' The following orders of the Registrar, Cooperative Societies of Azad Jammu and Kashmir are challenged through the Writ Petition No, 58/92 as being without lawful authority:
(a) Order dated 14-5-1992 whereby Mr. Maqbool Nazar respondent No,3, a suspended officer of the Cooperative Bank has been reinstated;
(b) Order dated 12-5-1992 whereby certain officers of the Cooperative Bank have been appointed to audit different branches of the Cooperative Bank; and
(c) Order dated 4-6-1992 whereby the General Manager of the Cooperative Bank has been ordered to negotiate the dispute regarding the rent of the house with the house owner.
2. The order dated 14-5-1992 whereby Mr. Maqbool Nazar respondent No,4 in Writ Petition No,70/92 is reinstated by respondnet No,1, is challenged by the Union of the Employees of the Bank as well.
3. As both the petitions raise identical points of law, hence both shall be decided together. The leading facts for disposal of the cases shall be referred from Writ Petition No,58/92.
4. The facts leading to the instant writ petitions are that Mr. Maqbool Nazar, an employee of the Cooperative Bank was suspended from service on the charges of corruption, misconduct, absence from duty etc. On October 3-, 1991 by the General Manager of the Bank with the approval of the Chairman of the Bank, subject to the approval of the Board of Directors of the Bank. The BODs of the Bank, vide its meeting held on July 23, 1991 approved his suspension order vide item No,13 of the proceedings of the Board. Mr. Shahpal Qadri, Manager Kotli Branch of the Bank was appointed to inquire into the allegations levelled against Mr. Maqbool Nazar The Registrar, Cooperative Societies respondent No,1, vide his impugned order, ordered the reinstatement of Mr. Maqbool Nazar in purported exercise of his powers under clauses 17 and 19 of the Bye-law 21 of the Bye-laws of the Bank. In Petition No, 70/92 only this order of the Registrar is under challenge, while in other petition, two other orders, as stated above, have also been assailed. The main ground of attack against the impugned orders is that Registrar, Cooperative Societies has nothing to do with the internal management and administration of the Cooperative Bank, which, according to the petitioners vests exclusively in the BODs and the General Manager of the Bank.
5. The order dated 12-5-1992, whereby certain officers of the Bank have been appointed by the Registrar to audit different branches of the Cooperative Bank is assailed on the ground that after adaptation of the Act called Establishment of the Federal Bank for Cooperative and Regulation of Cooperative. Banking Act, 1976 (hereinafter to be referrred as Federal Act by, in. Azad Jammu and Kashmir through Ordinance No,11 of 1977, the auditors appointed and nominated by the Federal Bank are only competent to adult the provincial Banks or its Branches. After adaptation of Federal Act, by the Azad Kashmir Government, Cooperative Bank is deemed as a Provincial Bank and is to carry out the orders and directions given by the Federal Bank for Cooperatives. As for the order dated 4-6-1992 whereby the General Manager of the Bank has been ordered to negotiate the dispute relating to the rent with the house owner, it is stated that this matter also relates to the administration of the Bank and the Registrar has no authority to direct as such or interfere in the affairs of the Bank in any manner.
6. In the written statement, the Registrar Cooperative Societies has controverted the assertions and after relying upon different provisions of bye-laws of the Bank, Cooperative Societies Act, 1925, rules framed thereunder and Rules of Business, stated that Registrar is the Head of the Department of the Cooperative Societies and is empowered to give directions and his orders are necessarily to be carried out with respect to the administration of the Bank as well as its employees. The Registrar has particularly referred to Item Nos, 3, 8, 12, 17, 18, 19 and 22 of the Bye-law 21, whereby all the orders of the BODs are subjected to the approval of the Registrar. He has further referred to sections 13, 22, 22 (a) 34, 43, 44, 44 (a), 54 and 60 of the Cooperative Societies Act, 1965 besides Rules 17, 17 (a), 18, 19, 26, 27, 31, 33, 45, 45 (a), 48 and 52 of the Cooperative Societies Rules, 1927. Referring the above- quoted provisions of law, the Registrar Cooperative Societies alleged that he is vested with overall control and supervision of the Cooperative Societies and thus can pass all the orders, particularly the orders impugned through writ petitions.
7. I've heard the learned counsel for the parties and have gone through the record. The objection of the learned counsel for the respondent that petitioners are not aggrieved persons cannot be agreed for the reasons that Syed Mukhtar Gilani is an elected delegate of the Cooperative Bank and he is already held as an aggrieved person with respect to the affairs of the Bank in another case filed by him against Registrar Cooperative Societies, decided on 19-9-1992 in Writ Petition No,9/92. Similarly, the Azad Kashmir Cooperative Bank Employees Union being a Union of the employees of the Bank, cannot by any stretch of imagination be held not to be aggrieved, as any order which effects the administration of the Bank or has effect of interfering with the terms and conditions of any of the officers of the Bank is likely to affect the employees of the Bank as a whole.
The objection is therefore, repelled. This brings me to the actual controversy between the parties that is, as to whether respondent No,1 has no authority to interfere in the internal administration of the Bank or as to whether the Bank and its employees are subordinate establishment of the Registrar?
8. As far as the matter relating to the terms and conditions of the service of the employees of the Bank are concerned, these are regulated by the rules called as 'Azad Jammu and Kashmir Government Cooperative Bank Ltd Staff Service Rules, 1984' (hereinafter to be called as Rules), and the Bye-laws of the Bank. Under rules the appointment of officers in the Bank are either to be made by the Board or by the General Manager. The other conditions of their services e.g. Their transfer, determination of seniority, promotion, increments, disciplinary action, dismissal, removal or suspension from service etc. Also vest either in the Board or in General Manager. The learned counsel for Registrar has not been able to point out even a single provision from the rules wherein the Registrar has any authority with respect to the service conditions of the employees of the bank, neither have I been able to lay my hands on any of the provisions in the rules. Similarly under the Bye-laws, it is either BODs or General Manager of the Bank, who is styled as a Chief Executive of the Bank, and these are the only arbitors of the powers with respect to the terms and conditions of the service of the employees of the Bank. Resolving the similar controversy under the Cooperative Societies Act, 1912, it is held in the AIR 1956 Allahabad 43: "Cooperative Societies are no doubt a creation of the statutes just like any other joint stock company. The Registrar is given certain powers of general supervision over the societies and he has power to hold inquiry in the constitution, working and financial condition of the Society. But this power can only be exercised in cases where the entire working of the society is defective and it has been given to protect the interests of the shareholders and those who have to deal with the Society.
' This does not, however, mean that the Registrar has power to interfere in the day to day administration of the Society. Therefore, the Registrar cannot be deemed to be the Head of the Cooperative Society and he should not be deemed to have power to interfere in the matters of appointments and dismissals of its employees. The State Government has still less power to do anything in the matter."
9. Under some of the provisions of the Bye-laws, some orders of the Board are subjected to the approval of the Registrar, however, they seem to be against the express provisions of the Cooperative Societies Act, 1925, rules framed thereunder and rules relating to service. It is a celebrated principle of interpretation that when a subordinate rule runs counter to the parent law or rules that has to be ignored and the superior law or rules are to be given the effect. Moreover, when the specific rules regulate any particular eventuality then those specific rules will have overriding effect on the general practice, rules or bye-laws. The wording of the bye-laws which subjects the authority of the Board of Registrar's approval, do not seem sound and legal.
10. The emphasis of the learned counsel for the Registrar on the provisions of bye-law 21 wherein certain orders of the Board are subject to the approval of the Registrar, as said earlier, do not seem sound and at the same time, are against the Rules of Business of the Government. The BODs is headed by the Chief Secretary, who is official head of the Secretarial and comprises many other officers of the Government of the rank of Secretary, all of whom are senior to Registrar. The decision taken by the Board comprising high level dignitaries, would not seem legal, proper and fair to be subjected to the approval of the Registrar, who is also a member of that Board. This haphazardly worded provision of bye-law strengthens the argument of the learned counsel for the petitioners that the insertions made in writing by pen in the original typed draft of the bye-laws, which are not initialled by any competent authority, are not part of the bye-laws, but unauthorized insertions, and it is this insertion which has created confusion and is leading the affairs of the Bank to maladministration and the institutions to overlap. Though in the writ proceedings I cannot enter into inquiry as to whether any entry made in the bye-laws of the Bank is forged, fabricated or genuine, but to ascertain the truthfulness of the statement of learned counsel for the petitioners at bar, I sent for the file and have gone through it. The entries are made by pen in the typed draft. Its effect is however, left to be decided by the BODs. But one thing is unambiguously clear that entries do not fit in the schemse of laws and rules. Moreover, the Registrar has nothing to do with the appointments, suspensions, removal, reinstatement or dismissal etc. Of the employees of the Bank in view of the rules. An amendment in the Rules of Business incorporated through an amendment dated April, 1986 whereby the Registrar is shown as the Head of the Department of the Cooperative Societies, does not clothe the Registrar with the overlordship of the administration of the Bank.
Heads of Departments, under the Rules of Business, are for regulating and transacting the business of the Departments and to watch the working of the establishment, so that the businsess of the department is conducted in accordance with rules. The Head of Department has no authority to thwart or to vanish the autonomous character and working of the Department. The business of the Bank and the service conditions of its employees are regulated by the express rules and bye-laws; directions or orders of the Registrar in contravention of these bye-laws or rules do not carry any legal effect for the sole reason of his being Head of the Department as entered in the Rules of Business. Overstepping from the defined sphere and travelling ambitiously beyond the authority has become an unhappy phenomenon of our national life, which has already led the national institutions to the brink of disaster. The provisions of the Act, the rules framed thereunder and the bye-laws referred by the learned counsel relating to the powers of the Registrar, relate to the constitution, registration, cancellation, smooth and fair working of the Societies in financial affairs for the interest of its shareholders, proper utilization of funds and schemes, disbursement of funds, disposal of assets of cancelled societies etc. Etc. None of these provisions authorises the Registrar to interfere in or dictate the terms to the Bank regarding its day to day business. The Registrar is concerned to see and interfere if a society registered by him travels beyond the articles of association, thereby causing loss to the public funds and prejudicing the interest of its shareholders, and can resort to proper legal action suo motu or on the application of any shareholder or officer-bearer of the society. But this power does not extend to day to day administeration of the society or its disciplinary matters, regulated otherwise by rules.
11. In view of above the order passed by the Registrar, reinstating Mr. Maqbool Nazar, is without lawful authority. He is a Grade-II officer. Only Board of Directors of the Bank is competent to pass such an order. Even viewing the proposition on the assumption that orders of the Board are subject to the approval of the Registrar, there was no order of the Board to reinstate Mr. Maqbool Nazar, which could be approved by the Registrar. Hence, the orders dated 14-5-1992 as well as 4-6-1992 passed by the Registrar are without lawful authority.
12. As far as the order dated 12-5-1992 is concerned, the Registrar, no doubt had authority under section 22 of the Act, 1925 to order the audit of the Societies or branches of its Bank. But after adaptation of the law relating to the Federal Bank Act, whereunder the Azad Kashmir Government Cooperative Bank has become a Provincial Cooperative Bank, as far as the Federal Bank is concerned, the manner and terms to audit the Societies is regulated by the adapted law. Under section 4 of Ordinance 2 of 1979, whereby the Federal Act is adapted, the previous law ceases to have the effect, section 4 reads as: "If immediately before the coming into force of this Ordinance there is in force in Azad Jammu and Kashmir any law corresponding to the said Ordinance, it shall, subject to the other provisions of this Ordinance, cease to have effect on and from the date of the commencement of this Ordinance, provided that the provisions of this Ordinance shall not render invalid any thing duly done before the coming into force of this Ordinance, under the provisions of any previous law."
' As under section 17 of the Federal Act, the Federal Bank of Cooperative is principal financing institution for meeting the credit needs of the provincial Banks and in view of its being financier, the Federal Bank has the powers under section 20 of the Act to impose conditions, under section 25 to inspect; under section 27 to call meetings etc., under section 28 to lay down the policy guidelines and give directions with regard to business etc. Etc.
13. The Federal Bank vide its letter dated February 12,1987, has directed all the Provincial Banks to have the accounts of their banks audited by the auditors, who are Chartered Accountants within the meaning of the Chartered Accountants Ordinance, 1961. A panel of Chartered Accountants stands already prepared and appointed by the Federal Bank and it is directerd in the letter referred above that Provincial Banks shall give preference to those Chartered Accountants who are either locally based or closer to the head of offices of the Bank. In view of this, order passed by the Registrar on 12-5-1992, whereby he has appointed the auditors, who are not Chartered Accountants is also against law. I may observe here that the audit of the Bank must necessarily be conducted as visualized by law, every year and as a considerable time is also consumed in the litigation, the audit of the Bank is desirable to be conducted as early as possible in accordance with the provisions relating to the law for auditing the accounts of the bank or its branches.
14. -In view of above, both the petitions are accepted with costs.