years as Accountant

(c) By direct recruitment

A degree& diploma in Co-operation

(iii) P o s t -Graduate with 1 year service as Accountant

(b) By direct recruitment

A Post Graduate

Asst. Manager/E.G.

(a) By Promotion

Accountantwith 3 years service

Field inspection& Assisting Manager

No. 3 inhierarchy

---
27/42
---

---

---

---

(b) By direct recruitment

Graduatewith Co-op. Training

Accountant

(a) By promotion

3 yearsas Asst. Accountant or 6 years as Supervisor

Maintenanceof Accounts

No. 4 inhierarchy

Accountant

By promotion

H.S.C. & Cooperative Training

---

---

or 5 years as Asst. Acctt.& Supervisor

(b) By direct recruitment

Degree in Commerce

Supervisor

(a) By promotion

3 years as Typist &Co-operative;

28/42
Fieldwork of Supervisor/ officework

No. 5 in hierarchy

Supervisor

(i) By promotion (90 % paidSecre-10% others in D.C.C.B.)

H.S.C. & Co-op. Training

To maintain accounts of Branch/Sec. in Head office

No. 5 in hier

(b) By direct

Intermediate & Diploma inCo-operative or Degree in Commerce

(ii) By direct Recruitment

Graduate with Co-operative training

Original duties

No. 6 in hiere primary supervisingoffice for loans an recoveries

20. Among the P.A.D.Bs., in the two categories of Chief Executives viz.,
Manager and Secretary, some of the larger P.A.D.Bs., were in the
charge of Managers while the remaining were managed by Secretaries
and this depended upon the norms prescribed by the Registrar of Co-
operative Societies: if the turnover of business was less than Rs. 50
lakhs, Secretary was appointed and if it was above Rs. 50 lakhs,
Manager was appointed. Comparing this with the set up in the
D.C.C.Bs., where there was only a single grade and they were posted in
all the branches irrespective of the volume of the business, although
the Chief Executive of the D.C.C.B. was the General Manager for
purposes of equation, the Commission considered Managers as Chief
Executives as they did not have the same independent status as the
Managers of the P.A.D.Bs. There were to grades selection grade and
special promotion grade - among the P.A.D.B. Managers besides the

29/42
normal grade of Manager but the same was not the case with the
D.C.C.B.

21. The post of Secretary in the P.A.D.B is the feeder category to the
post of Manager. The P.A.D.B. Manager, being the Chief Executive in
charge of an autonomous co-operative institution, was directly
answerable to the apex institution. He was responsible for the sanction
of long term loans to the individual farmers. Processing of the loan
applications involve scrutiny of documents relating to immovable
properties, a much more complicated task that the procedure involved
in the sanction of short term or medium term loans by the D.C.C.Bs.,
where no security except a personal bond will be taken from the
loanee. The P.A.D.B., was also responsible for the maintenance of loan
ledgers of individual loanees and the follow-up action for recoveries.
The main responsibility was on P.A.D.B., for implementation of larger
schemes for area development, minor irrigation, I.R.D.P. schemes etc.
As against these duties and responsibilities of P.A.D.B. Managers, the
Manager of the D.C.C.B was only the head of the office which
constituted a tier between the primary cooperatives and the Co-
operative Central Banks. He had no independent role in the sanction of
loans; this was performed by only certain categories of Managers in
charge of higher grades in the rank of General Manager, and Deputy
General Manager which are State wide cadres.

22. The post of Accountant in the P.A.D.B., was equated with the post
of Accountant in the Co-operative Central Bank. It was observed by the
Commission that the post of Accountant in the P.A.D.B. was the feeder
category to the post of Manager whereas there are two levels between
the Accountant and Manager in the D.C.C.B. and both of them were
made eligible for promotion to the post of Manager in the integrated
setup. The posts of Assistant Manager/Executive Officer and
Engineering Supervisor in the erstwhile P.A.D.Bs., were allowed to
remain as distinct categories which will fade out in course of time. On
this aspect, there was no controversy.

23. The posts of Assistant Accountant Supervisor and Typist in the

erstwhile P.A.D.B. were equated with Supervisor/clerk/typist in the

30/42
D.C.C.B.

24. The criticism that emanated from the counsel for the petitioners
against the Commission's report is that the Commission had ignored
one important aspect that the D.C.C.Bs. were really doing banking
business whereas the P.A.D.Bs., were only distributing long term loans.
The area of operation of the P.A.D.B. was much smaller compared to
the D.C.C.B. We are not inclined to accept this contention. Whatever
banking business a D.C.C.B. does was only incidental to the main
function of distributing short term loans whereas the P.A.D.Bs. were
entrusted with the responsibility of distributing long term loans. The
reasons given by the Commission, as noticed above, are sound and
rational. Distribution of short term loans, which is the main function of
the D.C.C.B. is much easier than arranging long term credit which
involves scrutiny of documents follow-up action and other higher
responsibilities. As regards the area of operation, although there were
22 District Co-operative Central Banks in the State as on 1-4-1987,
they also had 440 branches in the State whereas the number of
P.A.D.Bs. was 218. The jurisdiction of P.A.D.B. which was approximately
confined to the erstwhile revenue taluk, was far wider compared to a
branch of the D.C.C.B. the jurisdiction of which extends over a revenue
mandal. We are not persuaded by the argument of the counsel for the
petitioners that while considering D.C.C.Bs., we must take the District
as a unit and since the branches are part of the District Head Office,
they cannot be treated as independent units while considering the
nature and responsibilities as well as territorial jurisdiction. As a
general proposition of law, although it may be said that a body
corporate and its branches are not distinct and separate units from
each other, in the case of a Bank, operating through its branches, the
latter are regarded for several purposes as separate and distinct
entities from the Head Office, A.C. International Ltd., v. Custodian,
Banco National Ultra Marino - : [1982]1SCR16 .

25. The Accountant in the erstwhile P.A.D.B. used to prepare the

accounts of the entire unit while his counter-part in the D.C.C.B. used
to deal with transactions of specified subjects. The counter-affidavit
filed by the State Government in W.P.No. 15288 of 1994 clearly brings
31/42
out the comparative position:

'.... the Secretary of the erstwhile PADB who is now equated on par
with the Manager of the DCCB was the Chief Executive of the said bank
answerable directly to the Apex Bank and the CC & RCS, whereas the
Manager of the DCCB is in charge of a Branch, which is a part of
Revenue Mandal and is answerable only to the General Manager of the
DCB but not entering into any correspondence as was in the case of
Secretary/ Manager of the erstwhile PADB. Similarly the Accountant of
the erstwhile PADB will prepare the accounts of the entire unit while
the Accountant in a DCCB is only for limited transactions of specified
subjects. The Supervisor of the erstwhile PADB processes the loan
application, arrange for disbursement of loans, its utilisation and
recovery thereon, and the services of the supervisors in the DCCB are
no superior than the services rendered by the supervisors of the
erstwhile PADBS. As seen from the facts mentioned above, no
supremacy of any cadre either of the erstwhile PADB or CCB can be
claimed. However, due care was taken to safeguard the interests of the
employees of both the wings at large.'

26. The claim that the incidental performance of banking business by

the DCCBs must entitle their employees to superior status when
viewed in the over all context is devoid of merit. The object of
establishing District Co-operative Central Banks in the co-operative
sector was not for transacting banking business but only to strengthen
the co-operative movement by financing short term loans to
agriculturists. The funds for the disbursement of loans - either short
term or long term - come from the NABARD, owned by the Government
of India, the Reserve Bank of India and the State Government.

27. The contention that the principle of 'functional equivalence and co-
equal responsibility', the guiding factors laid down in N.P. Verma v.
Union of India, : (1989)IILLJ540SC , was violated does not merit
acceptance. In the above case, the Supreme Court was concerned with
the rights of the employees of the erstwhile Caltex Oil Refining (India)
Ltd., ESSO Standard Refining Company of India Ltd., and Lube India
Ltd., consequent upon their amalgamation with the Hindusthan

32/42
Petroleum Corporation Ltd. The Supreme Court while laying down the
principle of law that 'while it is not within the domain of the court to
make equation of posts for the purpose of integration, it is surely the
concern of the court to see that before the integration is made and
consequent fitment of officers in different grades /scales of pay is
effected, there must be an equation of different posts in accordance
with the principles stated above', found as a fact that in accordance
with the aforesaid principle, equation of posts was not effected and,
therefore, held:

'As there is no evidence or material in support of such equation of

posts, it is difficult to accept the rationalisation scheme with regard to
the placing of the officers of CORIL in different IOC/HPCL grades of pay'.

This precedent is, therefore, clearly distinguishable.

28. Whatever injustice the D.C.C.B. employees felt was done to them
because of the equation of the post of the Secretary of the PADB with
that of the Manager of the DCCB was set right by the Government by
creating 107 posts of Assistant General Managers in addition to the
sanctioned strength for the purpose of accommodating the senior most
personnel in the cadre of Managers of the integrated DCCB. The
acceptance of the recommendation of the One Man Commission in all
respects except the equation with regard to the post of Manager and
the reasons for the deviation and the contemporaneous action taken to
safeguard the interests of the DCCB Employees by creating 107 posts
of Assistant General Managers cannot be said to be unjust or illegal. A
comparison of the pay structure, the nature of the duties performed
and the responsibilities shouldered, the functions discharged, the
structure of the hierarchical set-up and the territorial jurisdiction over
which the incumbents were required to operate fully justifies the
equation of posts and integration of services as contained in Rule 73.

29. Equation of posts and integration of services per se is not

unjustified. In this regard, the employer enjoys a certain measure of
discretion. In S.B. Mathur v. Hon'ble C.J., Delhi High Court, :
AIR1988SC2073 , which relates to equation of certain posts in the High

33/42
Court service, it was held by the Supreme Court:

'There is, therefore, nothing inherently wrong in an employer treating

certain posts as equated posts or equal status posts provided that, in
doing so, he exercises his discretion reasonably and does not violate
the principles of equality enshrined in Articles 14 and 16 of the
Constitution. It is also clear that for treating certain posts as equated
posts or equal status posts, it is not necessary that the holders of these
posts must perform completely the same functions or that the sources
of recruitment to the posts must be the same nor is it essential that
qualifications for appointments to the posts must be identical. All that
is reasonably required is that there must not be such difference in the
pay scales or qualifications of the incumbents of the posts concerned
or in their duties or responsibilities or regarding any other relevant
factor that it would be unjust to treat the posts alike or, in other words,
that posts having substantially higher pay scales or status in service or
carrying substantially heavier responsibilities and duties or otherwise
distinctly superior are not equated with posts carrying much lower pay
scales or substantially lower responsibilities and duties or enjoying
much lower status in service.'

30. Ever since the single window system was adopted by the State
Government, efforts were being made to satisfy all the just demands of
the employees in the realisation that discontentment among the
employees would adversely affect the functioning of the institutions.
After the agreement, reached by the two service unions, Rule 73 as it
stands now was issued. Overwhelming number of the employees of the
DCCBs seem to have been satisfied, but a few individuals, thinking that
their chances of promotion would be adversely affected if Rule 73 was
implemented in its present form, have been carrying on this fight. We
do not find any basis for the apprehensions entertained by them. As
the arguments were confined to the general legal questions and the
staffing pattern of the two institutions - PADBs and DCCBs - we have
not examined the case of any particular individual. There is no need to
do so in view of Rule 73(IX) which provides for a right of appeal to the
Managing Committee of the District Co-operative Central Bank against
any order passed by the General Manager of the Bank. It must also be
34/42
mentioned in this context that the right of promotion should not be
equated with a mere chance of promotion. The right to be considered
for promotion is a condition of service but not mere chance of getting
promotion, See: Reserve Bank of India v. C.N. Sahasranama - :
(1986)IILLJ316SC . The Supreme Court in Reserve Bank of India's
case,6 also cited with approval an earlier precedent in Kamal Kanti v.
Union of India, : (1980)IILLJ182SC , wherein it was held that in matters
like formulation of seniority lists, justice should be ensured to as many
as possible and injustice to as few and 'it was not safe to test the
constitutionality of a service rule on the touch-stone of fortunes of
individuals'.

31. Restating the well accepted proposition that in service matters, the
rules made cannot satisfy each and every employee, the Supreme
Court observed in V.T. Khanzode (1 supra).

'No scheme governing service matters can be fool-proof and some

section or the other of employees is bound to feel aggrieved on the
score of its expectations being falsified or remaining to be fulfilled.
Arbitrariness, irrationality, perversity and mala fides will of course
render any scheme unconstitutional but the fact that the scheme does
not satisfy the expectations of every employee is not evidence of these
............Combined seniority is indispensable for the smooth functioning
of the bank and no organisation can function smoothly if one section of
its officers has an unfair advantage over others in matters of
promotional opportunities ..................combined seniority has emerged
as the most acceptable solution as a matter of administrative,
historical and functional necessity.'

The validity of the combined seniority of the officers in each of the

separate groups was in issue in that case.

32. Both on principal and precedent, the claim of the petitioners that
the equation of posts and integration of services was done unjustly is
unsustainable. Rule 73 does not suffer from the vice of
unconstitutionality either on the basis of Article 14 and 16 of the
Constitution.

35/42
33. The next question for consideration is: whether Rule 73 is ultra
vires Section 11(2) of the Act?

34. Sub-section (1) of Section 11 says that with effect from the
appointed date, the Primary Agricultural Development Banks shall
stand abolished. The consequences of such abolition are contained in
Sub-section (2). Clause (a) of Sub-section (2) says that on abolition of
the P.A.D.B. all rights and assets vesting in the bank and all liabilities
against it shall devolve on the Co-operative Central Bank of the District
concerned. Clause (b) refers to transfer to the D.C.C.B. of all contracts
made by the P.A.D.B. prior to its abolition and subsisting on the
relevant date. Clause (c) says that the members of the erstwhile
P.A.D.B. shall be deemed to be the nominal members of the D.C.C.B.
without the right to vote till their loans are discharged. Clause (d), with
which we are concerned, empowers the Registrar to transfer officers
and other employees immediately before such abolition in the service
of the P.A.D.B. 'to the service of the financing bank or to a Primary
Agricultural Co-operative Society in the manner prescribed.'
Consequent on such absorption, the first proviso the Clause (d) says
that the terms and conditions of the absorbed employees shall not be
less favourable than those applicable to them immediately before such
abolition as respects pay and allowances, leave, gratuity, provident
fund and age of superannuation. The second proviso says that the
service rendered by any officer or employee of the P.A.D.B., upto the
date of abolition 'shall be deemed to be service under the Co-operative
Central Bank or as the case may be the P.A.C.S., and he shall be
entitled to count that service for the purpose of increment, leave or
provident fund and gratuity'.

35. The argument vigorously pressed into service by the counsel for
the petitioners was that only in respect of matters specifically referred
to in the first proviso viz., pay and allowances, leave gratuity, provident
fund and age of superannuation, protection was afforded to the
employees of the erstwhile P.A.D.Bs and the counting of the service
rendered by the in the P.A.D.Bs., shall be restricted, under the second
proviso, only for the purpose of increment, leave, provident fund and
gratuity. Equation of posts, integration of services arid inter se
36/42
seniority are not the factors falling within the purview of Section 11(2)
(d) and inasmuch as Rule 73 specifically incorporates these aspects, it
is ultra vires the section.

36. We are unable to agree. The deeming aspect regarding service

contained in the second proviso necessarily implies that the previous
service rendered by the erstwhile P.A.D.B. employees would become,
after 1-4-1987, service under the D.C.C.B. or the P.A.C.S., as the case
may be. Although in the Section, P.A.C.S., is mentioned, there is no
controversy that none of the erstwhile P.A.D.B. employees was
transferred to any P.A.C.S. which functions only at the village level.
Seniority is a necessary component of service. When service as a
whole was protected by the second proviso, the expression 'service' in
the first proviso cannot be understood in a different manner. The
second proviso after stating that the service in the erstwhile P.A.D.B.
shall be deemed to the service in the D.C.C.B., particularly mentions
that the erstwhile P.A.D.B. employee shall be entitled to count his
previous service for the purposes of increment, leave, provident fund
and gratuity. In the absence of a statutory provision specifically
excluding the service rendered for any period by an employee, the
presumption always is that what is not specifically excluded goes into
the reckoning of seniority. Whatever doubts at the first blush one may
get with regard to the consequences of absorption on a reading of the
first proviso, the deeming provision introduced in the second proviso
makes the position clear. Deemed service must necessarily encompass
seniority in the equated cadre. The first proviso lays down that in
consequence of the absorption, the conditions of service of the
absorbed employees shall not be less favourable than those applicable
to them before their absorption in respect of pay and allowances,
leave, gratuity, provident fund and age of superannuation. The
aforesaid protected conditions of service are in addition to the seniority
which is covered by the deeming provision in the second proviso. What
all the second proviso, lays down namely, the erstwhile P.A.D.B.
employees 'shall be entitled to count that service for purposes of
increment, leave or provident fund and gratuity' are only illustrative of
the facets of the protected service, but not exhaustive of what is
intended to be protected. In consequence of absorption into the
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D.C.C.B., the erstwhile P.A.D.B. employees would not become fresh
recruits. Once they were absorbed, the absorption should be in all
respects except those that are specifically excluded. On a true
construction, we are of the view that the entire service should be
reckoned for the purpose of seniority was the basic underlying
assumption of Clause (d) which needed no specific articulation. If
Clause (d) of Section 11(2) was to be interpreted in the manner
suggested by the counsel for the petitioners, viz., that seniority was
not a component of the service protected, it would be violative of
Articles 14 and 16 of the Constitution.

37. Clause IV of Rule 73, which deals with future promotions, says that
the future vacancies in the post of Managers in the D.C.C.Bs. should be
filled by promotion from the common pool of Assistant Managers,
Executive Officers or Accounts of the erstwhile P.A.D.Bs., and
Accountants of the D.C.C.Bs., Clause (VI) incorporates the principle
governing inter se seniority which is to the effect that in the equated
cadres, Inter-se seniority of the erstwhile P.A.D.B. employees should be
determined on the basis of the dates of their appointment in the cadres
in which they were working on regular basis including notional
promotions.

38. The grievance of the petitioners in W.P. No. 14512 of 1994 and
14287 of 1994, who are Supervisors and Accountants, is that before
they moved into the equated cadres, in the cadres immediately below
the equated ones, they had put in longer years of service and,
therefore, their entire service, both in the equated cadre as well as the
cadre immediately below that, should be reckoned for the purpose of
seniority to the next higher post. On the face of it, this is an untenable
plea. When two posts are equated, the basis for future promotion must
be the service rendered in the equated cadre but not in the cadres
below the equated one. In respect of each separate cadre, reckoning of
seniority could only be in that cadre: For example, if an employee had
rendered 24 years of service in three cadres and was promoted to the
next fourth cadre in the 25th year of his service, it would not be open
to him to claim that because he could not earn promotion earlier due to
the stringent statutory hurdles, in the promoted cadre, his entire
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seniority of 25 years should be counted. Such a claim to say the least,
is highly' fanciful.

39. As the equated cadres came into being on 1-4-1987, reckoning of

the inter se seniority in the equated cadres of the two classes of
employees 'on the basis of the dates of their appointment in the cadres
in which they were working on regular basis including notional
promotions, if any, on 1-4-1987' as recommended by the Commission
and approved by the State Government, in the circumstances, was
fully justified.

40. Yet another argument, a seemingly formidable one, urged for the
petitioners is that the power of the Registrar of Co-operative Societies
under Clause (d) was restricted to transferring the officers and
employees of the erstwhile P.A.D.B. 'to the service of the financing
bank or to a P.A.C.S. in the manner prescribed' and as the D.C.C.B. is
not the financing bank of the P.A.D.B., about which there is no dispute,
the entire scheme of absorption must be set aside. We felt almost
inclined at the first blush to agree with this contention, but on deeper
considerations, we are unable to do so.

41. It is true that D.C.C.Bs., are not the financing banks of P.A.D.Bs. The
Andhra Pradesh Central Co-operative Agricultural Development Bank, a
statutory body, is the financing bank of P.A.D.Bs., and this is
uncontroversial. P.A.C.S., have no financial capacity; they are small
societies functioning at the village level and there are no equavalent
posts against which the erstwhile P.A.D.B., employees could be
absorbed. In the main part of Clause (d) of Section 11(2), instead of
using the words 'to the service of the District Co-operative Central
Bank', inadvertently, in our view, the words 'financing bank' were used.
As Clauses (a) (b) and (c) specifically refer to the Co-operative Central
Bank as the body to succeed the statutorily abolished P.A.D.Bs., in all
respects - rights and assets, contracts, membership - and as respects
service conditions, provisos (1) and (2) of Clause (d) also mention only
the Co-operative Central Bank but not the financing bank, it is a clear
case of draftsman's fallibility. If the transfer of the officers and
employees of the erstwhile P.A.D.B. is to be construed as transfer to
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the 'financing bank' but not the 'DCCB', it would lead to absurd
consequences. It was not the intention of the legislature to effect such
transfer. Neither the context nor the other provisions of Section 11
envisage such an incongruity. In a situation where the ordinary
meaning of grammatical construction of a statute leads to absurdity, at
variance with the manifest purpose of the enactment, it should be
construed in a manner consistent with the intention of the legislature
or the enactment. The well established rule as slated in Maxwell's
Interpretation of Statutes and followed by our Supreme Court in Tirath
Singh v. Bachittar Singh, : [1955]2SCR457 , while interpreting Section
99 of the Representation of the People Act reads:

'Where the language of a statute, in its ordinary meaning and

grammatical construction, leads to a manifest contradiction of the
apparent purpose of the enactment or to some inconvenience or
absurdity, hardship or injustice, presumably not intended, a
construction may be put upon it which modifies the meaning of the
words and even the structure of the sentence'.

We, therefore, hold that the words 'financing bank' occurring in Clause
(d) must be read as 'Co-operative Central Bank'.

42. Yet another submission advanced for the petitioners relates to

Section 15-A of the Act which confers power on the Registrar of Co-
operative Societies to amalgamate or merge on society with another
society or to divide and restrict or transfer the area of operation of a
society or to liquidate a society for any of the purposes specified
therein. Clause (e) of Sub-section (1) says that in public interest, the
Registrar may exercise the aforesaid power. It is the case of the
petitioners that conditions of service of the employees of the affected
societies are matters exclusively falling within the domain of Section
15-A(1)(e) and inasmuch as Section 15-A is a complete code in itself,
Section 11(2)(d) is inapplicable. We do not find any merit in this
contention. Four specified purposes are mentioned in Clauses (a) to (d)
of Section 15-A(1) - economic viability, avoidance of over-lapping or
conflict of jurisdictions, securing proper management, interests of co-
operative movement and co-operative credit structure. The fifth

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purpose contained in Section 15-A(1)(e) for which amalgamation,
division or restriction of the area of operation could be done by the
Registrar was 'for any other reason in the public interest'. It is true that
when a particular society is amalgamated with another society or its
area of operation is restricted or it is liquidated, the Registrar will have
to devise a method to safeguard the interests of the employees of the
affected society. This power is basically different from what is
contemplated by Section 11(2) which is a direct consequence of
abolition of an entire class of societies viz., P.A.D.Bs., Section 11
specifically deals with abolition of P.A.D.Bs. and the consequences of
such abolition. It also takes care to protect the service conditions of the
employees of the abolished banks. It is, therefore, plain that Section
15-A has no application.

43. Our examination of the entire scheme of equation of posts,

integration of services and determination of inter se seniority in
consequence of Section 11 (2)(d) leads to the conclusion that the
D.C.C.B. employees secured more advantage than the employees of
the erstwhile P.A.D.Bs. Instead of five categories which were in
existence before 1-4-1987, there are only three categories now in the
D.C.C.Bs. and with the creation of 107 posts of Assistant General
Managers, the promotional avenues of D.C.C.B., employees were
improved to a great extent. A satisfactory solution at long last was
found by the Government in the form of Rule 73, the basis of which was
the agreement arrived at by the two service unions representing the
erstwhile P.A.D.B. and the D.C.C.B. employees. When the solution was
to the satisfaction of the overwhelming number of employees of both
the classes, the perceived dissatisfaction of a few in a situation like the
present one cannot be a consideration, even if their discontentment
has some semblance of legal validity which will be of no consequence,
to set at naught the entire exercise. In our considered opinion, there is
no legal or factual foundation supporting the case of the petitioners.

44. For these reasons, all the writ petitions fail and accordingly they
are dismissed. However, we make it clear mat the right of any
aggrieved employee to prefer an appeal to the Managing Committee of
the District Co-operative Central Bank against an order passed by the
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General Manager under Rule 73(IX) remains unaffected
notwithstanding the dismissal of these writ petitions. No costs.

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