KOSHY, J.

The first appellant is a Co-operative Bank registered under the Kerala Co-operative Societies Act. The Bank was classified as Class IV Primary Agricultural Credit Society with effect from 1-7-1995. The business of the Bank includes acceptance of deposits of money for interest, distribution of loan amount to eligible members of the society, conducting chitty business, giving out loan amount to members against gold security, distribution of fertilizers to the agriculturists etc. According to the appellants working capital is more than Rs. 1.82 crores and the present deposit is more than Rs. 2 crores. It is also averred that appellant Bank was selected for the award of Banks Trophy. Considering the working capital, deposits, loan outstanding etc. the Board of Directors resolved to classify the Bank into Class III and a resolution was passed and forwarded to the Joint Registrar. Even though no action was taken to cancel the resolution, when prior approval was asked for appointing additional staff on account of reclassification and additional work load. It was refused by Ext. P5 on the ground that society was running on a loss of Rs. 19 lakhs and as per Circular No. 77/93 Registrar of Co-operative Societies ordered that no permission should be given for appointing additional staff on account of upgradation to societies whenever the society is running on a loss.

The learned single Judge observed that there is a specific provision in the second proviso to Rule 188 of the Kerala Co-operative Societies Rules that for change in the pattern of staff including the scale of pay, prior approval of the Registrar of Co-operative Societies is necessary and therefore appellants' request to set aside Ext. P5 cannot be allowed and therefore under the second proviso to Rule 188, for appointment of additional staff consequent upon change of staff pattern, prior approval from the Registrar of Co-operative Societies is necessary. Rule 188 reads as follows :"188. Staff Pattern :- Every society shall adopt the staff pattern indicated in Appendix III to these rules, according to the type and class to which it belongs :

Provided that where any society cannot adopt such staff pattern due to its financial position, the members of the committee may work in an honorary capacity in lieu of appointing any paid employee :

Provided further that where any society is in need of any change in the pattern of staff including the scale of pay be made by the society with the prior approval of the Registrar of Co-operative Societies."

To understand the meaning of Rule 188, we may have to look into S. 80 of the Co-operative Societies Act. S. 80(1) and (2) are quoted below :

"80. Officers, etc. of Co-operative Societies :- (1) The Government shall classify the societies in the State according to their type and financial position.

(2) The Government shall, in consultation with the State Co-operative Union, fix or alter the number and designation of the officers and servants of the different classes of societies specified in sub-sec. (1)."

In Appendix III, Societies are classified into different classes and types and also staff pattern and salary scale are accordingly prescribed.

A reading of the above Rule and Appendix III makes it clear that staff pattern is fixed by the Rule itself. Therefore, normally society will be free to appoint staff as per the staff pattern fixed in Appendix III. 1st proviso allows the society from not adopting the staff pattern due to financial position and allows the members of the committee to work in a honorary capacity. That is for the society to decide. Second proviso only makes it obligatory for society to get prior approval from the Registrar only if there is a 'need of any change in the pattern of staff including the scale of pay under special circumstances'. The above wordings make it clear that for appointing staff as per the staff pattern fixed in Appendix III and the rules according to the type and class to which the soci