Supreme Court Restores Bank Officer's Promotion, Holds Registrar's Rule Deletion Valid After 13 Years

A Supreme Court bench of Justices Sanjay Karol and Augustine George Masih rules that the Registrar's deletion of a service rule bar was a lawful exercise of statutory power, restoring S.P. Chandrakar's promotion as Additional Manager with 50% back wages.

The Supreme Court on 30 July 2026 set aside concurrent findings of the Chhattisgarh High Court that had quashed the promotion of S.P. Chandrakar, an employee of the District Central Cooperative Bank Ltd., Raipur, to the post of Additional Manager. The Court held that the deletion of Rule 5(3)(a) of the Chhattisgarh District Cooperative Central Bank Employee Service Rules, 1982 — the provision that barred technical employees from being appointed to non-technical posts — was a valid exercise of power by the Registrar of Cooperative Societies under Section 55(1) of the Chhattisgarh Cooperative Societies Act, 1960. The ruling ends a legal battle that had kept Chandrakar's promotion in doubt for thirteen years after it was granted, and directs the restoration of his seniority, all consequential promotion benefits, and 50% back wages payable within two months.

How the Dispute Reached the Court

Chandrakar and one Kishor Bagh are both Class I officers of the District Central Cooperative Bank Ltd., Raipur. Their service is governed by the Rules 1982, framed under Section 55 of the Chhattisgarh Cooperative Societies Act, 1960. Rule 5(3)(a) as it originally stood barred employees appointed to a “special technical work or service” from being appointed or absorbed into posts involving different work.

Chandrakar's original appointment was to a technical post (Assistant Engineer). When the bank prepared gradation lists for Class I officers, Chandrakar was initially left out of the 2005–06 list, but was included after a correction application. In the seniority list published on 6 November 2008 for the year 2007–08, he was placed at Serial No. 1 and Bagh at Serial No. 2. Bagh challenged this placement and separately objected to Chandrakar's inclusion in the eligibility list for the post of Additional Manager, arguing that Rule 5(3)(a) disqualified him from a non-technical administrative post.

Technical employees, including Chandrakar, made a representation seeking deletion of the bar in Rule 5(3)(a). On 13 August 2010 the Additional Registrar issued a communication to all District Cooperative Central Banks stating that Rule 5(3)(a) stood deleted, and adding that the order had been made by the Registrar. Bagh's objections notwithstanding, the Registrar directed the Chief Executive Officer of the bank to proceed in accordance with the amendment. A Departmental Promotion Committee met on 20 December 2010 and recommended Chandrakar's promotion; the promotion order followed on 30 December 2010.

Bagh filed a writ petition challenging the promotion. After thirteen years, the learned Single Judge of the High Court quashed the promotion order in July 2023. The Division Bench of the Chhattisgarh High Court, Bilaspur affirmed that decision in February 2024. Both courts held that the 13 August 2010 communication was merely a correspondence to cooperative societies and not a formal amendment order passed by the competent authority under Section 55(1); since the Rules 1982 have statutory force, they could not be amended by an executive order. Chandrakar then sought special leave, which was granted.

What the Court Held on the Central Issue

The Court framed the question as whether the amendment communicated by the Registrar was made in accordance with law. It answered in the affirmative on two distinct grounds.

First, it accepted the Registrar's position that Section 55(1) expressly confers power to frame rules governing terms and conditions of employment in societies. The Court held that this power to frame necessarily carries within it the power to amend, alter or delete. It drew support from Section 21 of the General Clauses Act, 1897, which provides that where a statute grants power to issue notifications, orders, rules or bye-laws, that power includes the power to add to, amend, vary or rescind them, exercisable in the same manner and subject to the same conditions.

Second, the Court addressed the objection that the 13 August 2010 communication was issued by the Additional Registrar rather than the Registrar himself. The Act provides for the appointment of Additional Registrars and Joint Registrars to assist the Registrar, and the Court found no bar on delegation of functions. Critically, the communication itself bore the notation “ordered by Registrar.” The State had also not disputed that the amendment was made under the Registrar's orders. The Courts below had faulted the absence of a formal order annexed to the record, but the Court held that an uncontroverted position that the power was exercised by the Registrar was sufficient.

Relying on Kiran Devi v. Bihar State Sunni Wakf Board, Municipal Corporation of Ahmedabad v. Ben Hiraben Manilal, and the Constitution Bench in Hukumchand Mills Ltd. v. State of M.P., the Court reiterated that a wrong reference to or an informal style in the exercise of power does not vitiate the action if the power in fact exists and has been exercised. The label of “circular” or “communication” would not detract from the sanctity of the notification.

The Laying Clause: “Shall” Read as Directory

A separate but consequential issue was Section 95(3) of the Act, 1960, which requires that all rules made under the Act “shall be laid on the table of the Legislative Assembly.” There was no indication that the amendment had been tabled. The question was whether this rendered the amended rule invalid.

The Court surveyed three Constitution Bench decisions on the mandatory/directory distinction: State of U.P. v. Manbodhan Lal Srivastava, State of U.P. v. Babu Ram Upadhya, and Bhikraj Jaipuria v. Union of India. Each of them confirmed that whether “shall” is obligatory or directory turns on the intent of the legislature, assessed by the nature, design and purpose of the statute, and the consequences of non-compliance.

The Court then applied the test from Atlas Cycle Industries Ltd. v. State of Haryana, where a three-judge bench considered the non-laying of a control order before Parliament and explained the three kinds of laying clauses: simple laying, laying subject to negative resolution, and laying subject to affirmative resolution. A five-judge bench in K.T. Plantation (P) Ltd. v. State of Karnataka had affirmed Atlas Cycle and tied the form of laying clause to the degree of legislative control intended.

Section 95(3) provides no consequence for non-tabling. The Court held this absence of consequence to be a weighty factor pointing towards a directory reading. It also noted that Madhya Pradesh, from whose Cooperative Societies Act, 1960 the Chhattisgarh Act was adopted, has an identically worded provision, interpreted by the Supreme Court as directory and operating only for the purpose of information. The conclusion was that non-compliance with the laying procedure in Section 95(3) could not defeat the Registrar's exercise of power.

On the Argument That Executive Instructions Cannot Override Statutory Rules

The original writ petitioner had relied on Punjab Water Supply & Sewerage Board v. Ranjodh Singh and Union of India v. Ashok Kumar Aggarwal for the proposition that executive instructions cannot override statutory rules and constitutional provisions. The High Court had accepted this reasoning.

The Supreme Court held the reliance misplaced. The Registrar was not issuing a mere executive instruction; he was exercising power specifically conferred by Section 55(1) of the Act to regulate service conditions. Once the power exists and has been exercised, the form or style of exercise does not dilute the authority. The argument that the Registrar had sidestepped the statute was rejected because the statute itself was the source of the power.

Outcome

The Court allowed the appeal and set aside the judgments of the Single Judge and the Division Bench of the Chhattisgarh High Court. It held there was no basis for quashing Chandrakar's promotion, which had been granted on a valid exercise of power. The Court observed that a person should be entitled to rest secure in the knowledge that a promotion granted long ago will not be disturbed after the passage of considerable time — particularly where, despite a challenge filed soon after the promotion, judicial pendency meant thirteen years elapsed before a decision.

The following directions were issued:

• Chandrakar shall be restored to the position and status from which he was removed.
• His seniority shall be protected.
• He is entitled to all benefits of promotion that may have fallen due as per law.
• He shall also receive 50% back wages, payable within two months from the date of the judgment; failing payment, interest at 6% per annum shall accrue.

Pending applications, if any, were disposed of. No costs were awarded.