Dayandeo Dattatraya Kale And Ors. vs State Of Maharashtra And Ors. on 18 October, 1994

Here's a summary of the judgment:

1. Outcome
The High Court dismissed all the writ petitions, upholding the selection and appointment of clerks and peons by the Ahmednagar District Central Co-operative Bank Ltd. The rule was discharged with no order as to costs.

2. Core Issue
The core issues were:
* Whether the Ahmednagar District Central Co-operative Bank Ltd. (Respondent No. 8) qualified as "State" or a "State instrumentality" under Article 12 of the Constitution, thereby making it amenable to writ jurisdiction and subject to fundamental rights regarding employment.
* Whether, even if not "State," the Bank performed a "public duty" or "statutory public duty" in its recruitment process, warranting judicial review under Article 226.
* Whether the recruitment of 481 clerks and 82 peons was vitiated by gross irregularities, including favoritism, corruption, sex discrimination, and non-compliance with government directives, to such an extent that it should be quashed.

3. Key Facts
* Parties: Petitioners (social workers and an unselected candidate) challenged the recruitment by the Ahmednagar District Central Co-operative Bank Ltd. (R8). The State of Maharashtra (R1 & R2) through the District Deputy Registrar supported the petitioners, while R8 and its Employees Union opposed the petitions.
* Recruitment: In August 1991, R8 recruited 481 clerks and 82 peons following a resolution passed on June 25, 1991.
* Allegations by Petitioners:
* Interviews were a "farce"; selection was pre-planned by the Bank's Directors.
* Bribes (Rs. 35,000 to Rs. 50,000) were allegedly paid to Directors for selection.
* Women were not invited for interviews, constituting sex discrimination (violating Articles 15 & 6/16).
* The Bank ignored lists from Employment Exchange/Social Welfare Officer and selected unrecommended candidates.
* The recruitment was done without prior permission from the Commissioner of Co-operation/District Deputy Registrar, violating government circulars/directives under Section 79A of the Maharashtra Co-operative Societies Act.
* Bank's Defence (R8):
* R8 is a federal co-operative society, not "State" under Article 12, nor a public instrumentality. Its financing and control are not predominantly governmental (State's share capital is Rs. 69 lakhs out of Rs. 15 Crores authorized).
* Employment with the Bank is not "public employment" and falls under the Bombay Industrial Relations Act.
* Allegations of bribes and favoritism were vague and unproven.
* The backlog of backward class candidates was cleared before the impugned recruitment (by June 30, 1991), thus no prior permission was needed.
* The District Deputy Registrar (Government nominee) was present at meetings approving the recruitment and never recorded dissent, implying acquiescence.
* Interviews were held at 14 centers for the convenience of candidates, with a standardized questionnaire to ensure merit-based selection.
* Exclusion of women was due to practical difficulties at remote posting locations (lack of accommodation, sanitary facilities, security), not solely sex discrimination.
* State's Stance (R1 & R2): Supported the petitioners, claiming the Bank violated government directions by not obtaining prior permission and not following prescribed procedures for calling candidates.
* Status of Appointees: The selected candidates had been appointed since August 1991 and had been serving for 2-3 years at the time of the judgment.

4. Arguments (Taxpayer vs Revenue)

• Petitioners (Taxpayer perspective):
  • Status of R8: R8, being a recipient of significant finances (e.g., from NABARD via State Co-op Bank) and operating under extensive governmental regulation (Maharashtra Co-operative Societies Act), should be considered "State" under Article 12 or at least performing a "public duty."
  • Constitutional Violation: The recruitment violated fundamental rights (Articles 14, 15, 16) due to sex discrimination and arbitrary selection.
  • Procedural Illegality: The recruitment process was a sham, pre-determined, and ignored government mandates regarding prior permission, fair advertisement, and consideration of candidates from Employment Exchanges.
  • Corruption: Allegations of Directors receiving bribes for appointments pointed to a deeply flawed and corrupt process.
• Respondent No. 8 (Bank) & Employees Union (Revenue perspective, as the entity under scrutiny):
  • No "State" Status: R8 does not meet the criteria for "State" or "State instrumentality" under Article 12 (minimal State shareholding, no pervasive control, self-financing, functions not inherently governmental).
  • No "Public Duty" in Employment: Employment terms are governed by contract and industrial law, not by statutory or public duty. Therefore, a writ of mandamus cannot be issued.
  • Procedural Compliance: Backlog clearance made prior permission unnecessary; the DD Registrar's presence at meetings indicated implied consent. The multi-center interview process was fair and merit-based, using questionnaires.
  • Justified Discrimination: The decision regarding female candidates was based on practical considerations (remote postings, safety, lack of facilities), not solely on sex, and therefore permissible.
  • Lack of Evidence: Allegations of corruption were vague and unsubstantiated.
  • Locus Standi & Acquiescence: Petitioners (especially the unselected candidate) had availed the interview process, hence should not challenge it; others lacked direct interest.
  • Consequences: Quashing appointments of long-serving employees would cause severe injustice.
• Respondents No. 1 & 2 (State Co-operative Department): Argued that R8 failed to comply with various government notifications and directions regarding recruitment procedures and prior approvals.

5. Court’s Reasoning

• "State" under Article 12: The Court meticulously applied the tests laid down by the Supreme Court (e.g., Ajay Hasia, R.D. Shetty) and previous High Court judgments, particularly the Full Bench decision in Shamrao Vithal Co-operative Bank Ltd. v. Padubidri Patabhiram Bhat and others. It found that R8:
  • Did not have its entire share capital held by the government, nor was its expenditure almost entirely met by government financial assistance.
  • Did not exhibit "deep and pervasive control" by the government; ultimate authority rested with its members and management committee.
  • Performed typical banking functions, not functions traditionally carried out by the State.
  • Therefore, R8 was not "State" or a "State instrumentality" under Article 12.
• "Public Duty": While acknowledging that a writ could lie against a private body performing a public duty (Anandi Mukta Sadguru Shree Kuktajee Vandasji Swami Suvarna Jayanti Mahotsav Smarak Trust v. V. R. Rudani), the Court found no such public or statutory duty imposed on R8 concerning its employment practices. The terms of employment were governed by the Bombay Industrial Relations Act Standing Orders, not by public law.
• Recruitment Irregularities:
  • Prior Permission: Accepted R8's claim that the backlog for backward classes was cleared, rendering the requirement for prior permission from the Registrar non-applicable.
  • District Deputy Registrar's Acquiescence: Noted that the DD Registrar, a government nominee, was present at the meetings where the recruitment resolution was approved and did not record dissent, implying acquiescence, as held in Nayagarh Co-operative Central Bank v. Narayan Rath.
  • Interview Process: Found the decentralized interviews at 14 centers with a standardized questionnaire to be a valid method, citing State of Himachal Pradesh v. Amar Nath Sharma, which permitted similar procedures.
  • Sex Discrimination: Accepted R8's explanation that the exclusion of female candidates was based on practical difficulties (lack of accommodation, sanitary facilities, security in remote areas), rather than solely on sex. Citing Miss C. B. Muthamma v. Union of India and Air India v. Nargesh Meerza, the Court stated that discrimination is prohibited only on the ground of sex, not when combined with other relevant considerations.
  • Corruption Allegations: Dismissed these as "vague," "exaggerated," and lacking any concrete evidence.
• Humanitarian Consideration: The Court, taking a humanitarian approach similar to H. C. Puttaswamy v. The Hon'ble Chief Justice of Karnataka High Court, decided against quashing the appointments. It noted that 481 employees had been serving for 2-3 years, and unsettling their positions would cause "grave prejudice."

6. Statutory References
* Constitution of India: Articles 6 (likely a typo for 16), 12, 14, 15, 15(1), 16, 16(2), 226
* Maharashtra Co-operative Societies Act, 1960: Sections 2(10), 2(13), 11, 12, 18A, 50, 72, 73, 78, 79, 79A
* Banking Regulation Act, 1949: Section 5(1)(b)
* Societies Registration Act
* Multi State Co-operative Societies Act, 1984: Section 103(1)
* Bombay Industrial Relations Act, 1946: Section 35, Schedule I
* Employment Exchange (Compulsory Notification of the Vacancies) Act, 1959
* Companies Act

7. Precedents Cited
* Mohinder Singh & Others v. O. P. Khatri and others (1994 LLJ 888)
* Ajay Hasia v. Khalid Mujib
* R. D. Shetty v. International Airport Authority of India
* Shahabuddin Chaudhari v. State of Assam (1994 I LLJ 1028)
* Dinesh Kumar Sharma v. M. P. Dugdha Mahasangh Sahakari Maryadit (1994 LLJ 513)
* Nayagarh Co-operative Central Bank v. Narayan Rath
* Dalel Singh v. Honorary Secretary, Co-operative Union
* Shamrao Vithal Co-operative Bank Ltd. v. Padubidri Patabhiram Bhat and others (1993 Mh. L. J. 1)
* Kohaseema Co-operative Bank v. V. N. Sharam Raju (A.I.R. 1990 A.P. 171)
* Anandi Mukta Sadguru Shree Kuktajee Vandasji Swami Suvarna Jayanti Mahotsav Smarak Trust v. V. R. Rudani and others
* National Seeds Corporation Employees Union v. National Seeds Corporation
* Girish Chandra Saxena v. The Chief Executive. Standard Chartered Bank (1994 II C.L.R. 119)
* Sohan Lal v. Union of India
* Dena Nath v. The National Fertiliser Ltd. (1992 II C.L.R. 1)
* State of Himachal Pradesh v. Amar Nath Sharma (1994 II CLR 822)
* Miss C. B. Muthamma v. Union of India (A.I.R. 1979 S.C. 1968)
* Air India v. Nargesh Meerza (A.I.R. 1981 SC. 1830)
* State of Haryana v. Piara Singh (1992 II CLR 890)
* Shivajirao Nilangekar Patil v. Dr. Gosawi
* Bandh Mukti Morcha v. Union
* H. C. Puttaswamy v. The Hon'ble Chief Justice of Karnataka High Court