G.H. GUTTAL, J.:---The petitioner was the General Manager and Chief Executive of the Shamrao Vithal Co-operative Bank Ltd., the Respondent No. 1 Respondents Nos. 2 and 3 are, respectively, the Chairman and Vice-Chairman of the said Bank. In this Judgment, the Respondent No. 1 shall, hereinafter, be referred to as "the Bank". The petitioner impugns the validity of Clause 4 of the Contract of Service dated 19th November, 1984, and the Resolution of the Board of Directors dated 21st May, 1987, whereby his employment was terminated in accordance with the terms of the contract.

I. The Questions

2. Is a Co-operative Bank, registered under the Multi-State Co-operative Societies Act, 1984, an Act of the Parliament, "State" as defined in Article 12 of the Constitution of India? The Bank urges that it is not. This is one of the questions arising in this petition.

3. The petitioner was appointed as Additional General Manager on 19th May, 1984. He was promoted to the Office of the General Manager and Chief Executive on 6th September, 1984. The Multi-State Co-operative Societies Act, hereinafter referred to as "the Act" came into force on 18th August, 1984. By virtue of section 103(1) of the Act, the Bank is deemed to have been registered under the Act. Its Bye-laws, in so far as they are not inconsistent with the provisions of the Act or the Rules, continue to be in force until altered. The petitioner incurred displeasure of the Board of Directors. The Board of Directors, therefore, resolved to terminate the services of the petitioner by paying three months salary in lieu of notice. The Resolution is dated 21st May, 1937.

4. According to the Bank, the petitioner is a trouble-maker and defies the view of the Board of Directors. On 15-2-87, he not only incited executives to shout, agitate and demonstrate against the Chairman and the Directors, but obstructed the passage of their cars. On 19-2-1987, he arranged demonstration with placards at the entrance of the place where the meeting of the Board was scheduled to be held . The petitioner's conduct is subject-matter of a complaint by 35 shareholders. Paragraph 20 of the Affidavit in reply dated 24th August, 1988. The Bank claims that merely because the order of termination does not specify reasons, "it does not mean that there are no reasons" for the termination. Paragraph 26 of the affidavit in Reply dt. 24th August, 1983. The Bank asserts that the petitioner instigated employees and shareholders to wage war against the Bank and harm the Bank. Paragraph 51 of the affidavit in Reply dt. 24th August, 1988.

5. The petitioner has urged four points:

(i) On the basis of the averments made by the Bank and summarised in paragraph No. 4 above, the petitioner contends that these averments prove that the real motive was to remove the petitioner for the acts of misconduct alleged to have been committed by him. The action is punitive and victimising. The termination of employment being punitive and victimising, it is urged, on the authority of (K.C. Joshi v. Union of India)1, 1985(3) S.C.C. 153 that the action is in breach of principles of natural justice. Since the principles of natural justice are part of constitutional guarantee of equality, the violation of the principles of natural justice offends the fundamental right guaranteed by Article 14 of the Constitution. Clause 4 of the contract leaves arbitrary discretion in the Bank thereby violating Article 14 of the Constitution of India.

(ii) On the authority of (Central Inland Water Transport Corporation Ltd. v. Brojo Nath Ganguly)2, A.I.R. 1986 S.C. 1571 the term of the contract which empowers the Bank to terminate services without giving reasons and by giving notice, is opposed to public policy and, therefore, void under section 23 of the Contract Act.

(iii) The Bank claims that there are rules which govern termination of services for misconduct. Para 28 of Affidavit in Reply dt. 29th August, 1988. If this is so, Clause 4 which empowers the Bank t