Administrator Cannot Terminate Employees Or Cancel Selection Process Without Formal Inquiry: Kerala High Court Rules

"The termination of services of confirmed Government servants through a simpliciter administrative order, without conducting a departmental enquiry, is a manifest violation of the procedural safeguards guaranteed under Article 311(2) of the Constitution." Kerala High Court, in a significant ruling dated October 7, 2026, held that an Administrator of a Co-operative Bank lacks the authority to terminate employees or cancel a selection process initiated by a previous elected Managing Committee without conducting an independent departmental inquiry.

A division bench comprising Justice K. Natarajan and Justice Johnson John emphasized that public employment cannot be terminated at the unfettered discretion of the employer, noting that Co-operative Banks, due to their public nature, must adhere to procedural fairness.

The dispute arose after the Thrissur District Co-operative Bank, then managed by an Administrator, terminated the services of part-time sweepers who had been appointed by a previously elected Managing Committee. The Administrator alleged irregularities in the recruitment process, including non-compliance with reservation norms under Rule 187 of the KCS Rules. The writ petitioners challenged these termination orders and the subsequent cancellation of the selection process, which a Single Judge had previously set aside.

The primary question before the court was whether an Administrator is empowered to terminate employees and annul a selection process conducted by a prior elected committee without conducting a formal inquiry. The court was also tasked with determining the maintainability of the writ petitions against the Co-operative Bank and whether the termination violated statutory safeguards and constitutional principles of natural justice.

The court reaffirmed that while an Administrator is appointed under Section 32 of the Kerala Co-operative Societies Act, 1969, their powers are not absolute. The bench noted that major policy decisions, including the termination of permanent employees or the cancellation of entire selection processes, should ideally be left to an elected Managing Committee. The Administrator's function is primarily to manage routine affairs, not to exercise unfettered power to dismantle previous administrative actions without due process.

Administrator Lacks Unilateral Power to Review

The bench observed that the Administrator attempted to review and overturn decisions made by the predecessor committee without statutory authorization. Relying on State of West Bengal and others v. Jai Hind Private Limited, the court held that quasi-judicial authorities cannot exercise review powers unless explicitly conferred by statute. The termination of the petitioners, carried out without an independent inquiry or the concurrence of the Registrar, was deemed a procedural nullity.

Mandatory Inquiry for Public Employment

Crucially, the court applied the principles laid down by the Supreme Court in Debashish Mohapatra & Ors. v. District and Session Judge, Jagatsinghpur & Ors. regarding the necessity of a departmental inquiry. The bench stated that even in Co-operative Banks, which operate under the supervision of the Reserve Bank of India, the "public law element" mandates that employment disputes involving statutory rules are amenable to judicial review. Terminating employees without an inquiry violates the spirit of Article 311(2) of the Constitution.

"Constitutional intent is clear that in a democratic republic governed by the rule of law, public employment cannot be terminated at the unfettered discretion of the employer."

Statutory Compliance and Amalgamation

The court also addressed the argument regarding the amalgamation of District Co-operative Banks into the Kerala State Co-operative Bank. Under Section 74H(13) of the Act, employees serving immediately before amalgamation continue their service as employees of the transferee bank. Therefore, the Bank’s attempt to dismiss these employees based on post-amalgamation recruitment norms was held to be legally unsustainable.

The High Court dismissed the writ appeals, upholding the judgment of the Single Judge. The court directed that the employees be reinstated with continuity of service and all consequential benefits. The bench concluded that the third-party appeals filed by unsuccessful applicants were merely an afterthought, lacking merit, as no timely challenge had been raised against the selection process before the litigation.

Date of Decision: 07 October 2026