K. KUNHAMBU v. REGISTRAR OF COOPERATIVE SOCIETIES — 1969 DIGILAW 40 (KER)

Judgment :- 1. This is an appeal by the petitioner in O.P. No. 113 of 1968 from the judgment of a learned judge of this Court in that case. The appellant is said to be the President of the Cannanore District Co-operative Central Bank Ltd., (hereinafter referred to as the Bank). It is a Society registered in 1963 under the Madras Co-operative Societies Act, 1932 (hereinafter referred to as the Act). The Bank has its registered office at Cannanore; and it started functioning with effect from 171963. The first Board of Directors of the Bank was nominated by the Registrar of Co-operative Societies, who is the first respondent in this appeal, in accordance with bye-law 26A of the bye-laws of the Bank. This Board would remain in office for a period of one year or for a further term not exceeding two years, if the Registrar is of the opinion that it is necessary in the interest of the Bank; but before the expiry of this term, the Board should arrange to hold a general meeting of the Bank for the purpose of electing its Board of Directors under bye-law 26. The term of the first Board was extended by the Registrar; and it would expire on 216 1966. 2. A general meeting of the Board was convened on 6 61965 for the election of the Board of Directors. It is alleged that, at this meeting, the name of Sri. P. R. Kurup, who is the present Honourable Minister for Co-operation in Kerala, was proposed as a candidate for the Board, that objection was raised to the said nomination, which the President of the meeting accepted, that Sri. P. R. Kurup and his followers thereupon behaved in an unruly manner, and that the meeting was subsequently dissolved by the President. The appellant further alleged that a suit was then filed by a nominee of Sri. P. R. Kurup in the Munsiff's Court, Tellicherry for restraining the Board of Directors from conducting the election of a new Board. In that suit, the Munsiff passed a temporary order of injunction restraining the Board of Directors from conducting the election of the new Board, and directing that the existing Board would continue in office for a period of two months after the final disposal of the suit. The suit was not then pressed, and was dismissed on 30101967. In the meanwhile Sri. The suit was not then pressed, and was dismissed on 30101967. In the meanwhile Sri. P. R Kurup became the Minister for Co-operation. Consequent on the dismissal of the suit, the Board of Directors convened a general meeting of the Bank on 30121967 for election of the new Board. On 27-121967, O.P. No 5425 of 1967 was filed in the High Court by Sri. P. H. Kunhiraman Nambiar, an Ex. M. L. A. belonging to the political party of the Honourable Minister, for a writ to restrain the conduct of the said election; and he moved for an interim order of injunction. The O. P. was summarily rejected. It is alleged that Sri. Kunhiraman Nambiar was the nominee of the Honourable Minister in that O. P. 3. One Sri. K. P. Raghavan Nair, said to be a senior advocate of the local Bar, had been appointed the returning officer for conducting the election on 30121967. According to the appellant, the general body met at 10-30 A. M. on that day; and when the polling started, about 30 persons rushed into the polling booth and snatched away some of the ballot papers and other records. The polling was suspended, but it was re-started at 1 P. M.; and the requisite number of members were elected to the Board. Ext. P1 is a copy of the minutes of the proceedings of the election made by the returning officer. On. the same day at 8.30 P. M. a meeting of the Board of Directors was held; and the office bearers were elected. The appellant was unanimously elected as the President of the Board; and the new Board took charge forthwith. Ext. P2 is a copy of the minutes of the said proceedings. This matter was reported by the appellant on the same day to the first respondent with copy to the second respondent, the Deputy Registrar of Co-operative Societies, Cannanore. Ext. P3 is copy of the said report. The election was also reported to the Kerala State Cooperative Bank Ltd., Trivandrum on the next day as per Ext. P4. 4. On 111968, the first respondent passed an order, Ext. P5, appointing the fourth respondent, who is the Secretary of the Bank, as Special Officer to manage the affairs of the Bank for a period of three months or till a new Board duly elected comes into existence, whichever is earlier. P4. 4. On 111968, the first respondent passed an order, Ext. P5, appointing the fourth respondent, who is the Secretary of the Bank, as Special Officer to manage the affairs of the Bank for a period of three months or till a new Board duly elected comes into existence, whichever is earlier. This order purports to have been issued in exercise of the power vested in him under S.43 of the Act as modified in its application to the Bank by a notification dated 111968 of the Government of Kerala, who is the fifth respondent. This notification was issued on the same day under S.60 of the Act. Ext. P8 is a copy of the said notification. Necessary directions were also issued in the light of the above order as per Ext. P6 dated 611968 by the second respondent to respondent No. 5, who is the office manager of the Bank. According to the appellant, the 4th respondent, on receipt of the order, Ext. P3, submitted a report that the order could not be complied with, as the new Board of Directors had taken charge on 30121967. and it was in management of the affairs of the Bank. Then the first respondent appointed the second respondent as Special Officer as per Ext. R4 dated 611968. The Original Petition was filed: (a) to quash Exts. P5, P6 and PP; (b) to prohibit respondents 2 and 4 from functioning and interfering with the affairs of the Bank as Special Officer; and (c) to direct the respondents to forbear from interfering with the rights of management vested in the appellant and other members of the Board of Directors. The appellant attacked the impugned orders as malafide and arbitrary exercise of power, illegal and without jurisdiction, and violative of the principles of natural justice. 5. The Joint Registrar of Co-operative Societies filed two counter-affidavits in the Original Petition on behalf of respondents 1 & 2; and subsequently the first respondent filed a counter-affidavit adopting the averments made by the Joint Registrar. It is not necessary at this stage to state the details of their contents. According to him, election of the Board of Directors did not take place as mentioned in Ext. Pi on 3012 1967; and there was, therefore, no question of the appellant being appointed as President or the new Board of Directors taking charge from the old Board. It is not necessary at this stage to state the details of their contents. According to him, election of the Board of Directors did not take place as mentioned in Ext. Pi on 3012 1967; and there was, therefore, no question of the appellant being appointed as President or the new Board of Directors taking charge from the old Board. He contended that Ext. P1 was a sham document, and that Exts. P2, P3 and P4 were created by interested parties to serve their own private ends, and the statements therein are contrary to facts. He also contended that Exts. P5, P6 and P8 were passed bona fide and in the best interest of the Bank, and they were within the jurisdiction of the authorities who issued them. 6. The learned Single Judge did not consider any of the attacks made against the impugned orders; but he dismissed the Original Petition on the short ground that the question whether the appellant was a duly elected President of the Bank or not was a seriously disputed one, which can be properly decided only in an Original Suit, and that the appellant had no locus standi to maintain the writ petition, without first getting himself declared as a validly elected President of the Board of Directors by an Original Suit. There was some discussion by the learned judge whether, in view of the provisions contained in S.51 (1) of the Act, which empowers to decide certain disputes touching the business of a registered society, an original suit was maintainable to decide the above dispute The learned judge held that a dispute whether a person was validly elected to the Board of Directors of a Society or as its President is one touching the business of the Society; that in the instant case, the dispute was not between persons mentioned in S.51 (1), but one between a member on the one part and the Registrar and other contesting respondents on the other part; and that the present dispute -did not, therefore, fall within the ambit of S.51 (1), and the remedy by way of suit was not barred. However, dealing with the stand that the Registrar took in this Original Petition that no elections were held on 30121967, the learned judge said: "The indiscretion of the Registrar in expressing himself in this fashion on a matter on which he ought to have envisaged the prospect of his having to adjudicate under S.51 of the Act, and which should have been elementary to him, is strongly to be deprecated." The learned Advocate General, who appeared for the contesting respondents, submitted that it was the orders of the Registrar that was impugned in this case, that the basis of the said orders was that no elections took place, and that the Registrar, being the main contesting respondent, there was no meaning in the criticism that he should not have taken such a stand. The learned counsel for the appellant submitted on the other hand that a dispute relating to the validity of an election is not one which arises between a member of the Society and the Registrar or the State, that the Registrar or the State has no locus standi in the matter, that it is a dispute to be settled in accordance with the election rules of the Bank, and that the validity of the election cannot be questioned except as provided by these rules. Ext. P-12 are the rules regarding election of members of the Board of Directors; and R.34 reads: "In case of any dispute in respect of validity of an election the matter shall be forwarded to the Registrar for decision under S.51 of the Madras Co-operative Societies Act VI of 1932 and such reference shall be made to the Registrar within 30 days from the date of declaration of the result of the election." The learned counsel for the appellant contended that as no reference was made by any interested person to the Registrar within the prescribed time, the validity of the election was no more open to question. 7. In our opinion, this is a wrong approach to the real controversy in this case. The appellant's attack is against the orders issued by the Registrar; and the reliefs claimed by him depends solely on the fate of this attack. If the orders are invalid, he is entitled to succeed; otherwise he is not entitled to any of the reliefs. In our opinion, this is a wrong approach to the real controversy in this case. The appellant's attack is against the orders issued by the Registrar; and the reliefs claimed by him depends solely on the fate of this attack. If the orders are invalid, he is entitled to succeed; otherwise he is not entitled to any of the reliefs. The writ of mandamus which he has sought against the respondents to forbear from interfering with the rights of management of the appellant and others is only consequential on the decision regarding the validity of Exts. P5 and Ext. P6. If these orders of the Registrar are valid, the appellant and his Board go out of office. The jurisdiction of the Registrar to act under S.43 of the Act does not depend on the question of the validity of the election of the Board of Directors. His jurisdiction arises when, in his opinion, the committee of the Society in this case the Board of Directors of the Bank is not functioning properly. In this case, the Registrar acted as in his opinion there was ho validly elected Board of Directors to manage the affairs of the Bank. This is a matter which the Statute has committed to his opinion; and it does not depend on the question whether the election is disputed by any member. Therefore, we do not agree with the learned judge that the appellant has no locus standi to maintain the Original Petition, until he gets himself declared by any original suit that he is a duly elected President of the Bank. It is not disputed that the appellant is a member of the Bank; and any member has the interest to seek the reliefs sought for in this Original Petition. The learned Advocate General contended that the appellant has not claimed the reliefs as a member, that he did not also put forward such a contention before the learned Single Judge, and that he should not be allowed to raise it in appeal. We have gone through the Original Petition and the several counter-affidavits filed by or on behalf of the contesting respondents; and it is obvious from them that there was no dispute that the appellant is a member of the Bank. We have gone through the Original Petition and the several counter-affidavits filed by or on behalf of the contesting respondents; and it is obvious from them that there was no dispute that the appellant is a member of the Bank. All the records of the Bank are now in the possession of the Special Officer; and it can be easily verified whether the appellant is a member; and we put it to the learned Advocate General whether this was disputed by him. He fairly conceded that the fact that the petitioner is a member of the Bank cannot be denied. Therefore, the ground on which the learned judge dismissed the Original Petition cannot be sustained. 8. The first contention raised by the learned counsel for the appellant was that the impugned orders were mala fide. When an order is attacked on this ground, the only relevant consideration, as pointed out by the Supreme Court in Puranlal Lakhapnal v. Union of India, AIR, 1953 S.C.163, is whether the order was made for ulterior purposes, or purposes other than those mentioned in the order. There is a very exhaustive and instructive discussion of this question in the majority judgment of the Supreme Court delivered by Ayyangar, J. in Pratap Singh v. State of Punjab AIR. 1964 S.C. 72. For the sake of brevity, we shall quote only the following passage from that judgment. "As we said earlier, the two grounds of ultra vires and mala fide are thus most often inextricably mixed. Treating it as a question of ultravires, the question is what is the nature of the power which has been granted to achieve a definite object, in which case, it would be conditioned by the purpose for which it is vested. Taking the present case of the power vested in Government to pass the impugned orders, it would not be doubted that it is vested in Government for accomplishing a defined public purpose, viz., to ensure probity and purity in the public services by enabling disciplinary penal action against the members of the service suspected to be guilty of misconduct. The nature of the power thus discloses its purpose. In that context the use of that power for achieving an alien purpose wreaking the minister's vengeance on the officer would be mala fide and a colourable exercise of that power, and would, therefore, be struck down by the courts. The nature of the power thus discloses its purpose. In that context the use of that power for achieving an alien purpose wreaking the minister's vengeance on the officer would be mala fide and a colourable exercise of that power, and would, therefore, be struck down by the courts. In this connection we might cite a dictum of Lord Lindley in General Assembly of Free Church of Scotland v. Overtoun, 1904 A.C. 515, where the learned Lord said at p. 695: "I take to be clear that there is a condition implied in this as well as in other instruments which create powers, namely, that the power shall be used bona fide for the purposes for which they are conferred." In Ram Manohar v. State of Bihar, AIR. 1966 S.C. 740 the Supreme Court said: "If a person, under colour of exercising the statutory power, acts from some improper or ulterior motive, he acts in bad faith. The action of the authority is capable of being viewed in two ways. Where power is misused but there is good faith the act is only ultra vires but where the misuse of power is in bad faith there is added to the ultra vires character of act, another vitiating circumstance. Courts have always acted to restrain a misuse of statutory power and the more readily when improper motives underlie it. The misuse may arise from a breach of the law conferring the power or from an abuse of the power in bad faith. In either case the Courts can be moved, for we do not think that Art.359 or the President's Order were intended to condone an illegitimate enforcement of the Defence of India Act." 9. The attack against the orders impugned in this case is that they were issued at the instance of the Honourable Minister for Co-operation for ousting his rivals, who were duly elected to the Board of Directors of the Bank, from its management, and to bring it under his control far achieving his personal and political objects. These charges have been denied by the Honourable Minister in a counter-affidavit, which he has filed. These charges have been denied by the Honourable Minister in a counter-affidavit, which he has filed. At the same time, it is clear from the affidavits and counter-affidavits filed in this case, that, in connection with the election to the Board of Directors of the Bank, its members were divided into two factors one of which was headed by the appellant, and that the appellant rightly or wrongly always viewed and treated Sri. P. R. Kurup, who subsequently became the Minister for Co-operation, as the leader of the appellant's opposition This cannot, however, obstruct or embarrass the Honourable Minister in discharging his official duties. The appellant's allegation is that the election of the Board of Directors was duly conducted, the new Board had taken charge of the management of the bank on 30-12-1967, and that there was no scope for taking the impugned action. But these matters are seriously disputed. As we have already pointed out, the exercise of the Registrar's power under S.43 of the Act does not depend on the validity of the election or the adjudication of any dispute relating thereto. We shall now quote the above section. "43 (1) If, in the opinion of the Registrar, the committee of any registered society is not functioning properly, he may, after giving an opportunity to the committee to state its objections, if any, by order in writing, dissolve the committee and appoint a suitable person or persons to manage the affairs of the society for specified period not exceeding two years. The period specified in such order may at the discretion of the Registrar, be extended from time to time provided that such order shall not remain in force for more than four years in the aggregate. (2) The person or persons so appointed shall, subject to the control of the Registrar and to such instructions as he may from time to time give, have power to exercise all or any of the functions of the committee or of any officer of the society, and to take all such action as may be required in the interest of the society. (3) The Registrar may fix the remuneration payable to the person or persons so appointed. The amount of such remuneration and the other costs, if any incurred in the management of the society, shall be payable from its funds. (3) The Registrar may fix the remuneration payable to the person or persons so appointed. The amount of such remuneration and the other costs, if any incurred in the management of the society, shall be payable from its funds. (4) The person or persons appointed shall, at the expiry of the period of his or their appointment, arrange for the constitution of a new committee in accordance with the by-laws of the society. (5) Before taking any action under sub-section (1) in respect of a financing bank or in respect of a society indebted to a financing bank, the Registrar shall consult in the former case the Madras Provincial Co-operative Bank, and in the latter case the financing bank concerned, regarding such action. (6) Nothing in this section shall be deemed to affect the power of the Registrar to cancel the registration of the Society under S.44." What is necessary for the exercise of the power under the above section is the opinion of the Registrar that the committee of the society is not functioning properly. Therefore, the question arises whether the Registrar acted in this case on the basis of such an opinion, which would naturally depend on the fact whether he had any materials to form that opinion. A counter-affidavit filed by the Joint Registrar on behalf of respondents 1 and 2 has stated that the decision to take action under S.43 of the Act was taken by the Registrar, and it has also referred to the materials which the Registrar had to take that decision. The Joint Registrar has stated in that counter-affidavit that he is competent to swear to the things stated therein. Apparently he is not. He is not a party to this writ petition, and none of the numerous documents produced in this case shows that he had anything to do in this matter. His competency to swear to counter-affidavits in this case is, therefore, confined to what he his seen from the files. It is the Registrar alone who is competent to say that he had such and such materials before him, and that, on the basis of those materials, he honestly formed the opinion that action under S.43 was necessary; but he has not said so, except filing a counter affidavit at a late stage of the case stating that he adopted the averments in the counter-affidavits filed by the Joint Registrar. This has led to the comment on behalf of the appellant that the Registrar refrained from swearing to a counter-affidavit stating that he acted on his own opinion on the basis of the materials before him, as he did not want or was not bold enough to swear to a false affidavit in court. Whatever that may be, the materials which the Registrar had before him while taking the impugned action have been placed before court. Therefore, the only question is whether the Registrar could have reasonably and bonafide formed an opinion on the said materials to act under S.43 of the Act. 10. The Bank has an authorised capital of Rs. 24,50,000/- which has been fully paid up. It has fairly large financial commitments It has obtained from the Reserve Bank of India a credit facility to the extent of one crore of rupees on the guarantee of the State Government; and the State has, therefore, vital interest in its proper working. A general meeting for the election of the Board of Directors was convened on 6-6-1965; and it ended in disorder. This was followed by litigations by the two factions. The next meeting for the same purpose was convened on 30-12-1967; and on this date, the period of the existing Board would expire. Police assistance to maintain law and order in the meeting had already been sought for by the conveners of the meeting. Accordingly, the Deputy Superintendent of Police, and the Sub-Collector were present at this meeting. On 31-12-1967, the Deputy Superintendent submitted a report to the Collector stating that the meeting was dissolved by the returning officer at 12.00 noon without being able to conduct the election, obviously due to the confusion caused on account of the fight between the two opposing parties. Ext. R-1 is a copy of this report. On 30-12-1967 itself, the second respondent sent a telegram to the Registrar, stating that the meeting was not held due to pandemonium. Ext. R-7 is a copy of that telegram. It is alleged that on 1-1-1968, the Registrar addressed a letter to the Government stating the above facts and pointing out the necessity to appoint a suitable person to manage the affairs of the Bank, and also to exempt the Bank from the provisions of S.43 of the Act for that purpose. Neither this letter nor a copy thereof has been produced in Court. Neither this letter nor a copy thereof has been produced in Court. On the same date, the Government issued a notification, Ext. P-8 under S.60 of the Act exempting the Bank from the operation of S.43, and also issued an order, Ext. P7, stating that, under the circumstances mentioned therein it was necessary to appoint a person to manage the affairs of the Bank, till a newly elected Board takes charge. Accordingly, The Registrar passed the order Ext. P-5, on the same day appointing the 4th respondent as Special Officer to manage the affairs of the Bank. We are not prepared to say that on the above materials, the Registrar could not have honestly and reasonably formed an opinion to take action under S.43 of the Act. Considering the fact that the appellant always viewed and treated Sri. P. R. Kurup, as the leader of the party who opposed the appellant, and that Sri. Kurup happened to be the Minister for Co-operation at the time when the impugned order was passed, and the extraordinary haste with which they were done, the appellant has legitimate ground to think that the strong and powerful arm of Sri. Kurup was behind these things. But it is not sufficient reason to hold that the orders were mala fide. 11. The next contention urged by the appellant's learned counsel was that Ext. P-5, the order appointing the Special Officer for management of the Bank, was violative of the provisions of S.43 of the Act. He advanced several arguments in support of that contention. First, he submitted that the section comes into play only if, in the opinion of the Registrar, the committee of the society is not functioning properly, that it pre-supposes the existence of a committee, in the absence of which the question whether the committee is functioning properly or not cannot arise, that the Registrar passed the order, Ext. P-5, on the ground that there was no election, and consequently no committee, and that the said order was, therefore, without jurisdiction. The argument has some force on a literal reading of S.43 (1) of the Act. But we are not prepared to read it in that fashion. P-5, on the ground that there was no election, and consequently no committee, and that the said order was, therefore, without jurisdiction. The argument has some force on a literal reading of S.43 (1) of the Act. But we are not prepared to read it in that fashion. It has to be read and understood in the light of the object of that provision, which appears to us is to empower the Registrar to make a temporary provision to manage the affairs of a registered Society, when, in his opinion, it is called for; If mismanagement or improper functioning of the committee is a ground to act under S.43, absence of a committee to manage it is a stronger ground. There is no other provision in the Act to meet this contingency. So, in our opinion, S.43 (1) covers also a case of the non-existence of a committee to manage the affairs of a registered Society. 12. The next argument of the learned counsel was that S.60 of the Act is unconstitutional, that at any rate Ext. P-6, the notification issued by the Government under that section, is ultra vires, and that, if S.60 and Ext. P-8 are valid, S.43 does not apply to the Bank, and Ext. P-5 is, therefore, without jurisdiction. S.60 reads as follows: "The State Government may, by general or special order, exempt any registered society from any of the provisions, of this Act or may direct that such provisions shall apply to such society with such modifications as may be specified in the order." Assuming that the above section is valid, what it empowers the State Government to do are (i) to exempt any registered society from any of the provisions of the Act; and (ii) to direct that any of the provisions of the Act shall apply to a Society with such modifications as the Government may specify in their order Ext. P-8 reads as follows: "NOTIFICATION., "In exercise of the powers conferred by S.60 of the Madras Co-operative Societies Act, Act VI of 1932, Government hereby exempt the Cannanore District Co-operative Bank from the operation of S.43 of the said Act enabling the Registrar to appoint a Special Officer to the Bank without following the procedure mentioned in sub-section (i) and subsection (S) of that section, for the period from 3012 1967, the date of expiry of the nominated Board till a new Board duly elected comes into existence." (By order of the Governor) T. V. Swaminathan, Additional Secretary." It has in very clear terms exempted the Bank from the operation of S.43 of the Act, and then stated that it was done for enabling the Registrar to appoint a Special Officer to the Bank without following the procedure mentioned in Subsections (1) and (S) of that section. Now, if the Bank is exempted from the operation of S.43, the question of application of the procedure mentioned in Sub-sections (1) and (5) does not arise at all, as the whole of the section would be inapplicable by the exemption. The learned Advocate General submitted that what was really intended was not to exempt the Bank from the operation of S.43, but to make S.43 applicable to it with the modification that the procedure mentioned in Sub-sections (1) and (5) shall not apply. Apparently,this was what the Government wanted to do; but what the notification stated is just the opposite. Ext. P-8 is a statutory instrument; and its language is plain. He cannot read it in such a way as to give the opposite meaning to its plain language. The Government have realised the mistake; and they issued a notification No.13821/C2/68/AD dated 8 31968 correcting Ext. P-8. This notification reads: "Agriculture Department (co-operation) No. 13821/62/68/AD. ERRATUM Dated, Trivandrum, 8th March 1968. "In the Notification No. GO. Rt. 4/68/AD" dated 1st January 1968 published as SRO. No. 7/68 in the Gazette dated 9th January; 1968, for the words and figures "exempt the Cannanore District Co-operative Bank from the operation of S.43 of the said Act enabling the Registrar to", read "direct that S.43 of the said Act shall apply to the Cannanore District Co-operative Bank with the modification that the Registrar may." (By Order of the Governor.) C. P. Ramakrishna Pillai, Deputy Secretary." The above erratum has high-lighted the mistake. This correction has been made during the pendency of this appeal; and it cannot in any manner save the impugned order of the Registrar. Considering the extraordinary features of this ease and the extreme haste with which the authorities concerned have acted, we are not sorry for this gross error committed by them. 13. We shall next consider the argument of the appellant's learned counsel relating to the validity of S.60 of the Act, and Ext. P-8. If Ext. P8 meant to exempt the operation of S.43 of the Act to the Bank, the appellant has no objection to it. His objection is only if it meant to apply S.43 to I the Bank without the application of the procedure mentioned in Sub-sections (1) and (5). In the first place, the learned counsel submitted that S.60 contains an unguided and arbitrary delegation of power, and it is, therefore, unconstitutional. It is now well-established that the power of delegation is a constituent element of the legislative power as a whole, and that the legislature can delegate subsidiary and ancillary powers to delegates of its choice for carrying out the policy laid down by its Acts. The extent to which such delegation is permissible is also well-settled. In Hari Shankar Bagla V. State of Madhya Pradesh AIR. 1954 SC. 465 Mahajan, C. J. stated: "The Legislature cannot delegate its functions of laying down the Legislative Policy in respect of a measure and its formulation as a rule of conduct. The Legislature must declare the policy of the law and the legal principles which are to control any given cases, and must provide a standard to guide the officials or the body in power to execute the law". The above passage was quoted With approval by Gajendragadkar, J. in his majority judgment of the Supreme Court in Vasanlal Maganbhai v. State of Bombay AIR 1961 SC. 4; and the learned judge added: "In dealing with the challenge to the vires of any Statute on the ground of excessive delegation, it is, therefore, necessary to enquire whether the impugned delegation involves the delegation of an essential legislative function or power and whether the Legislature has enunciated its policy and principle and given guidance to the delegate or not." 14. We shall examine S.60 of the Act in the light of the aforesaid principles. The preamble of the Act shows that it. We shall examine S.60 of the Act in the light of the aforesaid principles. The preamble of the Act shows that it. is a law enacted to facilitate the formation and making of co-operative societies for the promotion of thrift, self-help and mutual aid among agriculturists, and other persons with common economic needs and to consolidate and amend the law relating to Co-operative Societies. For this purpose, the legislature has made various and exhaustive provisions. Then S.60 says in the first instance that the State Government may exempt any registered Society from any of the provisions of the Act., There is no guidance or principle laid down in the Act or discernible from its provisions to choose or single out the societies for being exempted from the operation of any of the provisions of the Act. Similarly, there is no guidance or principle laid down or indicated for deciding which provisions should not be made applicable to a particular society. The Government; if they are so pleased, may under this section exempt all societies from all the provisions of the Act, or they may exempt societies of their own choice from all or any of the provisions of the Act for reasons of their own. This section also says that the Government may direct that any of the provisions of the Act shall apply to any Society with such modifications as they may specify in their order. There is no limit for the modification that the Government may specify. They may modify the provisions of the Act to the extent of re-writing its scheme with respect to any Society, which they may choose for reasons of their own. This is a clear case of conference of an arbitrary and naked legislative power on the State Government; and in our view, S.60 of the Act is unconstitutional. 15. In the light of our above finding it is unnecessary to deal with the argument that Ext. P-8 is ultra vires of the power of the Government under S.60. If S.60 is unconstitutional and invalid, as we have held, Ext. P-8 becomes automatically invalid; and if Ext. P-8 is invalid, it was not rightly contended that the action taken by the Registrar under S.43 would be valid, as admittedly it was taken without complying with the mandatory provisions of that section. If S.60 is unconstitutional and invalid, as we have held, Ext. P-8 becomes automatically invalid; and if Ext. P-8 is invalid, it was not rightly contended that the action taken by the Registrar under S.43 would be valid, as admittedly it was taken without complying with the mandatory provisions of that section. In the above view of the matter, it also becomes unnecessary to consider the question whether Ext. P-5 is violative of the principles of natural justice. S.43 contains express provision for the compliance of natural justice. It is the order of the Government made in exercise of the power under S.60, which provided that the Registrar may act in violation of natural justice, in spite of the express provision contained in S.43 to the contrary effect. In the result, we quash Ext. P-5. the order of the Registrar appointing a Special Officer for managing the affairs of the Bank, and all proceedings taken by the respondents pursuant to or in furtherance of the said order. 16. We have already held that the Registrar had sufficient grounds to form the opinion that the Board of the Bank was not functioning properly and to appoint a person for the management of the Bank. But the appointment, which he made, happened to be invalid, as he did not comply with the provisions of S.43 of the Act. The appointment itself was for a period of three months or till a new Board duly elected comes into existence whichever is earlier. S.43 (2) provides that the person appointed under Sub-section (1) shall, subject to the control of the Registrar, have the power to exercise all or any of the functions of the Committee. In the circumstances of this case, one would expect that the officer appointed by the Registrar under Ext. P 5 would have forthwith taken steps to conduct the election of the Board of Directors. More than one year has elapsed, since that appointment was made; but nothing has been done so far for that purpose. Admittedly, the Bank has to be managed by a Board of Directors constituted as provided in bye-law No. 26, according to which the Kerala State Co-operative Bank would nominate three members to the Board, and the remaining members would be sleeted at a general meeting of the Sank. Admittedly, the Bank has to be managed by a Board of Directors constituted as provided in bye-law No. 26, according to which the Kerala State Co-operative Bank would nominate three members to the Board, and the remaining members would be sleeted at a general meeting of the Sank. It is not possible for a general meeting to be convened under S.15 (1) of the Act, as the existence of a duly elected Board of Directors is in dispute; and at any rate there is no such Board now in office. It is also not possible for the Special Officer to convene a general meeting, as his appointment has been held to be invalid. So the only feasible and correct solution for the difficulty arising under the above situation is for the Registrar to convene a general meeting under S.15(2) of the Act for the election. We, therefore, direct the first respondent, the Registrar of Co-operative Societies to take the necessary steps forthwith to convene a general meeting of the members of the Bank as on 30121967 for election of the requisite number of members to the Board of Directors in accordance with the provisions of the Act, the bye-laws and the rules regarding election of directors to the Board of the Bank. The election should be conducted on a date fixed by the Registrar, which should be within two months from this date. He should also take necessary steps to have three members nominated to the Board by the Kerala State Co-operative Bank before the above date, if they have not been already nominated by it. The general meeting will be supervised and the election conducted by Sri. T.P. Kelu Nambiar, Advocate, Ernakulam, who is hereby appointed as returning officer for the said purpose. The general meeting will be presided over by a chairman chosen at the meeting as provided in bye-law No. 23. "A meeting of the Board of Directors will be held immediately after the election of the members to the Board for electing a President and a Vice-President. The second respondent who is now in management of the Bank as Special Officer will hand over charge to the Board of Directors thus elected within three days from the date of election. The: second respondent will deposit in this Court within two weeks out of the funds of the Bank a sum of Rs. The second respondent who is now in management of the Bank as Special Officer will hand over charge to the Board of Directors thus elected within three days from the date of election. The: second respondent will deposit in this Court within two weeks out of the funds of the Bank a sum of Rs. 1,000/- which we fix as remuneration of the returning officer including travelling expenses for his work. In the special circumstances of this case, the second respondent is allowed to continue in charge of the Bank till the election of the Board of Directors is conducted and the charge is handed over to the new Board of Directors as directed above. If general meeting is not convened and the election is not conducted within the aforesaid period in accordance with the directions contained herein, the second respondent will hand over charge of management of the Bank to the appellant, who claims to be the President of a duly elected Board of Directors. We consider that these directions are necessary for enabling the management of the Bank to be carried on by a properly elected Board of Directors according to the Act and its bye-laws, and rules, and also to protect and safeguard the interests of all persons connected with the Bank. This appeal is disposed of in the manner stated above. In the circumstances of the case, the parties will bear their own costs.