Holding

The 1975 Service Regulations apply and, because probation cannot exceed two years, the appellant is deemed confirmed by implication, rendering the reversion order illegal.

Summary

The appellant, an employee of Kisan Sahkari Chini Mills Ltd., was promoted to Commercial Officer on a one‑year probation which was later extended for another year, totalling the maximum two‑year probation allowed under the U.P. Cooperative Societies Employees Service Regulations, 1975. No confirmation order was issued, yet he continued in the post until a reversion order demoted him back to Superintendent. He challenged the reversion, arguing that he became a confirmed employee by implication after the two‑year limit. The Supreme Court held that the 1975 Service Regulations, framed by the Institutional Service Board under sec. 122 of the U.P. Cooperative Societies Act, 1965, govern the employee’s service and prevail over the 1976 Federation Service Rules. Since the Regulations prohibit extending probation beyond two years, the appellant was deemed confirmed after the maximum period, making the reversion illegal. The Court set aside the High Court’s decision and quashed the reversion order.

Issues considered

Which set of service rules—U.P. Cooperative Societies Employees Service Regulations, 1975 or U.P. Cooperative Sugar Factories Federation Service Rules, 1976—applies to employees of the U.P. Cooperative Sugar Factories Federation Ltd.?
Does an employee whose probation exceeds the statutory maximum period without a confirmation order become a confirmed employee by implication?
Is the order reverting the appellant from Commercial Officer to Superintendent valid under the applicable service regulations?

Legislation cited

U.P. Cooperative Societies Act, 1965s. 121, s. 122

Subjects

service rulesprobationconfirmation by implicationcooperative societiesemployment lawapex level societiesreversion orderstatutory interpretation

Judgment

A

OM PRAKASH MAURY A
v.
U.P. COOPERATIVE SUGAR FACTORIES FEDERATION,
B LUCKNOW & ORS.

MAY 9, 1986 \
ri
IO. CHINNAPPA REDDY AND K.N. SINGH, JJ.]

U.P. Cooperative Societies Act, 1975, Sections 121and122, scope '(
c of the scheme under-if two sets of service Rules are prevalent, which
would prevail---Whether the U.P. Cooperative Sugar Factories Federa-
lion Service Rules, 1976 override the U.P. Cooperative Societies' Emp-
loyees Service Regulations 1975.

D Deemed Confirmation-Whether an employee who has completed
the statutory maximum period of probation could be deemed to have
been confirmed-U. P. Cooperative Societies Employees Service Regu-
lations 1975, Regulations 17 and 18--Whether reversion to substantive
post in such a case, valid.
\
E In the State of Uttar Pradesh there are two sets of service rules (i) /

The U.P. Cooperative Societies Employees Service Regulations 1975
framed by the U.P. Cooperative Institutional Authority constituted by
the State Government through a Notification dated March 4, 1978 as an
authority for th~ recruitment, training and disciplinary control of the
employees of the Apex Level Societies Central or Primary Societies and;
F (2) the U.P. Cooperative Sugar Factories Federation Employees'
Service Rules 1976 framed by the cane commissioner by virtue of the
power vested under section 122(1) of the U.P. Cooperative Societies Act
which provided that they shall apply to all the employees of the U.P.
"l'l
Cooperative Sugar Factories Federation Ltd. While the proviso to Regu-
lation 17 restricts the power of the appointing authority in extending
G the period of probation beyond the period of one year and in case of an
employee appointed against a regular vacancy beyond two years, Rule 5
of the Federation Service Rules 1976 does not place any such restriction
on the appointing authority's power to extend the period of probation /
and in the absence of a confirmation order, the employee shall continue
to be a probation for indefinite period. Again while the Regulations
H framed by the Institutional Service Board require approval of the State
O.P. MAURY A'· SUGAR FACTORIES [SINGH,J.J 79

Government under sub-section 2 of section 122 of the Act, the Rules do A
not provide for an approval. Section 2(a-4) which defmes "Apex Level
Societies" specifies the U.P. Cooperative Sugar Factories Federation
Ltd. as an Apex Level Society.

The appellant joined service in Kisan Sahkari Chini Mills Ltd. B
Bisalpur District Pilibhit, a Sugar Factory run and managed by the
I U.P. Cooperative Mills Federation. While working as an Office
\ Superintendent, he was selected for promotion to the post of commer-
cial officer and by an order dated 29.8.80 appointed on probation for a
l period of one year which was extended by another order dated 2.10. 81
I till 4.9.82. No further order either extending the period.of probationary
period or confirming him on the post was issued and while so continuing C
he was reverted, by an order dated 2.9.83, to the post of office
Superintendent. The appellant challenged the validity of the reversion
L. order before the High Court of U.P. (Lucknow Bench) on the sole
ground that on the expiry of the probationary period he stood con-
firmed and he could not be reverted treating him on probation. The 0
High Court held that on the expiry of the probationary period, the
appellant could not be deemed to be confirmed as there was no rule
prohibiting the extension of the probationary period. Hence the appeal
by special leave.
< Allowing the appeal, the Court E

HELD: I. I Since the appellant's services were regulated by the
U .P. Cooperative Societies Employees Service Regulations, I975 under
which his services could not be extended beyond the maximum period of
two years, he stood confirmed by implication on the expiry of maximum
probationary period and thereafter, he could not be reverted to a lower F
post treating him on probation. The order of reversion is illegal. [87D-E]

1.2 Reading Regulations 17 and 18 together it is clear that an
employee appointed against a regular vacancy cannot be placed on
probation for a period more than two years and if during the period of
probation the appointing authority is of the opinion that the employee G
has not made use of opportunity afforded to him he may discharge him
from service or revert him to his substantive post but he has no power to
extend the period of probation beyond the period of two years. Regula-
tion 18 stipulates confirmation of an employee by an express order on
the completion of the probationary period. The regulations do not expre-
ssly lay down as to what would be the status of an employee on the H
80 SUPREME COURT REPORTS [1986] 3 S.C.R.

A expiry of maximum period of probation where no order of confirmation
is issued and the employee is allowed to continue in service. Since Regu-
l'
lation 17 does not permit continuation of an employee on probation for
a period more than two years the necessary result would follow that
after the expiry of two years probationary period, the employee stands
confirmed by implication. This is implicit in the scheme of Regulation 17
B
and 18. [820-H]
\
State of Punjab v. DharamSingh I1968] 3SCR I applied. I
1.3 It is well settled that where appointment on promotion is \
made on probation for a specific period and the employee is allowed to I
continue in the post after expiry of the probationary period without any
c specific order of confirmation he would be deemd to continue on proba-
tion provided the Rules do not provide contrary to ii. In that sense, if
Rule 5 of the U.P. Cooperative Federation Service Rules, 1976 were to
apply, the appellant, no doubt could not acquire the status of a
confirmed employee in the post of commercial officer. But the scheme
D of sections 121 and 122 of the U.P. Cooperative Societies Act, 1965
postulates that primacy has to be given to Regulations framed by the
Authority under section 122 of the Act and if there are two sets of rules
regulating the conditions of service of employees of Cooperative Socie-
ties the Regulations framed under section 122 and approved by the
State Government shall prevail. In this view, the provisions of the U.P. )

E Cooperative Sugar Factories Federation Service Rules do not override
Service Regulations 1975 which is further evidenced by Government's
Notification dated 6.8.1977. Since the Institutional Service was confer-
red power to frame regulations regulating the conditions of service of
the employees of Apex Level Societies, the regulations framed by the
Board alone will apply to the employees of the U.P. Cooperative Sugar
F Factories Federation Ltd. so long as such a power has not been with-
drawn. Further, constituting the commissioner and Secretary of the
Cane Development Department as the competent authority for framing
regulations for the recruitment, training and disciplinary control of the
employees of the U.P. Cooperative Sugar Factories Federation Ltd. is
of no consequence to the applicability of 1975 Regulations. [840-E;
G 860-E; 85F; 86G I

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 491
of1985

From the Judgment and Order dated 26th July, 1984 of the
H Allahabad High Court in W.P. 1'o. 4899of1983.
0.P. MAURY Av. SUGARFACTORiES [SINGH,J.J 81

r Pankaj Kalra for the Appellant. A

Rameshwar Dial and Sarv Mitter for the Respondents.

The Judgment of the Court was delivered by
B
j
SINGH, J: This appeal is directed against the order of the High
Court of Allahabad (Lucknow Bench) dismissing the appellant's writ
\ petition made under Art. 226 of the Constitution challenging the
Order dt. 2.9.1983 reverting the appellant from the post of Commercial
J
Officer to that of Superintendent.
\
The appellant joined service in Kisan Sahkari Chini Mills Ltd., c
Bisalpur District Pilibhit, a sugar factory run and managed by the
!. Uttar Pradesh Co-operative Mills Federation. While the appellant was
working as Office Surperintendent, he was selected for promotion to
the post of Commercial Officer and by Order dt. August 29, 1980
appointed on probation for one year against a regular vacancy with a
D
condition that his probationary period may be extended further and
during the period of probation he could be reverted to the post of
Office Superintendent without any notice. On 2. 7 .1981 the appellant
was transferred from Bisalpur to Majohla Sugar Factory where he
continued to work as Commercial Officer. By an Order dt. 2.10.1981
" the appellant's probationary period was extended for one year till
E
4.9.1982, the period so extended expired on 4.9.82 but no further
order either extending the probationary period or confirming him on the
post was issued, and the appellant continued to work as Commercial
Officer. The Managing Director of the U. P. Co-operative Sugar Mill
l Federation Ltd. a "Co-operative society" registered under the U. P.
\ Co-operative Societies Act, 1965, which runs and manages a number of F
sugar factories in the State of Uttar Pradesh issued order on 2. 9. 83
reverting the appellant to the post of Office Superintendent. The appel-
!ant challenged the validity of the reversion order before the High Court
on the sole ground that on the expiry of the probationary period he
stood confirmed, and he could not be reverted treating him on proba-
tion. The High Court held that on the expiry of the probationary period
G
the appellant oould not be deemed to be confirmed as there was no rule
firohibiting the extension of probationary period.
~
The U.P. Co-operative Institutional Service Board constituted
by the State of Uttar Pradesh in accordance with sub-sec. (2) of sec.
122 of the U.P. Co-operative Societies Act, 1965 has framed the U.P. H
82 SUPREME COURT REPORTS [1986] 3 S.C.R.

A Co-operative Societies Employees Service Regulations 1975 which 1
regulate the condition of service of employees of all the co-operative
societies placed under the purview of the Institutional Service Board
by the Government Notification No. 366-C/XIIC-3-36-71 dt. March
4, 1972. These regulations contain provisions for recruitment, proba-
tion, confirmation, seniority and disciplinary control. Regulation 17
B
provides for probation, it lays down that all persons on appointment \
against regular vacancies shall be placed on probation for a period of
one year. Proviso to the Regulation lays down that the appointing
I
authority may, in individual cases, extend the period of probation in \
writing for further period not exceeding one year, as it may deem fit. l
Clause (ii) of the Regulation provides that if, at any time, during or at
c the end of the period of probation or the extended period of probation,
it appears to the appointing authority that the employee placed on
probation, has not made sufficient use of the opportunity offered to
him or has otherwise failed to give satisfaction, he may be discharged
from service, or reverted to the post held by him substantively, if any,
D immediately before such appointment. Regulation 18 provides for
confirmation of an employee on the satisfactory completion of the
probationary period. Regulation 17 and 18 read together, provide that
appointment against a regular vacancy is to be made on probation for a
period of one year, this probationary period can be extended for a
period of one year more. The proviso to Regulation 17 restricts the
E
power of the appointing authority in extending period of probation
beyond the period of one year. An employee appointed against a
regular vacancy cannot be placed on probation for a period more than
two years and if during the period of probation the appointing autho-
rity is of the opinion that the employee has not made use of opportunity
afforded to him he may discharage him from service or revert him to
F his substantive post but he has no power to extend the period of
probation beyond the period of two years. Regulation 18 stipulates
confirmation of an employee by an express order on the completion of
the probationary period. The regulations do not expressly lay down as
to what would be the status of an employee on the expiry of maximum
period of probation where no order of confirmation is issued and the
G
employee is allowed to continue in service. Since Regulation 17 does
not permit continuation of an employee on probation for a period
more than two years the necessary result would follow that after the
expiry of two years probationary period, the employee stands con-
firmed by implication. This is implicit in the scheme of Regulation 17
and 18. In State of Punjab v. Dharam Singh [1968] 3 SCR 1, a Con-
H stitution Bench of this Court held,
0.P. MAURYA v. SUGAR FACTORIES [SINGH,J.] 83

r "Where, as in the present case, the service rules fix a cer- A
tain period of time beyond which the probationary period
cannot be extended, and an employee appointed or pro-
moted to a post on probation is allowed to continue in that
post after completion of the maximum period of probation
without an express order of confirmation, he cannot be B
deemed to continue in that post as a probationer by impli-
j
cation. The reason is that such an implication is negatived by
\ the service rule forbidding extension of the probationary
period beyond the maximum period fixed by it. In scuh a
"\ case, it is permissible to draw the inference that the em-
ployee allowed to continue in the post on completion of the
maximum period of probation has been confirmed in the c
post by implication."

In the instant case the order of appointment promoting the
appellant on the post of Commercial Officer merely indicated that his
probationary period could be extended and he could be reverted to the D
post of Office Superintendent without any notice. Stipulation for ex-
tension of probationary period in the appointment order must be con-
sidered in accordance with the proviso to Regulation 17(1) which means
that the probationary period could be extended for a period of one
year more. Undisputably on the expiry of the appellant's initial pro-
bationary period of one year, the appointing authority extended the
E
same for another period of one year which also expired on 4.9.82.
During the period of probation appellant's services were neither
terminated nor was he reverted to his substantive post instead he was
allowed to continue on the post of Commercial Officer. On the expiry
of the maximum probationary period of two years, the appellant could
not be deemed to continue on probation, instead he stood confirmed F
in the post by implication. The appellant acquired the status of a
confirmed employee on the post of Commercial Officer and the
appointing authority could not legally revert him to the lower post of
Superintendent.

Learned Counsel appearing for the U.P. Co-operative Sugar G
Factories Federation urged that the U .P. Co-operative Societies Em-
ployees Service Regulations 1975 do not apply to the appellant as he
was an employee of the tJ. P. Co-operative Sugar Factories Federa-
tion, as the condition of service of the appellant and other employees of
the U .P. Co-operative Sugar Factories Federation are regulated by the
U.P. Co-operative Sugar Factories Federation Service Rules 1976 H
84 SUPREME COURT REPORTS 11986] 3 S.C.R.

A framed by Cane Commissioner in exercise of his powers under sub-sec. l'
(1) of sec. 121 of the Act published in the U.P. Gazette dt. September
4, 1976. Rule 3 of the U.P. Co-operative Sugar Factories Federation
Service Rules 1976 (herein after referred to as the Federation Service
Rules) provides that these Rules shall apply to all the employees of the
Federation. Rule 5 provides that every employee shall be appointed on
B
probation for such period as the appointing authority may specify and
\
the period of probation may be extended by the appointing authority
from time to time, the rule does not prescribe any limit on the exten- f
sion of the probationary period. Rule 6 provides that upon satisfactory
completion of probationary period an employee shall be eligible for
confirmation. Placing reliance on rule 5 learned counsel for the re-
c spondents urged that since there was no order of confirmation the
appellant's probationary period stood extended, therefore, he could
be reverted at any time to his substantive post. It is true that rule 5 of
the Federation Service Rules does not place any restriction on the
appointing authority's power to extend the probationary period, it
may extend the probationary period for an unlimited period and in the
D
absence of Confirmation Order the employee shall continue to be on
probation for indefinite period. It is well settled that where appoint-
ment on promotion is made on probation for a specific period and the
employee is allowed to continue in the post after expiry of the prob-
ationary period wi<hout any specific order of confirmation he would be
deemed to continue on probation provided the Rules do not provide
E
contrary to it. If Rule 5 applies to the appellant he could not acquire
the status of a confirmed ·employee in the post of Commercial Officer
and he could legally be reverted to his substantive post.

There are two set of rules (i) The U.P. Co-operative Societies
Employees Service Regulations, 1975, (ii) the U.P. Co-operative
F
Sugar Factories Federation Employees Service Rules, 1976. The ques-
tion is which of the rules apply to the employees of the Co-operative
Sugar Factories Federation. While considering this question it is neces-
sary to advert to the relevant provisions of the Act and .the Rules
framed thereunder and the Notifications issued from time to time.
Section 121 of the Act confers power on the Registrar, (an officer
G
appointed as such by the State Government under sec. 3) to frame
regulations to regulate the emoluments and conditions of service of
employees in a Co-operative Society or class of Co-operative
Societies. Section 3(2) confers power on the State Government to
appoint officers to assist the Registrar and to confer on them all or any
H of the powers of the Registrar. An officer on whom powers of Re-
0.P. MAURY Av. SUGAR FACTORIES [SINGH, J.[ 85

r gistrar are conferred by the State Government, has authority to frame
rules regulating conditions of service under sec. 121(1) of the Act.
A

Section 122(1) confers power on the State Government to constitute
an authority for the recruitment, training and disciplinary control of
the employees of the Co-operative societies or class of co-operative
societies and it may further require such authority to frame regulations B
regarding recuritment, emoluments, terms and conditions of service
/ including disciplinary control of such employees. Regulations so
\ framed require approval of the State Government under sub-sec. (2).
Once approval is granted, the regulations take effect from the date of
; publication. The State Government in exercise of its powers under sec.
1 122(1) issued a Notification No. 366-C/XIIC-3-36-71 dt. March 4,
1972 constituting the U .P. Co-operative Institutional Service Board as c
an authority for the recruitment, training and disciplinary control of
the employees of the Apex Level Societies Central or Primary
Societies, and it further conferred power on the Institutional Service
Board to frame regulations regarding recruitment, emoluments, terms
and conditions of service of the employees of the co-operative societies D
of the Apex Level Societies Central or Primary Societies. In pursuance
thereof the Institutional Service Board framed the U .P. Co-operative
Societies Employees Service Regulations 1975 regulating the condi-
tions of service of the employee of these Co-operative Societies which
were placed under the purview of the Institutional Board by the
Government Notification No. 366--C/XIl-C-3-36-71 dt. March 4, 1972. E
This Notification states that the Board shall have authority to frame
regulations for the recruitment, training and disciplinary control of the
employees of the Apex Level Societies, Central, or Primary Societies.
Section 2(a-4) which defines "Apex Level Societies", expressly speci-
fies the U .P. Co-operative Sugar Factories Federation Ltd. as an Apex
' Levi;! Society. Since the Institutional Service Board was conferred F
power to frame regulations regulating the conditions of service of the
employees of Apex Level Societies, the regulations framed by the
Board apply to the employees of the U.P. Co-operative Sugar
Factories Federation Ltd. The respondents have failed to place any
Notification hefore the Court to show that the power of the Institu-
tional Service Board to frame regulations, regulating the conditions of G
service of the employees of Apex Level Societies including that of
U.P. Co-operative Sugar Factories Federation Ltd. was ever with-
(
drawn.

The U .P. Co-operative Sugar Factories Federation Service Rules
1976 have been framed by the Cane Commissioner under sub-sec. (1) H
86 SUPREME COURT REPORTS 11986] 3 S.C.R.

A of sec. 122 of the Act. These Rules provide that they shall apply to all
the employees of the U.P. Co-operative Sugar Factories Federation
Ltd., but the question is whether rules so framed by the Cane Commis-
sioner would override the Service Regulations 1975. As noted earlier,
the Institutional Service Board was constituted an authority under sec.
122(1) of the Act and authorised to frame regulations regulating the
B
conditions of service of employees of the Co-operative Societies inc-
luding those of Apex Level Societies. Sub-section (2) of sec. 122 pro- \
vides that on approval of the Regulations by the State Government I
any rule or regulations framed by the Registrar in exercise of its pow-
ers under sec. 121(1) would stand superseded. Sub-section (1) of sec. \,
121 confers power on the Registrar which may include any other sub- r
c ordinate officer or authority to frame rules regulating the condition of
service of employees of Co-operative Societies, such rules do not re-
quire approval of the State Government. While a regulation framed by
an authority constituted under sub-sec. (1) of sec. 122 requires ap-
proval of the State Government and on such approval the regulation so
framed supersedes any rules made under sec. 121. The scheme of sec.
D 121 and sec. 122 postulates that primacy has to be given to regulations
framed by the authority under sec. 122 of the Act. If there are two sets
of rules regulating the conditions of service of employees of Co-
operative societies the regulations framed under sec. 122 and
approved by the State Government shall prevail. In this view the pro-
visions of the U.P. Co-operative Sugar Factories Federation Service
E
Rules 1976 do not override Service Regulations of 1975. It appears
that this position was realised by the State Government and for that
reason it issued Notification No. U.O. 402(11)/C-I-76 dt. August 6,
1977 constituting the Commissioner and Secretary Sugar Industry and
Cane Development Department as authority under sub-sec. (1) of sec. \
122 for the recruitment, training and disciplinary control of employees
F
of the U .P. Co-operative Factories Federation Ltd.

The learned counsel for the respondent urged that since the Gov-
ernment had constituted the Commissioner and Secretary of the De-
velopment Department as the competent authority for framing regula-
tions for the recruitment, training and disciplinary control of the emp-
G loyees of the U.P. Co-operative Sugar Factories Federation Ltd. 1975
Regulations framed by the Institutional Service Board do not apply.
We find no merit in this submission. Firstly, the Notification dt. \
August 6, 1977 merely designates the Commissioner and Secretary Sugar '.
Industry and Cane Development Department as the authority for the
recruitment, training and disciplinary control of the employees of the
H
0.P. MAURY Av. SUGAR FACTORIES [SINGH, J.J 87

U.P. Co-operative Sugar Factories Federation, it does not confer A
power on the authority to frame any rule or regulations regulating the
conditions of service of the employees of Sugar Factories Federation
Ltd. But even if any such power can be inferred, admittedly no rules or
regulations regulating the conditions of service of the employees of the
Co-operative Sugar Factories Federation have as yet been framed.
B
Learned counsel for the respondents conceded that draft service regula-
) tions have been prepared but those have not been approved by the
\I Government as required by sub-sec. (2) of the Act. In absence of
i approval of the State Government as required by sub-sec. (2) of sec.
4 122, regulations, if any, framed by the Commissioner and Secretary
Sugar Industry and Cane Development Department do not acquire
1
any legal force. In this view 1975 Regulations framed by the Institu- c
tional Service Board continue to apply to the employees of the U.P.
Co-operative Sugar Factories Federati0n Ltd.

In view of the above discussion it is manifestly clear that the
appellant's services were regulated by the U.P. Co-operative Societies
D
Employees Service Regulations, 1975. Since under those Regulations
appellant's probationary period could not be extended beyond the
maximum period of two years, he stood confirmed on the expiry of
maximum probationary period and thereafter he could not be reverted
to a lower post treating him on probation. The Order of reversion is
illegal. We aocordingly allow the Appeal, set aside the order of the
E
High Court and quash the order of reversion dt. 2.9.1983 and direct
that the appellant shall be treated in service and paid his wages and
other allowances. The appellant is entitled to his costs which is
quantified as Rs.1,000.

S.R. Appeal allowed.

/
\