Disciplinary Action Proceedings Against Employees of Co-Operative Societies

Saji Koduvath, Advocate, Kottayam.

SUSPENSION

Who has to suspend an employee pending enquiry into serious charges against?

  • An authority competent to appoint.
  • Rule 198(6) of the Kerala Co-operative Societies Rules provides: “An authority competent to appoint an employee may suspend him pending enquiry into serious charges against such employee.”
  • Usually, the Managing Committee is the appointing authority. When the Managing Committee has taken the decision, it can be issued by the president or the Secretary, for the committee.
  • The President can issue suspension Order, considering the urgency and as an immediate preventive action even though the Managing Committee is the appointing authority, anticipating that the suspension will be subsequently ratified/ approved by the Managing Committee.  The President has the general control over the affairs of the Society, as the chief executive of the Committee.
  • See: Prasanth Maroli v. Kannur Primary Co-operative Agricultural & Rural Development Bank Ltd. 2008 (4) KLT 451: 2008 (4) KHC 240);  Chandrikamma v. Assistant Registrar (General), Co-operative Societies, 2000 (3) KLT 940.
  • The bye-laws of the society may expressly confer disciplinary/ suspension power on the President or exclusively on the Committee. It has to be honoured.

What should be the period of suspension?

  • Rule 198(6) is the relevant provision.  It reads: No employee shall however be kept under suspension for a period exceeding six months at a time. In no case an employee shall be kept under suspension for a continuous period exceeding one year without the prior approval of the Registrar.

Is the employee suspended is entitled for subsistence allowance?

  • Rule 198(6) further reads:  “An employee under suspension shall be entitled to subsistence allowance payable under the Kerala Payment of Subsistence Allowance Act, 1972 (27 of 1973).”

Is suspension a part of enquiry?

  • No. Both are independent matters. The Disciplinary Sub-Committee is the enquiry body. An authority competent to appoint an employee suspends him.

Is suspension a punishment?

  • No. Suspension is not a punishment; it is only a temporary measure adopted to facilitate a fair enquiry.

Can a suspended employee be revoked pending enquiry?

  • Yes. A suspended employee of a co-operative society can be taken back into service pending enquiry by revoking the suspension order, if the competent authority later finds that continued suspension is unnecessary.

What are the grounds for revoking suspension?

  • If there is no likelihood of interference with the enquiry or tampering with evidence, continued suspension may be unwarranted. This principle was stated in K.K. Chandramathi v. Vadakkumpad Service Co-operative Bank Ltd., 1998 (2) KLT SN 37

Who can revoke the suspension?

  • The same authority competent to suspend—normally the Managing Committee, or the President if the suspension was issued by him and ratified by the Committee—may revoke the suspension and permit the employee to rejoin duty.

Can the employee be posted elsewhere?

Yes. The Society may:

  • revoke the suspension;
  • assign the employee to another seat/branch/section;
  • restrict access to records connected with the enquiry; or
  • require the employee not to interfere with witnesses or documents.
  • Such arrangements are often adopted where the employee’s presence is not likely to prejudice the enquiry.

Can there be a preliminary fact-finding before suspension?

  • Yes, it can be.

DISCIPLINARY SUB-COMMITTEE

How a Disciplinary Sub-Committee is formed? What is the Period of office of the Committee?

  • The disciplinary sub committee, envisaged under Rule 198(2A), is ordinarily to be constituted as a standing body.
  • It is not constituted on a case-to-case basis (Mattanur Co-Operative Rural Bank Ltd. v. The Co-Operative Arbitration Court (FB), 2023-5 KLT 312; 2023 KHC (Online) 541).

Can the Disciplinary Sub-Committee suspend an employee?

  • No. Rule 198(6) governs it.  It says – “an authority competent to appoint an employee may suspend him pending enquiry into serious charges.”

How many members are there in a Disciplinary Sub-Committee

  • Rule 198 (2A) reads: “The committee of a society shall constitute a disciplinary sub-committee consisting of not more than three of its members, of whom one shall be designated as Chairman ….”

Can the President society be the President of the Disciplinary Committee?

  • No. Rule 198 (2A) further reads: “….. but the President of the committee of the society shall not be a member in the disciplinary sub-committee”.

Duties of Disciplinary Sub-Committee

  • The Full Bench Mattanur has now made it clear that the Disciplinary Sub-Committee has a substantial statutory role. It can:
  • 1. inquire into the charges;
  • 2. issue the memo of charges;
  • 3. engage an external agency;  
  • 4. conduct or arrange the disciplinary enquiry.

Can those (already constituted) Sub-Committee members participate in the Managing Committee’s decision to suspend?

  • Ordinarily they should not participate or vote in the Managing Committee’s decision on suspension if they are acting as members of the Disciplinary Sub-Committee which is enquiring into the same charges.

Can a member of the Disciplinary Sub-Committee participate in the Managing Committee in the disciplinary–action-decision-making process?

  • Being a member of the Managing Committee he does not, by itself, disqualify from attending a Managing Committee meeting.
  • But participating in the enquiry as a member of the Disciplinary Sub-Committee and then participating in the decision-making process concerning the same disciplinary matter raises a serious issue of institutional bias / nemo judex in causa sua.
  • This is particularly strong where the Sub-Committee has already formed an opinion regarding the charges, or recommended disciplinary action.

PRELIMINARY FACT-FINDING ENQUIRY

Can there be a preliminary fact-finding enquiry before show-cause notice and/or the formal charge-sheet?

  • Yes, it can be. Such a procedure is not in Rule 198. But it is useful, particularly where the facts are uncertain.
  • It should never be a full-fledged ‘fact finding’ capable of canvasing prejudice to the mind of persons who may be associated to the ‘enquiry’ that may be done after issuing Charge Memo.

SEPARATE “SHOW-CAUSE NOTICE” BEFORE ISSUING THE CHARGE-SHEET

  • A separate “show-cause notice” before issuing the charge-sheet is not necessary in every case. Such a procedure is not in Rule 198.
  • But it is useful and may be a fair procedure to ask the employee to explain why disciplinary action should not be initiated, particularly where the facts are uncertain.

CHARGES

Is it necessary to issue Memo of charges in disciplinary actions?

  • Yes. Rule 198(2) reads: “No kind of punishment shall be awarded to an employee unless he has been informed in writing of the grounds on which it is proposed to take action against and he has been afforded an opportunity including a personal hearing to defend himself.”

What should be the contents of a Charge Sheet?

  • Rule 198(2) itself requires – the grounds on which it is proposed to take action against the employee. It should be capable of affording an opportunity to understand the matters upon which actions are taken against him and defend himself.

Who has to issue Memo of charges in disciplinary actions?

  • Memos of charges in disciplinary actions can be issued by the
  • disciplinary sub-committee or
  • the managing committee. (Mattanur Co-Operative Rural Bank Ltd. v. The Co-Operative Arbitration Court (FB), 2023-5 KLT 312; 2023 KHC (Online) 541) analysing the Kerala Cooperative Societies Rule 198, held as under: Paras 86, 87)

Time of issue of Memo of charges?

  • Before starting enquiry.

Should an explanation be sought for from the employee when a Memo of charges is issued?

  • Yes, though not mandatory – as it is not so specifically stated in the Rules. If the employee admits the guilt, it may not be necessary, in the circumstances of the matter, to conduct an enquiry even.

Purpose of issuing a charge-sheet

  • It is a mandatory requirement apart from complying natutal-justince. Rule 198(2) reads as under:  “No kind of punishment shall be awarded to an employee unless he has been informed in writing of the grounds on which it is proposed to take action against and he has been afforded an opportunity including a personal hearing to defend himself.”
  • The purpose of a charge-sheet is precisely to tell the employee what he is required to meet. See: Saralakumari P.V. v. President, Kottayam Co-operative Urban Bank Ltd.

Should the charges be specific?

  • A vague allegation such as “you committed serious irregularities” is different from a charge identifying the particular act, date, transaction, document and rule allegedly violated. Vague charge is defective.

Whether the omission to make a charge-sheet (or improper charge sheet), vitiates the entire disciplinary proceeding?

  • Yes. The absence of a charge-sheet/memo of charges before that enquiry is a serious procedural defect and can vitiate the enquiry. K.V. Jankiraman, Anil Kumar Sarkar, H.C. Khurana and Ch. Gandhi.

Should there be a separate “show-cause notice” before issuing the charge-sheet?

  • No.  A separate “show-cause notice” before issuing the charge-sheet is not necessary in every case. Such a procedure is not in Rule 198.
  • But it is useful and may be a fair procedure to ask the employee to explain why disciplinary action should not be initiated, particularly where the facts are uncertain.

ENQUIRY

Who has to enquire into the charges?

  • Under Rule 198(2B) reads as under: “The disciplinary sub-committee so constituted shall inquire into the charges against the employee either by themselves or by engaging an external agency.”

Can an advocate can be engaged as an external agency/enquiry officer for the disciplinary enquiry under Rule 198(2B)

  • Yes, an advocate can be engaged as an external agency/enquiry officer for the disciplinary enquiry under Rule 198(2B).

Who can appoint the advocate/enquiry officer? Who has to make the appointment?

  • Rule 198(2B) provides: “The disciplinary sub-committee so constituted shall inquire into the charges against the employee either by themselves or by engaging an external agency.”

Can the Managing Committee appoint the advocate?

  • Not the proper course in view of Rule 198(2B). The Managing Committee should not simply bypass the Sub-Committee and appoint an advocate to conduct the Rule 198 enquiry, unless there is some separate statutory authority for doing so (such as bye-law provision).

Should there be a presenting Officer for Management?  

  • Yes. Normally it will be the Secretary of the Society.

What are the duties of a presenting Officer for Management?

  • inspect documents or places;
  • collect evidence;
  • investigate particular factual matters for the Management;
  • submit sworn statement before the enquiry officer by himself or arrange a competent person for the same.

Should the Sub-Committee analyse and adopt the findings (if they agree) advocate’s report

  • Yes. If the advocate is engaged as the external agency under Rule 198(2B), the Sub-Committee should not mechanically adopt the advocate’s report. It must consider the report, the materials/evidence relied upon, and the employee’s explanation/objections, and then arrive at its own independent finding on each charge.

Is the advocate’s report the ultimate finding of disciplinary action?

  • No. The advocate’s report is not itself the disciplinary decision. Rule 198(2B) says that the Disciplinary Sub-Committee shall inquire into the charges “either by themselves or by engaging an external agency.” The external agency only conducts the enquiry. The advocate’s report is therefore a report/recommendation arising from the enquiry; it does not automatically become the final finding of the statutory disciplinary authority.
  • The Disciplinary Sub-Committee is required to independently consider the enquiry report, the evidence on record and the defence of the delinquent employee, apply its own mind to each charge, and record its independent finding as to whether the charge has been proved.
  • A mechanical acceptance of the external agency’s report, without independent consideration and a reasoned finding by the competent disciplinary authority, would be vulnerable to under Rule 198.

Should opportunity be given to the employee to make his representation on the enquiry report and on the proposed finding of guilt/punishment?

  • Desirable; not mandatory under the Rules.

Must the employee receive the Advocate’s enquiry report?

  • If the disciplinary authority relies upon the report, the employee should ordinarily be furnished the report and given an opportunity to make a representation before the final decision.

Can the disciplinary authority disagree with the Enquiry Officer?

  • Yes—but the procedure becomes important. If the disciplinary authority proposes to disagree with a finding favourable to the employee, the employee should ordinarily be informed of the proposed disagreement and allowed to respond before the finding is finally recorded.

Should the findings be confined to the charges?

  • The authority should not punish the employee for an allegation which was never made a charge and on which no opportunity of defence was given.

Can a charge be held proved merely because the employee did not disprove it?

  • The disciplinary authority must assess the material establishing the misconduct; it should not simply reverse the burden onto the employee.

What is the standard of proof?

  • A departmental/co-operative disciplinary proceeding is generally governed by the preponderance of probabilities, rather than proof beyond a reasonable doubt. But the finding still has to be based on evidence/material on record.

PUNISHMENT

Who imposes the punishment?

  • This depends upon the employee’s category and the table in Rule 198(3).
  • Where the relevant penalty is one that the Disciplinary Sub-Committee is competent to impose under Rule 198(3), the Sub-Committee may impose it in the categories specified in Rule 198(3).
  • Where the Managing Committee is the competent penalty authority, however, the Sub-Committee’s role is different: it conducts the enquiry and records its findings, and the competent authority thereafter deals with the penalty in accordance with Rule 198.

Opportunity be given to the delinquent to say his part as regards the proposed punishment

  • Rule 198(2) requires the employee to be informed in writing of the grounds on which action is proposed and given an opportunity, including personal hearing, to defend himself.

Should there be ‘Show-Cause Notice’ for Punishment

  • Yes. It is to comply doctrine of natutal-justice. “Communication of Enquiry Report and Opportunity to Submit Representation Against the Findings and Proposed Penalty” is desirable rather than: “Show-Cause Notice for Punishment”.

Is the Managing Committee the disciplinary/penalty authority?

  • No. Because the Managing Committee is also the appellate authority (as stated in the rule) under Rule 198(4).
  • The President is the competent penalty authority for certain lower-level employees under the table in Rule 198(3), and the Executive Committee/Board was the appellate authority.
  • The Managing Committee cannot and should not subsequently “approve” or “confirm” the punishment if the Sub-Committee is the designated penalty authority.

What must the final punishment order contain?

  • It should ideally contain:
  • charges,
  • employee’s defence,
  • enquiry findings,
  • consideration of objections to the report,
  • independent findings of the competent authority,
  • reasons for accepting/rejecting material contentions,
  • finding on each charge,
  • reasons relevant to the penalty,
  • penalty imposed,
  • right of appeal and appellate authority.

Should the punishment be proportionate?

  • Even if misconduct is proved, the proportionality of the penalty can be challenged in appropriate circumstances.

APPEAL

Who is the appeal authority?

  • The Managing Committee is the appellate authority under Rule 198(4).

Can members of the Disciplinary Sub-Committee subsequently participate in the Managing Committee’s decision on appeal?

  • Not Desirable. This raises the bias/nemo judex issue, especially if those members have already considered the evidence and formed an opinion about guilt.

End Notes:

Rule 198 of the Kerala Co-operative Societies Rules

Rule 198. Disciplinary action.— (1) Any member of the establishment of a cooperative Society may, for good and sufficient reasons, be punished by imposing any of the following penalties, namely:

(a) Censure;

(b) Fine (in the case of employees in the last grade);

(c) Withholding of increments with or without cumulative effect.

(d) Withholding of promotion;

(e) Recovery from pay of the whole or part of any pecuniary loss caused to the society, by negligences or breach of orders or otherwise;

(f) Reduction to a lower rank;

(g) Compulsory retirement;

(h) Dismissal from service.

(2) No kind of punishment shall be awarded to an employee unless he has been informed in writing of the grounds on which it is proposed to take action against and he has been afforded an opportunity including a personal hearing to defend himself. Every order awarding punishment shall be communicated to the employee concerned in writing stating the grounds on which the punishment has been awarded.

 (2A) The committee of a society shall constitute a disciplinary sub-committee consisting of not more than three of its members, of whom one shall be designated as Chairman, but the President of the committee of the society shall not be a member in the disciplinary sub-committee.

(2B) The disciplinary sub-committee so constituted shall inquire into the charges against the employee either by themselves or by engaging an external agency.

 (3) The authority competent to impose the various penalties on different categories of employees shall be as shown in the table below:

Rank of the employeeAuthority competent to impose
 Penalties under (a) to (c)Penalties under (d) to (h)
Secretary /Manager or other Chief Executive Officer and all employees holding posts higher than that of Sr. Clerk/Sr. Assistant/I Grade Assistant/Equivalent other employees with same or identical scale of pay      President /Chairman    Sub-Committee/Executive Committee  
All other employeesSecretary /Manager or other Chief Executive Officer.President

(4) An appeal shall lie against every order imposing a penalty to the competent appellate authority, shown in the table below:-

Secretary /Manager or other Chief Executive Officer and all employees holding posts higher than that of Sr. Clerk/Sr. Assistant/I Grade Assistant/Equivalent other employees with same or identical scale of pay      Executive Committee or Board of Management          Board of Management Executive      
All other employeesPresidentCommittee/Board of Management

 (5) No appeal shall be entertained if it is not preferred within a period of three months from the date of the order imposing the penalty. Provided that where the penalties are imposed on employee by an administrator or an administrative committee, such employees can file appeal before the forthcoming elected committee and in such cases the restriction of three months shall not be applicable.

 (6) An authority competent to appoint an employee may suspend him pending enquiry into serious charges against such employee. No employee shall however be kept under suspension for a period exceeding six months at a time. In no case an employee shall be kept under suspension for a continuous period exceeding one year without the prior approval of the Registrar. An employee under suspension shall be entitled to subsistence allowance payable under the Kerala Payment of Subsistence Allowance Act, 1972 (27 of 1973).

 Provided that an employee not coming under the purview of the Kerala Payment of Subsistence Allowance Act, 1972 (27 of 1973) shall be entitled to subsistence allowance at the rate admissible to State Government Employees as prescribed under the Kerala Service Rules.

 (7) In the event of any pendancy of disciplinary proceedings against any employee of a co-operative society or any co-operative institution pursuant to any charge of grave misconduct, irregularity, corruption or other charge involving moral turpitude, no retirement benefits shall be sanctioned to such employee or retired employee and in case of sanctioning of any retirement benefits to any such employee or retired employee, the name and designation of the sanctioning authority together with the reason for such sanctioning shall be recorded by the sanctioning authority by himself and such authority shall be held responsible for any loss to the society owing to such sanctioning of retirement benefits if found that such sanctioning was unwarranted.

 (8) In respect of all employees save the Chief Executive Officer of a society, no retirement benefits shall be sanctioned and disbursed until after the due issuance of a nonliability certificate by the Chief Executive Officer and approval of the same by the committee of the society within thirty days from the date of retirement of such employee. In the event of the retirement of the Chief Executive Officer, the non-liability certificate shall be issued by the committee of the Society. For any loss to the society due to the non-adherence of the forgoing procedure, the Chief Executive Officer along with the committee of the society shall be held responsible collectively and severally in respect of the issuance of Non-liability Certificate to any employee other than the Chief Executive Officer and the members of the committee shall be held collectively and severally responsible for the issuance of Non-liability Certificate to the Chief Executive Officer.”

How to Subscribe ‘IndianLawLive’? Click here  –  “How to Subscribe  free  “

Read in this Cluster (Click on the Topic)

Civil Suits: Procedure & Principles

Book No, 1 –  Civil Procedure Code

Principles and Procedure

PROPERTY LAW

Title, ownership and Possession

Recovery of Possession:  

Survey, Revenue Records, Mutation

Adverse Possession

Land Laws/  Transfer of Property Act

Land Reform Laws

Power of attorney

Evidence Act – General

Sec. 65B

Admission, Relevancy and Proof

Law on Documents

Documents – Proof and Presumption

Interpretation

Contract Act

Specific Relief Act

Law on Damages

Easement

Stamp Act & Registration

Natural Justice/Disciplinary Action

Divorce/Marriage

Negotiable Instruments Act

Criminal

Arbitration

Will

Book No.  2:  A Handbook on Constitutional Issues

Religious issues

Book No.  3:  Common Law of CLUBS and SOCIETIES in India

Book No.  4:  Common Law of TRUSTS in India

Unknown's avatar

Published by sajikoduvath

Leave a Comment