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Jammu and Kashmir High Court Holds Cooperative Banks Amenable to Writ Jurisdiction for Public Functions
In a significant judgment expanding the frontiers of , the has ruled that a cooperative bank, even if not a “State” under , is to judicial scrutiny under Article 226 when it performs public functions such as accepting deposits from the public and operating under regulation. The ruling came in a case where a former General Manager/Chief Executive Officer of the , challenged his premature relief from service after the bank’s declared his post-retirement extension illegal. Justice Shahzad Azeem, sitting singly, dismissed the petition, holding that the extension was as the lacked any statutory competence to grant it.
The Case in Brief
Mohammad Shafi Reshi joined the , in 1987 and eventually rose to the position of GM/CEO. Under the statutory service rules framed vide SRO 233 of 1988, the age of superannuation for employees of cooperative societies is 58 years. Reshi attained that age on . However, the then of the bank, by a resolution dated , granted him an extension of three years commencing from to . Soon after, the superseded the Board and constituted a in . Acting on a report that the earlier Board had been illegally constituted and that the extension was contrary to the statutory rules, the relieved Reshi with immediate effect in and withheld his retirement benefits.
Reshi challenged these orders before the High Court, contending that he was denied a hearing, that approval was mandatory before removal of a CEO, and that the very supersession of the and appointment of Administrators was . The respondents opposed the petition, raising a preliminary objection that the writ was not maintainable against a cooperative bank—something they argued stood settled by an earlier coordinate bench decision.
Writ Maintainability: From Formal Status to Public Function
At the heart of the preliminary objection was the argument that the Urban Cooperative Bank is not “State” under Article 12 and that service disputes governed by its bye-laws are private contractual matters and, therefore, immune to . The respondents relied on , where a similar view was taken.Justice Azeem, however, traced the evolution of Article 226 jurisprudence. Citing the ’s recent pronouncement in , the judgment underscored that “the focus has gradually shifted from the formal character of the body against whom relief is sought to the nature of the function performed, the source of power exercised, and the effect of the impugned action on legally protected rights.” The court also referred to , which recognized that a body performs a “ ” when it intervenes in social or economic affairs in the public interest.
Applying this test, the court found that the , accepts money from the public, advances loans, and functions under ’s regulatory oversight. These activities involve public trust, financial inclusion, and depositor protection, and therefore constitute a . The bench categorically held:
“The business involves public money, depositor protection and financial system stability. regulations impose public duties on the Bank. This supports amenability to under Article 226 as ‘any person or authority’ performing public functions.”
The court further distinguished Ghulam Rasool Dar . In that case, the service conditions were purely contractual, rooted in bye-laws that had no statutory force. In contrast, Reshi’s service conditions—including the retirement age and any possibility of extension—were governed by SRO 233 of 1988, a framed by the government in exercise of its . As such, they carried the and injected a clear into the dispute. The court thus declared:
“Enforcement of statutory service conditions involves a clear public/ statutory element and is to under against the Cooperative Bank.”
The preliminary objection was overruled, clearing the path for a merits review.
The Extension That Never Was
On the merits, the court zeroed in on , which unambiguously states that an employee of a cooperative society shall retire on attaining the age of 58 years. The provision does not vest any authority in the of a cooperative bank to extend service beyond that age. The Division Bench of the same high court in had already ruled that any alteration of the retirement age for cooperative employees could only be done by the government through an amendment to the statutory rules, not by a Board resolution.
Adverting to that , Justice Azeem found that the of the Urban Cooperative Bank had no competence to grant Extensions. Consequently, the resolution of and the subsequent order of were in the eyes of law. The judge observed:
“The of the UCB, Anantnag, by resolution dated followed by Order dated , purported to grant the Petitioner an extension of three years… Such extension was beyond the competence of the and is in the eyes of law. Consequently, the Petitioner had no legal right to continue in service after .”
The impugned relieving orders were, therefore, not premature or illegal; they were merely a recognition of the fact that Reshi’s continuance beyond the statutory retirement age had no legal foundation. The court declined to examine the challenge to the supersession of the and the appointment of Administrators, holding that such disputes fall within the exclusive under , and are not to .
Key Observations from the Bench
“For maintaining of a Writ Petition under , the existence of a and the effect of the impugned action on the rights of the affected person are the decisive factors.”
- “The business involves public money, depositor protection and financial system stability. regulations impose public duties on the Bank.”
- “Such extension was beyond the competence of the and is in the eyes of law.”
- “The impugned Orders, whereby the Petitioner was relieved with immediate effect, therefore, cannot be termed as premature or illegal.”
Decision and Its Implications
The petition was dismissed, and all interim directions stood vacated. The judgment reinforces that cooperative banks, despite their private legal form, are not immune from constitutional oversight when they handle public deposits and function under a statutory regulatory framework. It also serves as a strict reminder that service extensions beyond the prescribed retirement age for cooperative society employees must be founded in express statutory amendment—mere Board resolutions will not suffice.
Case Title:
Mohammad Shafi Reshi v.
& Ors.
Citation:
2026 LiveLaw (JKL) 305
