It is unusual for a Court to render a judgment with illustrations or story. The problem presented in these writ petitions impels this Court to begin the judgment with an illustration to espouse the legal question germane to the dispute. 'A' commenced his service in a co-operative society in a lowest cadre. At the time of his initial appointment, society was classified as Class V society. Before his retirement, society was re-classified as Class I. The pay and allowances of different class of societies are fixed based on the classification of the society. Therefore, when the society reached the classification as Class I, 'A' was drawing higher pay and allowances comparing to such pay and allowances drawn by the employees of Class V society. The average pay for ten months preceding the retirement is reckoned for the purpose of pension under the pension scheme floated for the employees working in the co-operative sector. The classification of the society is based on the capital deposit, loan outstanding, audit classification, declaration of profit, dividend etc. Due to severe drought and calamities in the area of operation of the society, financial position of the society became precarious. Thus the society was ordered to be reclassified as Class V. By virtue of Note 6 to Appendix III of the Kerala Co-operative Societies Rules, 1969, the society is given six months time from being reclassified to lower categories. If not, the classification of society will be reduced and pay and allowances will be re-fixed accordingly. In the matter of 'A', classification is reduced/downgraded prior to ten months of his retirement and his pay and allowances for the purpose of pension was worked out based on reduction in classification. In case the society where 'A' was employed achieves higher criteria for upgradation after his retirement, the society will be upgraded and those employees will be able to enjoy higher pay and allowances. This is one of the illustrations. Illustrations as above are referred in the matter of pension. The question that looms large in this case is whether consequent upon the degradation of the society, the Government has the right to revise and reduce the pay and allowances that was enjoyed by such employees before the degradation.

2. These writ petitions are filed by the association of co-operative employees as well as the employees working in the co-operative sector challenging the Rules framed by the Government invoking Section 109 of the Kerala Co-operative Societies Act, 1969 ('the Act', for short). Clause (xxxviii) under Section 109 refers to the residuary power of the Government to make rules for any other matters required or allowed under the Co-operative Societies Act. The amended rules are in respect of Appendix III to the Kerala Co-operative Societies Rules. The Government is having power under Section 80 of the Act to classify the societies according to their type and financial position. Accordingly, the Government classified the societies as shown in Appendix III. Rule 182 of the Co-operative Societies Rules states that societies in the State shall be classified as shown in Appendix III. Rule 188 states that every society shall adopt the staff pattern indicated in Appendix III. Under Section 80(6) of the Act, the Government is having power to fix the pay and allowances and other benefits of employees of co-operative societies. Thus it is clear that the Government is having power to classify the society in accordance with its financial position. The Government also have the power to prescribe the staff pattern as well as the pay and allowances applicable to such societies.

3. The problem in this context is peculiar to the co-operative societies owing to the power given to the Government. That is to say, co-operative societies, though an autonomous body, have no power in fixing the pay and allowances.

4. The financial position of the society is not static and it varies according to the volume and natu