Allowed

Ashutosh Misrha and 4 Others v. Union of India and 6 Others

Allahabad HC27 Sept 2018WRIA/17873/2018

Case brief

AI extract

What is this about?

Writ petition challenging the termination of employee services by an Official Liquidator before a winding up order was passed. Court held the termination order illegal absent a winding up order and quashed it, allowing employees to continue in service.

What did the court decide?

Writ petition allowed; order dated 10.07.2018 by Official Liquidator quashed; employees deemed continuing in service.

Ashutosh Misrha and 4 Others Vs Union of… — Pension and Retirement Benefits | Allahabad HC (2018)

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Court No. - 39

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Case :- WRIT - A No. - 17873 of 2018

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Petitioner :- Ashutosh Misrha And 4 Others Respondent :- Union Of India And 6 Others Counsel for Petitioner :- Krishna Mohan Misra,Sri. H.R. Misra, Sr. Advocate Counsel for Respondent :- A.S.G.I.,C.S.C.

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Hon'ble B. Amit Sthalekar,J. Hon'ble Jayant Banerji,J.

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Heard Shri K.M. Misra, learned counsel for the petitioners and Shri Mata Prasad, learned Additional Chief Standing Counsel appearing for the respondent nos. 2, 3, 4 and 5.

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This writ petition has been filed for quashing the order dated 10.07.2018 passed by the respondent no. 7 in his capacity as Liquidator of Brahmawart Commercial Co-operative Bank Limited¹ . The license of this Co-operative Bank has been cancelled by the Reserve Bank of India by means of an order dated 26.06.2018 that has been enclosed as Annexure-3 to the writ petition.

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By means of the order dated 03.07.2018, the Liquidator was appointed and thereafter the Liquidator issued an office memorandum on 10.07.2018 stating that except those employees whose presence is required for providing assistance in the work of winding up, the services of the rest of the employees of the Cooperative Bank would be automatically terminated.

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In the supplementary counter affidavit filed on behalf of the respondent no. 3, 4 and 5, it has been stated in paragraph no. 5 that the bank is an insured Cooperative Bank, in which, the provisions of Section 90 of the U.P. Co-operative Societies Act, 1965² are applicable and in view of the said provisions, the Official

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1 Co-operative Bank 2 Act of 1965

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Liquidator has been appointed by letter dated 03.07.2018 and under the provisions of Section 72 of the Act of 1965, the winding up order has not been issued nor it has been published in the newspapers.

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With regard to insured Cooperative Banks, special provisions have been inserted under Section 90B of the Act of 1965, which provide as follows:

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90B. Special provisions applicable to insured Cooperative Banks. - Notwithstanding anything contained in this Act, the following provisions shall apply to every insured co-operative bank, namely -

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(i) an order sanctioning a scheme or resolution for the amalgamation or merger or provision or winding up of an insured co-operative bank may be made by the Registrar only with the previous sanction in writing of the Reserve Bank;

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(ii) an order for the winding up of an insured co-operative bank shall be made under the provisions of this Act if so required by the Reserve Bank in the circumstances referred to in the Section 13-D of the said Act;

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The Reserve Bank of India, by means of the aforesaid order dated 26.06.2018, has come to the conclusion that circumstances referred to in Section 13-D of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 exist that would merit cancellation of the license and winding up of the Co-operative Bank.

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The contention of the petitioners is that without an order of winding up being passed in accordance with the procedure provided under the Act of 1965, the Official Liquidator has straightaway proceeded to direct the termination of the petitionersemployees from the service of the Co-operative Bank. Rule 290 of

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the U.P. Co-operative Societies Rules, 1968 reads as follows:-

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290. Notwithstanding anything contained to the contrary in bye-laws of a co-operative society or in the regulation framed under Section 121 or Section 122. the services of all the employees of a co-operative society which has been ordered to be wound up shall be deemed to have been terminated with effect from the date the order of winding up becomes final. The liquidator may re-employ any employee of the society, on such terms and conditions and for such period as he deems fit, subject to the approval of the Registrar.

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Thus, as provided in Rule 290 of the U.P. Co-operative Societies Rules, 1968, the services of all the employees of a cooperative society which has ordered to be wound up shall be deemed to have been terminated with effect from the date the order of winding up becomes final.

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It is the contention of the petitioners that no winding up order has been passed in respect of the Co-operative Bank. In the averments in the supplementary counter affidavit referred to above, there is a clear admission on behalf of the answering respondents that winding up order has not been passed nor the same was published in the newspaper.

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In view of this admission, we have no hesitation in holding that since the winding up order has not been passed, the order dated 10.07.2018 passed by the Official Liquidator is patently illegal and deserves to be set aside.

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In view of the above, the order dated 10.07.2018 that has been enclosed as Annexure- 1 to the writ petition passed by the Liquidator of the Co-operative Bank is hereby quashed.

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The consequence of this order would be that the employees would be deemed to be continuing in service without any break with all consequential benefits. However, this order will not be of

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any hindrance to the respondents to proceed in accordance with law in compliance of the directions of the Reserve Bank of India for winding up of the aforesaid Co-operative bank.

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With the aforesaid observation, this writ petition is allowed.

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Order Date :- 27.9.2018 A. V. Singh

Ashutosh Misrha and 4 Others v. Union of India and 6 Others

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Ashutosh Misrha and 4 Others v. Union of India and 6 Others

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