The Supreme Court of India has held that the requirement under Section 95(3) of the Chhattisgarh Cooperative Societies Act, 1960 to lay service rules before the Legislative Assembly is directory in nature, and failure to lay them does not invalidate rule amendments framed by the Registrar. Setting aside a judgment of the Chhattisgarh High Court, a division bench comprising Justice Sanjay Karol and Justice Augustine George Masih restored the promotion of an employee of the District Central Cooperative Bank Ltd, Raipur, holding that the statutory authority’s power to frame service rules inherently includes the power to amend or delete them.
Background of the Case
The dispute arose between S.P. Chandrakar (the appellant) and Kishor Bagh (respondent No. 5), both employees of the District Central Cooperative Bank Ltd, Raipur (DCCBL). Service conditions at the bank are governed by the Chhattisgarh Ke Jila Sahkari Kendriya Bank Karmachari Seva (Niyojan, Nibandhan, Tatha Unki Karya Sthiti) Niyam, 1982 (Rules 1982), framed under Section 55 of the Chhattisgarh Cooperative Societies Act, 1960.
Under the unamended Rule 5(3)(a) of the Rules 1982, employees appointed for special technical work—such as Chandrakar, who was originally appointed as an Assistant Engineer—were barred from being appointed or absorbed into non-technical or administrative posts. On July 4, 2005, the Registrar of Cooperative Societies, Subrat Sahu, issued an order under Section 55(1) deleting Rule 5(3)(a), (b), and (c). Later, on August 13, 2010, the Additional Registrar issued a communication to all DCCBL branches stating that Clause 5(3)(a) had been deleted to enable technical employees to become eligible for promotions to higher posts and pay scales.
Pursuant to recommendations by the Departmental Promotion Committee on December 20, 2010, Chandrakar was promoted to Additional Manager on December 30, 2010. Bagh challenged this promotion before the High Court. Thirteen years later, a Single Judge of the High Court quashed Chandrakar’s promotion and directed that Bagh be promoted notionally. A Division Bench affirmed the Single Judge’s ruling, relying on Punjab Water Supply & Sewerage Board v. Ranjodh Singh and Union of India v. Ashok Kumar Aggarwal to hold that executive instructions cannot override statutory rules and that no formal statutory amendment order under Section 55(1) was produced.
Arguments of the Parties
The appellant and the State submitted that the Registrar possessed express statutory authority under Section 55(1) of the Act of 1960 to frame service conditions, which carried the inherent authority to amend or delete rules under Section 21 of the General Clauses Act, 1897. They argued that the communication issued by the Additional Registrar was made pursuant to directions of the Registrar and was a valid exercise of statutory power.
Respondent No. 5 (Kishor Bagh) argued that Chandrakar was appointed to a technical post and could not be absorbed or promoted to an administrative post. He contended that the communication issued by the Additional Registrar was a mere executive circular that sidestepped statutory service rules.
Court’s Analysis and Precedents
The Supreme Court examined whether the amendment communicated by the Registrar was validly made under law. Addressing the power to amend rules, the Court held that Section 55(1) of the 1960 Act grants the Registrar power to frame service rules. Applying Section 21 of the General Clauses Act, 1897, the bench observed that an authority empowered to frame rules inherently holds the authority to amend, alter, or rescind them.
On the delegation of power and nomenclature of the order, the apex court noted that the Act permits Additional Registrars to assist the Registrar, and the communication explicitly stated “Ordered by Registrar”. Addressing the argument that executive instructions cannot override statutory rules, the Court held that where statutory power exists, the nomenclature under which it is exercised does not invalidate the action. The Court cited Kiran Devi v. Bihar State Sunni Wakf Board, which referred to Municipal Corpn. of Ahmedabad v. Ben Hiraben Manilal and Hukumchand Mills Ltd. v. State of M.P., noting:
“It is well settled that the exercise of a power, if there is indeed a power, will be referable to a jurisdiction, when the validity of the exercise of that power is in issue, which confers validity upon it and not to a jurisdiction under which it would be nugatory, though the section was not referred, and a different or a wrong section of different provisions was mentioned.”
Regarding the laying clause under Section 95(3) of the Act—which states that all rules “shall” be laid on the table of the Legislative Assembly—the bench analyzed whether the provision was mandatory or directory. Referring to Constitution Bench rulings in State of U.P. v. Manbodhan Lal Srivastava, State of U.P. v. Babu Ram Upadhya, and Bhikraj Jaipuria v. Union of India, the Court observed that the use of the word “shall” does not automatically make a provision mandatory. Quoting State of U.P. v. Manbodhan Lal Srivastava, the Court highlighted:
“The question as to whether a statute is mandatory or directory depends upon the intent of the legislature and not upon the language in which the intent is clothed. The meaning and intention of the legislature must govern, and these are to be ascertained, not only from the phraseology of the provision, but also by considering its nature, its design, and the consequences which would follow from construing it the one way or the other….”
Quoting Bhikraj Jaipuria v. Union of India (referencing Lord Campbell in Liverpool Borough Bank v. Turner), the Court noted:
“No universal rule can be laid down as to whether mandatory enactments shall be considered directory only or obligatory with an implied nullification for disobedience. It is the duty of courts of justice to try to get at the real intention of the legislature by carefully attending to the whole scope of the statute to be construed.”
Relying on the three-judge bench decision in Atlas Cycle Industries Ltd. v. State of Haryana, the five-judge bench decision in K.T. Plantation (P) Ltd. v. State of Karnataka, and State of M.P. v. Hukum Chand Mills Karamchari, the apex court concluded that because Section 95(3) does not attach any penalty or consequence for non-compliance, the requirement to lay rules before the Assembly is directory. Therefore, non-compliance cannot invalidate the Registrar’s exercise of power.
Addressing the 13-year period that elapsed before the High Court quashed the promotion, the Supreme Court emphasized the protection of long-standing positions:
“It is a position of law that a person should be entitled to sit back, considering that his promotion, effected a long time ago, would not be disturbed after passage of considerable time.”
Decision of the Court
The Supreme Court allowed the appeal and set aside the decisions of both the Single Judge and the Division Bench of the High Court. The Court issued the following directions:
- The appellant (S.P. Chandrakar) shall be restored to the position and status of Additional Manager from which he was removed.
- His seniority shall be protected.
- He shall be entitled to all promotion benefits that may have fallen due as per law.
- He shall be entitled to 50% back wages payable within two months from the date of the judgment, failing which interest at 6% per annum shall apply.
Case Title: S. P. Chandrakar v. State of Chhattisgarh & Ors.
Case No.: Civil Appeal No. ____ of 2026 (Arising out of SLP (C.) No. 8726 of 2024)
Bench: Justice Sanjay Karol and Justice Augustine George Masih
Date: July 30, 2026
