TMI Blog1997 (7) TMI 700X X X X Extracts X X X X X X X X Extracts X X X X ..... k or any other society whose area of operation is confined to a part to the State and which has as its principal object the promotion of the principal object and the provision of facilities for the operation of same type of societies and for other societies affiliated to it and not less than five members of which are societies. Section 2(c-ii) defines 'Central Cooperative Bank' to mean a resource society registered or deemed to be registered under this Act. Section 2(d) defines 'Committee' to mean the Board of a management by whatever name called constituted under Section 48. Section 2(j) defines 'Farming Society' to mean a society formed with the object of promoting development of land and better methods of cultivation, and includes a better farming society, tenant farming society, collective farming society, joint farming society, irrigation society and a crop protection society. Section 2(r) defines 'Member' to mean a person joining in the application for the registration of a society or a person admitted to membership after registration in accordance with this Act, the rules and the bye-laws applicable to such society and includes the State Gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... member of the society shall have one vote in the affairs of the society. The other details in Sub-section (2) to (8) are not material for the purpose of this case, hence omitted. Section 23 prescribes the manner of exercising vote. Sub-section (1) thereof postulates that every member of a society shall exercise his vote in person and no member shall be permitted to vote by proxy. Provided that subject to any rules made under this Act - (i)(a) a society which is a member of another society may appoint one of its members as a representative to vote on its behalf; and (b) not necessary for the purpose of this case. Section 23(ii) says that the State Government may nominate one of its officers as its representative, to vote or otherwise participate in its behalf in the affairs of the society of which such society or the State Government is a member. Other details are not necessary for the purpose of this case, hence omitted. Section 47-A prescribes the functions of Apex society. Sub-section (1) thereof says that the Apex society may, for servicing its constituents and in accordance with its byelaws, perform the functions enumerated therein. Sub-section 1(k) enjoins to ensure timely con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ety, their tenure and qualifications have been provided for and the management of the society shall vest with the committee and the committee is empowered to elect the officers, namely, the President, two Vice-Presidents etc. etc. and the representatives to represent its membership in other societies. 12. The undisputed facts are that on June 5, 1984, the District Co-operative Central bank (for short the Central Bank ) had sent their 45 delegates to the M.P. State Co-operative Bank Ltd. (for short, the 'Apex Bank'). On August 24, 1984, the first meeting of the Board of Directors of the Apex Bank was held and from that date its term of office of three years started running. The President and Vice-President, and other office bearers from the Board of Directors came to be elected, resulting in Constitution of the Board of Directors and the Managing Committee of the Apex Bank. The term of the representatives of the Central Bank (Board of Directors) and of their office bearers was co-terminus with the term of the Managing Committee of the Central Bank. Equally, the term of the Board of Directors and of the Managing Committee of the Apex Bank was co-terminus, i.e., three year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision would appear, prima facie, unreasonable and arbitrary. In view of the discussions aforesaid, these petitions succeed and are allowed by quashing Section 48(4) and Section 49(8) of the Act, as amended by M.P. Act No. 14/90. As a necessary consequence, provisions in these sections existing immediately before the aforesaid amendment would be deemed to be continuing legally and validly. As a necessary consequence, the officers of the earlier Managing Committee of the petitioners Societies will continue to function, till elections are held, in accordance with law. 13. While the writ petitioners were pending, the office bearers continued to hold office. Subsequently, the present writ petition come to be filed seeking writ of quo warranto to show cause under which authority the appellants were functioning. In the meanwhile, Section 49(8) was amended which reads as under; 49(8)(i) It shall be obligatory on the outgoing committee of the Society to hold elections prior to the expiration of the term under Sub-section (7-A) or extended term under Sub-section (7-AA). The outgoing committee shall apply to the Registrar for holding election within a reasonable time which shall not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Societies shall expire on 28.4.90. The notification relating to the answering respondents is filed herewith and marked as Annexure R-3. That consequent to the notification dated 26.4 the Registrar took over the charge of the Respondent No. 3 Society on 28.4.90 itself. On 4.5.90 this Hon'ble Court vide interim orders directed that the old committees which were incharge of the Societies as on 28.4.90 shall continue to remain incharge. On 5.5.90 the elected committees again took over charge as per the interim orders of the Hon'ble High Court. That the state Government enacted MP. Act No. 14 of 1990 by way of which the previously notified ordinance was duty incorporated in the Act vide notification dated 31.7.90. That in view of the Act No. 14 of 1990 charge was again taken over by the Registrar w.e.f. 1.8.90. However, it is pertinent to note that the Co-operative set up in the state of M.P. is three tier set up i.e. Primary Society at the village level, Central Society at the district level and apex Society at the state level. The representatives elected by the Primary Society from the electoral college for the central Societies along with some other represe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m within the democratic governance by requiring holding of periodical elections right from the bottom-most democratic set up of the village panchayat upto the District Board. The elections, therefore, to the Co-operative Societies are also required to be conducted periodically before the expiry of the term of the Managing Committee of the Societies so that the elected body would remain in office and organise the management of the Society and disburse loans to the agriculturists for their economic and social empowerment and to augment their economic resources for self-sufficiency and to give a boost to the national productivity in agricultural produce. The conduct of the periodical elections is required to be organised in accordance with the provisions of the Act, Rules and bye-laws of each Society. 17. The question, therefore, is: whether the Registrar was justified under Section 49(8)(ii) of the Act to assume charge of the Apex Bank? Section 2(d) of the Act defines 'Committee' to mean the Board of a management, by whatever name called, constituted under Section 48. The 'Registrar' defined under Section 2(x) of the Act shall be the Registrar of Co-operative Socie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... committee shall be five years from the date on which first meeting of the Committee is held. The proviso is not relevant; hence omitted. Clause (ii) of Sub-section (7-A) envisages that the term of the representative elected by the Committee of the Society shall be co-terminus with the term of the Committee of the Society for which representative is elected. However, the proviso thereto provides that the representative of a Committee shall continue to hold his office till the expiry of the term of the Committee of which he is a member. (emphasis supplied) Sub-section (7-AA) of Section 49 provides that the State Government may, by notification, for reasons to be stated therein, extend the term of the Committee of a Society or a class of Societies from time to time for a total period not exceeding twelve months. Sub-section (7-AAA) of Section 49 envisages that notwithstanding the expiry of the maximum period of eighteen months specified in Sub-section (7-AA), in respect of the committees between the period commencing on the 7th May, 1988 (hereinafter referred to as the said date) and ending on the date of publication of the Madhya Pradesh Co- operative Societies (Amendment) Ordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the first proviso to Sub-section (8)(i), fails to appoint a returning officer under the second proviso and, if the committee thereby, commits default to hold elections and does not hand over the charge, on expiry of the term under Sub-section (7-A) or extended term under Sub-section (7-AA) to the Registrar or any officer authorised by him on his behalf, they all shall be deemed to have vacated their seats and the Registrar shall assume charge and hold elections as early as possible. Thus the combined reading of the sections envisages that elections to the Managing Committee shall be held by the Registrar, at the request by the Committee, before expiry of the term of the outgoing committee within the time schedule prescribed therein. If the Registrar fails to perform the said duty, the Managing Committee, while remaining in office, is enjoined to have the elections conducted within 180 days or at least not less than 90 days before the expiry of the term of the Managing Committee. But if the committee commits default in conducting the elections, the members of the committee are deemed to have vacated their seats. Thereby, by statutory operation, no Managing committee remains in offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se bye-laws or is excluded, shall not be member of the Bank, such share shall be returned to the person or Co-operative Society concerned by the Bank after registration of these bye-laws. Clause (2) of bye-law 8 is not relevant, hence omitted. 26. Bye-law 23 deals with meetings of the General Assembly of the members of the Bank. It postulates as under: All the general meetings of the members of the Bank shall be held in the Registered Office of the Bank. At least one assembly known as the Annual Meeting must be held in accordance with the provisions prescribed under the Co-operative Societies Act and Rules for the following purposes: XXX XXX XXX (3) Election of Directors according to the bye-laws and XXX XXX XXX 27. Bye-law 24 envisages that the Board is free to call the general meeting, whenever required and can be compelled to call one on a written requisition by the prescribed members, the details of which are not material for the purpose of this case. 28. Bye-laws 25 to 28 deals with the manner of requisition, the service of notice of the meeting on members, etc. The details thereof are not material. Hence omitted. 29. Bye-law 32 postulates that a genera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... han two Directors. (3) One representative of each concerned Central Bank, who is elected by the Managing Committee of the concerned Central Bank We are informed and the High Court found that for the entire 45 Districts, each Central Bank sent its elected representative as member of the Apex Bank as well as also as a member of the Board of Directors. (4) Omitted. (5) President of such Apex Co-operative Societies or his nominee, where there is a provision under the bye-laws of the said Society for the President to become the ex-officio Director, such Banks are required to have minimum share for a value of Rs. 10 thousand for this purpose . The details of minimum share holding for a value of Rs. 10 thousand is not necessary, hence omitted. (6) Managing Director-Ex-Officio. (7) Incharge Regional Office, National Agricultural and Rural Development Bank (Nabard), Bhopal or an officer nominated by him who is not below the rank of Deputy General Manager. 35. It would thus be seen that the Board of Directors consist of Registrar, or his nominee, Government nominees not exceeding to two, nominee of Nabard Branch, Bhopal as official Board of Directors: 45 Board of Directors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ident and the Directors, they shall continue to function till their successors takeover charge under the provisions of these bye-laws. (emphasis supplied) 41. The shortfall in the composition of the Board of Directors due to demise or interim vacancy arising for any other reason can be filled in accordance with the provisions of the bye-laws of the Board. The vacant post may be filled up by Registrar or the State Government from the Directors nominated by the Registrar or the State Government. The other details are not necessary for the purpose of this case, hence omitted. 42. Bye-law 43 deals with disqualification to remain as a Director of the Board of Directors or ceases to be a Member and the details thereof are not material for the purpose of this case, hence omitted. 43. Bye-law 44, describes about the meeting of the Board of Directors. It says that the meeting of the Board of Directors shall be called as per requirement at least twice a year. The other details are not necessary for the purpose of this case, hence omitted. 44. Bye-law 46 empowers the Board of Directors to carry on and manage the business of the Apex Bank and exercises the powers enumerated ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es to function till their successors assume charge. In case there is a vacancy of any elected Director, the same may be got filled up by appointing some other person from the same cadre as per bye-laws. 48. Bye-law 48 envisages that the President of the Board of Directors shall also be the President of the Managing Committee. The meetings of the Managing Committee shall be presided over by the President, in his absence by any one of the two Vice-Presidents. In the event of the President and both the Vice-Presidents being absent, the Meeting of the Managing Committee shall be presided over by a member elected by the Members present. By operation of this bye-law, the President and the Vice-Presidents elected by the Board of Directors, by virtue of membership of the Managing Committee would become President and Vice-Presidents of the Managing Committee without further getting elected to the Managing Committee. 49. Meetings and transactions of business and the convening the meeting by the Managing Committee are dealt with in Bye-law 49 which is not relevant for the purpose of this case, hence omitted. 50. Bye-law 52 deals with powers and duties of the President with which we a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and two Vice-Presidents elected by the Board of Directors itself has statutory duty to ensure conduct of elections to the Committee of the Board of Directors (Managing Committee) and the management of the Apex Bank. The Managing Committee again is headed by the President of the Apex Bank contemplated in bye-law 47(3), for the purpose of internal management on behalf of the Board of Directors. The ultimate power and responsibility in managing the affairs of the Apex Bank by the Committee of the Apex Bank is that of the Board of Directors. So the Managing Committee discharges the functions and performs the duties for and on behalf of the Board of Directors. Therefore, the Managing Committee shall ensure passing of a resolution by the Board of Directors requesting the Registrar to conduct elections to the Board of Directors within the specified period as per the Act, rules or bye-laws enumerated hereinbefore. The term of the Board of Directors is 5 years from the date of the first General Meeting of the members of the Apex Bank. Each Central Bank is represented by its elected representative. For the purpose of the Apex Bank, they are designated as Directors. Under Sub-section (7A) or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to the Primary Societies and in turn election to the managing Committee of each of the District Central Banks and election of one representative from each of the 45 Central Banks as members of the Apex Bank, as two steps are condition president and is necessary. Until then, Constitution of the Board of Directors and the Managing Committee of the Apex Bank cannot be done. As a pre-condition for completion of these two sequential steps, i.e., (i) election of the President and two Vice-Presidents; and (ii) election of 5 elected member-Directors to the Management Committee, the election of a representative by the General Body of the Managing Committee along with members of its Managing Committee is mandatory and are necessary concomitant. For the latter election, the elections to the Primary Societies, which in turn simultaneously elect the Managing Committee and representatives to Central Bank, is also necessary. That is how the three-tier system of election has got inter- linked and become inseparable. That is also the admission of the State Government as extracted earlier from the counter-affidavit. 56. It would, therefore, be mandatory that by operation of Sections 48 and 49 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is also difficult to visualise that President, two Vice-Presidents, the Board of Directors and the Managing Committee of Apex Bank should be saddled with the liability to vacate the office, on expiry of the term for non- conducting elections thereof, when they have no statutory obligation to ensure conduct of elections to Primary Societies and Central Banks. The Registrar does not in the above situation get the power to assume office as per the statutory obligation. One important fact to be noted is that the bye-laws of the Apex Bank ensure that the Board of Directors and the Members of the Managing Committee elect the President and Vice-President and remain in office till their respective successors assume office. Thereby there would be no hiatus created in the management of the affairs of the Apex Bank in accordance with law, nor their actions in the management of the Apex Bank would be illegal. The admission of the State Government in the counter affidavit that elections were not conducted to the Central Banks by or before the date of the expiry of the term of the office of the Board of Directors and the Managing Committee of the Apex Bank, pre-empts the Registrar to resume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or. No futile writ would be issued. Suffice it is to state that we have given declaration of the true legal position so as to be followed in future cases. 61. The appeal is accordingly dismissed with no order as to costs. D.P. WADHWA, J. 62. I agree that the appeal be dismissed. However, I do not entirely agree with my learned Brother on the interpretation put by him to some of the provisions of the M.P. Co-operative Societies Act, 1960 (for short 'the Act') and the byelaws of the M.P. State Co-operative Bank Ltd. (Madhya Pradesh Rajya Sahkari Bank Maryadit). The M.P. State Co-operative Bank Ltd. has been varyingly referred to in this judgment as the apex society or apex body or even the apex bank. This is how I look at the things. 63. It will be advantageous to refer to some of the definitions as mentioned in Section 2 of the Act, Apex Society means a society whose principle object is to provide facilities for the operation of other societies affiliated to it and whose area of operation extends to the whole State of Madhya Pradesh. Central Society means a Co-operative Land Development Bank or any other society whose area of operation is confined to a pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as a part of Bhopal, Gwalior and Raipur Divisions respectively. (7) Managing Director - Ex-officio 66. Under Clause (24) of byelaw 47 the Board can delegate some or all of its functions to the Managing Committee. It will thus be seen that the Managing Committee is not the same thing as the Board and it is also not the committee as defined in Clause (d) of Section 2 of the Act. Any reference to Managing Committee therefore in these proceedings, in my view, would not be relevant as when Sub-section (8) of Section 49 talks of election of the Committee, it is of the Board. 67. Member under the byelaws of the apex body means District Cooperative Societies Central Bank or the Co-operative Societies of the Apex level or any such co-operative Society without an Apex Institution or the Apex Institution of which is not a member of the Bank but which has been given membership under these byelaws or is likely to be given membership and shall exclude the nominal members (Clause (e) of Byelaw 2). Under byelaw 8 Membership to the apex body is open to: (1) Distt. Co-operative Central Bank. (2) Co-operative Societies at the Apex level. (3) Other Co-operative Societies which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioned therein and one of such function is to ensure timely conduct of elections in member societies. This is Clause (k). Under byelaw 3(2)(ta) one of the duties of the apex body is to ensure that election process of member societies is held on time. Primary society is not a member society of the apex body. Any duty cast on the apex body to hold election of primary society is therefore not there and the whole edifies on which the case of the appellants is based that unless elections of the Committees of the primary and central society are not complete election to the Board of the apex body cannot be held, falls to the ground. 71. There are apparent contradictions in some of the byelaws of the apex body. It says the term of the Board would be five years from the date of its first meeting when it also elects one President and two Vice-Presidents. I have already taken the view that the Board is a continuous body. The five years term would therefore apply only to the election of President and two Vice-Presidents. When Sub-section (1-A) of Section 49 provides that the election of the members of the society, President, Vice-President and representative, if any, shall be conducted by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nter affidavit have taken a stand that elections of primary and district bodies have taken place and now election of the board of the apex body would be held by April 11, 97, meaning, perhaps, thereby that the election of the new board is dependent on the elections first to be held of the primary society and then of the central society. This interpretation to my mind is not correct and the Court is not bound by the interpretation put by any of the parties. The parties can be under some misconception or some bona fide mistake. If the election to the Board of the apex body is to be dependent on the election first to be held by the primary and then by the district bodies, possibly with different byelaws, it can be anybody's guess as to when the election to the Board of the apex body would be held. There are numerous primary bodies and also district bodies. There can be intervention by the court in the election process of any of the societies and as a matter of fact it has been mentioned in the counter affidavit that the courts have stayed the elections of primary bodies of three places. All this is apart from the fact that the byelaws of the apex body do not contemplate any electi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
