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1954 DIGILAW 231 (MAD)

R. Venkatasubba Reddiar v. The Registrar of Co-operative Societies, Madras

1954-05-06

RAJAGOPALAN, SATYANARAYANA RAO

body1954
Satyanarayana Rao, J.-This is an appeal against the order of our learned brother, Rajagopala Ayyangar, J., dismissing Writ Petition No. 1026 of 1953.† The application was filed by one of the directors of the Madras Co-operative Central Land Mortgage Bank, Limited, for the issue of a writ of certiorari or any other appropriate writ, direction or order calling for the records relating to the passing of Resolution No. 7 by the General Body of the Madras Co-operative Central Land Mortgage Bank limited, on 5th September, 1953, and for quashing the registration of the same on the same day by the Registrar of Co-operative Societies. Consequent on the separation of the Andhra State, it was decided by the Government of Madras to reconstitute the existing State Co-operative Societies and to form new societies, that is, to reconstitute the Madras State Co-operative Bank, Limited, the Madras Co-operative Central Land Mortgage Bank Ltd., and the Madras Handloom Weavers’ Co-operative Society Limited, Ordinance II of 1953, was issued for that purpose. It was decided to reconstitute the Madras Co-operative Central Land Mortgage Bank, Limited, hereinafter called “the Bank,” excluding from its area of operation the part of the territory transferred to the Andhra State. For this purpose the Ordinance provided that the Registrar of Co-operative Societies for the State of Madras should take steps to reconstitute the existing societies and to form new societies for the Andhra State. The Registrar drafted certain proposals for the purpose of reconstituting the Madras Co-operative Central Land Mortgage Bank, Limited and forming the Andhra Co-operative Central Land Mortgage Bank, Limited, and sent them to the bank for confirmation by the general body of the bank. On 3rd August, 1953, the bank gave notice of a general body meeting of the shareholders of the bank to be held on the 5th September, 1953, at 11 a.m. in the premises of the bank. In the agenda for that meeting, proposals for the bifurcation of the bank, consequent on the formation of the Andhra State and also amendments to bye-laws were included. Actually along with that notice the proposed amendments to bye-laws were not circulated to the members of the general body. On 16th August, 1953, a meeting of the board of directors was held, and at that meeting the directors resolved that certain amendments to the bye-laws should be made. Actually along with that notice the proposed amendments to bye-laws were not circulated to the members of the general body. On 16th August, 1953, a meeting of the board of directors was held, and at that meeting the directors resolved that certain amendments to the bye-laws should be made. A supplementary notice of 20th August, 1953, was issued to the members of the general body and a printed notice in which the existing bye-laws and the proposed amendments were embodied was circulated to the members. The important changes were, while the executive management of the bank vested in a board consisting of eighteen members including the Registrar of Co-operative Societies, it was proposed to reduce the strength of the board to ten members including the Registrar. It was proposed that three members should be elected from among the individual members distributed as follows: One from among the share-holders in the City of Madras, two from those residing in the remaining districts of the State and five from among the representatives of the share-holding mortgage bank, and one to be nominated by the Registrar. Thus, including the Registrar, the number was reduced to ten. A transitory bye-law under bye-law 22(a) was also proposed, which was in these terms: “Notwithstanding anything contained in these bye-laws every director now in office in the Madras Co-operative Central Land Mortgage Bank who is a share-holder residing or a representative of a primary land mortgage bank, within its area shall continue to retain his directorship and other offices till 31st December, 1954.” At the meeting of the general body held on the 5th September, 1953, the amendment to the bye-laws, which were put forward as resolutions, were carried. With reference to the transitory bye-law above set forth, however, at the general body meeting, Sri C.S. Rathnasabapathy Mudaliar moved and Sri M.S. Palaniappa Mudaliar seconded that the date at the end of the transitory bye-law under the bye-law 22(a), viz-, 31st December, 1954, be changed to 31st December, 1953. By resolution No. 7, the transitory bye-law as amended was passed unanimously. Immediately on the same day, the amended bye-law was registered by the Deputy Registrar of Co-operative Societies to whom the power was delegated by the Registrar as required by section 12(2) of the Madras Co-operative Societies Act (VI of 1932). By resolution No. 7, the transitory bye-law as amended was passed unanimously. Immediately on the same day, the amended bye-law was registered by the Deputy Registrar of Co-operative Societies to whom the power was delegated by the Registrar as required by section 12(2) of the Madras Co-operative Societies Act (VI of 1932). The complaint of the petitioner, who was absent from the meeting of the general body, was that the amendment proposed to the transitory bye-law, altering the date of the term of the office of the directors and reducing the period from 31st December, 1954, to 31st December, 1953, was contrary to the Rules and the Bye laws of the bank and that the required notice of the amendment was not given-He therefore urged that the bye-law was ultra vires and unauthorised by the Act and the Rules framed thereunder, and that it should not have been registered by the Registrar under section 12 of the Act. He prayed therefore that the registration of the bye-law by the Registrar should be quashed. The Registrar of Co-operative Societies filed a counter-affidavit in which he alleged that the registration of the bye-law was valid and that the resolution did not offend the Rules or the Bye-laws of the bank. According to his opinion, the requirements of rule 24 of the Rules framed under the Act had been complied with, and he was also satisfied that the amendment was not contrary to the Act or to the Rules. The learned judge thought that the application was one for quashing the amendment of bye-law affected by the resolution passed on 5th August, 1953. He found, however, that the amendment introduced, altering the date, was really a substantial amendment, which required twenty days’ clear notice or at least five days’ notice under the latter part of bye-law 50 and that therefore the bye-law violated the Rules and the Bye-laws of the bank. Notwithstanding that finding, the learned judge dismissed the application on the ground that under section 12(3) of the Act, when once the amendment to the bye-law was registered by the Registrar, it acquired the force of conclusive evidence, and that the antecedent violation of the Rules and the Bye-laws was of no consequence. In this view, he dismissed the application. Notwithstanding that finding, the learned judge dismissed the application on the ground that under section 12(3) of the Act, when once the amendment to the bye-law was registered by the Registrar, it acquired the force of conclusive evidence, and that the antecedent violation of the Rules and the Bye-laws was of no consequence. In this view, he dismissed the application. At the outset, it was pointed out by the learned counsel for the appellant that the learned Judge fell into an error in holding that the application was for quashing the bye-law passed by the resolution of 5th September, 1953. The prayer in the petition was not to quash the bye-law, but to quash the registration of the same. Of course, under section 12(3) of the Act, if a bye-law was registered by the Registrar, it is treated as conclusive evidence that the same was duly registered. It is to avoid the effect of this conclusiveness that the petitioner prayed that the registration itself should be quashed and not the bye-law. Though the ground was that the bye-law violated the Rules and the Bye-laws, as the required notice was not given of the amendment carried at the meeting, it was the registration that the petitioner sought to avoid. The short question with which we are now concerned in this appeal is whether the amendment passed by the general body altering the date is contrary to any rule or bye-law, and whether the registration of the bye-law by the Registrar was valid. If the bye-law was passed contrary to the Rules or Bye-laws, it cannot be disputed that the registration by the Registrar would be without jurisdiction. Section 12(2) of the Act requires that the Registrar should be satisfied before registering the amendment of the bye-laws that they are not contrary to the Act or to the Rules, and it is only after his being so satisfied that he should register the amendments. An appeal is provided by the same sub-section to the Local Government within two months from the date of the issue of the order of refusal, if the Registrar refuses to register an amendment to the bye-law, but if he registers contrary to the Act or to the Rules or the Bye-laws, no remedy is provided under the Act. An appeal is provided by the same sub-section to the Local Government within two months from the date of the issue of the order of refusal, if the Registrar refuses to register an amendment to the bye-law, but if he registers contrary to the Act or to the Rules or the Bye-laws, no remedy is provided under the Act. As an appeal is provided against the refusal of the Registrar to register an amendment, the functions of the Registrar in considering the question of registration are undoubtedly quasi-judicial, so as to attract the jurisdiction of this Court to interfere by way of writ; and it was not contended that this is not the correct position. Before considering the question whether the amendment of the bye-law was passed contrary to the Rules or the Bye-laws, it is necessary to refer to the relevant provisions of the Act and the Rules. Section 65 of the Act confers upon the Local Government the rule making power. By virtue of the power so vested in the Local Government, Rules were framed under the Act. Rule 24 lays down the procedure regarding the amendments of bye-laws. It requires that every amendment should be made only by a resolution passed by a majority of the members present at a meeting of the general body of the members of the society, and that no such resolution shall be valid unless notice of the amendment propsoed has been given in accordance with the Bye-laws. Under the Bye-laws of the bank, bye-law 50 prescribes the period of notice for resolutions, and for any amendment to a bye-law proposed, as well as notice for a general body meeting. It requires that there should be a month’s notice for a meeting of the general body. For an ordinary resolution, five days’ clear notice is required; but if a resolution is for an amendment of a bye-law, twenty days’ clear notice has to be given, and it is cut down to five days, if the amendments are proposed by the board. Under rule 51, no amendment to the Bye-laws is permitted except at the general body meeting of the members and the amendments do not take effect until registered by the Registrar. The powers of the general body are enumerated in bye-law 46. Under rule 51, no amendment to the Bye-laws is permitted except at the general body meeting of the members and the amendments do not take effect until registered by the Registrar. The powers of the general body are enumerated in bye-law 46. The constitution of the board of directors and their term of office before reconstitution is laid down under bye-law 22, which vests the executive management of the Bank in eighteen directors, of whom the Registrar is an ex-officio member. Under bye-law 22(a) the elected members of the board will hold office for a period of three years. When it was decided to reconstitute the existing Bank, consequent on the separation of the Andhra State, the existing board was not dissolved. Six out of eighteen directors went to the Andhra State and twelve directors remained. The reconstitution consisted of merely transferring certain territory from the jurisdiction of the existing Bank to the newly constituted Andhra Co-operative Central Land Mortgage Bank, Limited, which was registered. The reconstitution, therefore, by itself did not affect the term of office of the twelve continuing directors, and they would ordinarily be entitled to hold office for a period of three years from the date of their election that is, in this case till 31st December, 1954. The proposed bye-law was intended to reduce the strength of the Board to ten, which of course implied that it was prospective and not retrospective, that is, it did not aim at cutting down or terminating the tenure of the office of any of the existing directors; and to empahsise this, it would seem that the proposed transitory bye-law under bye-law 22(a) was included in the agenda of the general body meeting on the 5th September, 1953. The bye-law as circulated to the members including the petitioner emphasised that the existing directors would continue to retain their directorship and other offices till 31st December, 1954. There was no reason or occasion, therefore, for an absent director to presume that at the meeting of the general body, the situation would be altered to his detriment, and that the term of office would be reduced or cut down by one year. Curiously, however, at the meeting the amendment cutting down the period from 31st December, 1954, to 31st December, 1953, was moved without any prior notice and was adopted. Curiously, however, at the meeting the amendment cutting down the period from 31st December, 1954, to 31st December, 1953, was moved without any prior notice and was adopted. The question is whether this amendment required notice under the Bye-laws and the Rules. It would be seen that the amendment was not of a formal nature, but was intended seriously to prejudice the directors, as it purported to reduce the term of the office by one year. It was argued by the learned Advocate-General, who appeared for the Registrar, that the amendment to the resolution introducing the transitory bye-law did not require notice, as it was the right and privilege of a member present at the meeting to propose amendments to the resolutions without observing the formalities regarding the notice, etc., under the Rules and the Bye-laws. In support of this proposition, he drew our attention to a passage in Paragraph 683 in Vol. 6. Halsbury’s Laws of England, third edition, where it is laid down: “Any amendment fairly arising on a resolution which is specified in the notice of meeting and within the scope of the notice may be proposed and passed at the meeting, and a chairman has no right to refuse to put such an amendment. It is usual for a resolution or an amended resolution to be moved by one voter and seconded by another, but if the chairman chooses he can put it to the vote without these formalities.” It is undoubtedly true that if the amendment was within the scope of the notice and the resolution, it could be moved without further notice. But the question really is whether the amendment proposed was within the scope of the resolution or not. Grew on "Procedure at Meetings," eigth edition, at pages 49, 50 and 51 discusses this matter. At page 49, it is pointed out, "Amendments generally seek to do one or more of the following things: (1) To omit certain words. (2) To omit certain words and insert others. (3) To insert certain words". At page 50, the following proposition is laid down: "An amendment- (1) Must not merely negative the motion. A person wishing to move such an amendment can achieve the same result by voting against it. (2) Should, if the standing orders so provide, be formally moved and seconded. (3) Must come strictly within the scope of the notice convening the meeting. A person wishing to move such an amendment can achieve the same result by voting against it. (2) Should, if the standing orders so provide, be formally moved and seconded. (3) Must come strictly within the scope of the notice convening the meeting. "Amendments substantially altering the motion cannot usually be put without proper notice." At page 51, he quotes, "How is it possible for the Court to know how many shareholders abstained from attending the meeting, being satisfied that the arrangment, as it was proposed, was advantageous to them, and being quite content to exercise no voice about it (Clinch v. Financial Corporation1). Any amendment without notice which substantially alters the motion of which notice is required is out of order, as is any amendment which is merely obstructive or dilatory." If the amendment, therefore, brings about a substantial alteration in the motion before the house, it must comply with the formalities regarding notice. In the present case the amendment, though it was a substitution of one date for the other, was a serious one and was intended to retrospectively alter the existing bye-law 22(c) by cutting down the period of three years during which the elected directors are entitled to hold office, to two years. It requires, as was held by Rajagopala Ayyangar, J., twenty days’ notice, as the mover of the amendment, it was admitted, was not a member of the Board. Under rule 24 already cited, no resolution shall be valid unless notice of the amendment proposed has been given in accordance with the bye-laws. Bye-law 50 provides the period of notice in the case of amendments. Therefore the amendment, proposed at the meeting violated the rule and the bye-law. The registration, therefore, of the bye-law which was passed contrary to the rule and the bye-law was invalid. The Registrar does not seem to have applied his mind as he was bound to do, to this aspect of the matter and considered it on its merits. The registration is also invalid on this ground. Where an officer entrusted with the discharge of quasi-judicial functions fails and neglects to do his duty and omits to apply his mind to the matter before him, and performs an act contrary to the Rules and the Bye-laws, such an act is illegal and without jurisdiction. The registration is also invalid on this ground. Where an officer entrusted with the discharge of quasi-judicial functions fails and neglects to do his duty and omits to apply his mind to the matter before him, and performs an act contrary to the Rules and the Bye-laws, such an act is illegal and without jurisdiction. This Court is bound to interfere by issuing a writ to set light such matters, which are without jurisdiction. The learned Advocate-General, however, strongly pressed that when once the bye-law was registered by the Registrar even if the bye-law was passed in violation of the Rules and the Bye-laws, the registration is conclusive evidence and therefore this Court has no jurisdiction to interfere by way of writ to quash the registration. In support of this he relied upon the language of section 12(3) of the Act, which reads as follows: "When the Registrar registers an amendment of the bye-law of a registered society, he shall issue to the society a copy of the amendment certified by him, which shall be conclusive evidence that the same is duly registered." The learned Judge, Rajagopala Ayyangar, J., was of opinion that the "conclusiveness" enunciated in the section is not restricted to the fact that it was duly registered, but goes further to an anterior stage of the registration so as to preclude any enquiry regarding the validity of the passing of the bye-law at the meeting. Whether this position in view of the language of section 12(3) of the Act, is correct or not, it is unnecessary for us to consider it. Assuming that the registration is conclusive evidence that it was duly registered, would it take away the jurisdiction of this Court conferred upon it under article 226 of the Constitution? The learned Advocate-General seriously maintained, that that was the result, but we are unable to agree. Assuming that the registration is conclusive evidence that it was duly registered, would it take away the jurisdiction of this Court conferred upon it under article 226 of the Constitution? The learned Advocate-General seriously maintained, that that was the result, but we are unable to agree. It is unnecessary to refer to the many decisions and to consider the other citations by the learned Advocate-General, as we are of opinion that this matter is really concluded by the recent decision of the Supreme Court in Raj Krushna Bose v. Binod Kanungo &38; Others1, where it was laid down as follows: “Our power to make such an order was not questioned but it was said that when the Legislature states that the orders of a Tribunal under an Act like the one here shall be conclusve and final (section 105), then we should not interfere. It is sufficient to say that the powers conferred on us by article 136 of the Constitution and on the High Courts under article 226 cannot be taken away or whittled down by the Legislature. So long as these powers remain, our discretion and that of the High Courts is unfettered.” A Legislature can enact a law subject to the provisions of the Constitution and the existing laws, which were continued by the Constitution, would prevail only in so far as they are not inconsistent with the provisions of the Constitution. If the language of section 12(3) of the Act has the effect of taking away the statutory jurisdiction conferred upon us under article 226 of the Constitution, that law must yield place to the Constitution. We do not think that the language of sub-section (3) of section 12 of the Act has the effect contended for by the learned Advocate-General. In the view, therefore, we take in this case, it is unnecessary to consider the question elaborately dealt with by the learned Judge regarding the conclusiveness of the registration under section 12(3) of the Act. It follows that the registration by the Registrar of the amendment cannot be sustained and was without jurisdiction. The appeal must be allowed, the order of the learned judge must be set aside, and the writ must be issued, quashing the registration of the bye-law by the Registrar of Co-operative Societies. It follows that the registration by the Registrar of the amendment cannot be sustained and was without jurisdiction. The appeal must be allowed, the order of the learned judge must be set aside, and the writ must be issued, quashing the registration of the bye-law by the Registrar of Co-operative Societies. As the appellant has succeeded, he is entitled to his costs here and in the Court below from the first respondent. P.R.N. ----- Appeal allowed.