S. C. v. Gopal, Chief Promoter,Tamil Nadu Road Transport Financing Co-operative Society Limited, Madras VS The Joint Registrar of Co-operative Societies, Madras and others .
1973-02-15
K.VEERASWAMI, V.V.RAGHAVAN
body1973
DigiLaw.ai
Palaniswami, J.- This petition is filed by Gopal, Chief Promoter of Tamil Nadu Road Transport Financing Cooperative Society, Limited, Madras to quash the order of the Joint Registrar of Co-operative Societies, Madras, the first respondent herein, dated 14th March, 1970, under which the first respondent nominated eight persons as members of the committee of management of the petitioner society. Gopal and nine others promoted the petitioner society for the purpose of providing cheap and convenient credit facilities to small lorry owners for purchase of vehicles. About 15o members were enrolled. The promoters proposed to the Deputy Registrar of Co-operative Societies a panel of names of shareholders for the committee of management. The Joint Registrar of Co-operative Societies purported to nominate eight persons as members of the committee of management by virtue of the powers conferred on him under Transitory Bye-law No. 20 of the Bye-laws of the petitioner society. It is to quash this proceeding that this writ petition has been filed. 2. The ground, upon which the proceeding is sought to be quashed, is that under the provisions of the Madras Cooperative Societies Act, 1961 (hereinafter referred to as the Act), the Joint Registrar, purporting to act on behalf of the Government, has no jurisdiction to nominate any person to be a member of the committee if that person is not already a member of the society. Out Of the eight persons nominated by the Joint Registrar, one is the Deputy Registrar of Co-operative Societies, who is ex-officio member and for whose nomination there is no objection. Out of the remaining 7, two alone are members of the society and the rest 5 are non-members. The petitioner takes objection to the nomination of these five non-members. 3. The relevant provision of the Act that confers powers upon the Government to make nomination is contained in section 27 of the Act.
Out of the remaining 7, two alone are members of the society and the rest 5 are non-members. The petitioner takes objection to the nomination of these five non-members. 3. The relevant provision of the Act that confers powers upon the Government to make nomination is contained in section 27 of the Act. Sub-section (1) of that section reads thus: 27 Appointment of committees: (1) The general body of a registered society shall constitute a committee in accordance with the bye-laws and entrust the management of the affairs of the registered society to such committee Provided that, in the case of a society registered after the commencement of this Act, the persons who have signed the application to register the society may appoint a committee to conduct the affairs of the society for a period of three months from the date of registration or for such further period as the Registrar may consider necessary ; but the committee appointed under this proviso shall cease to function as soon as a committee has been constituted in accordance with the by-laws: Provided further that where the bye-laws so provide, the Government or the Registrar may nominate all or any of the members of the committee for such period as may be specified in the byelaws. Bye-law 20 of the Bye-laws framed by the petitioner society deals with constitution of the committee. Sub-clause (1) of that by-law inter alia states that the executive management of the affairs of the society shall vest in a committee consisting of not more than 9 members of whom an official of the Co-operative Department and an officer not below the rank of the R.T.O. in the office of the Commissioner of Transport, Madras, shall be the ex-officio members of the committee and that the remaining 7 shall be elected. Transitory Bye-law No. 20, under which the Joint Registrar, first respondent, has purported to make the impugned nomination of nine persons, reads: " Notwithstanding anything contained in these bye-laws, the first set of the members of the committee including the President and Vice-President may be nominated by the Registrar for a period of 3 years, which if found necessary may be extended, to a further period of 3 years at the discretion of the Registrar.
Such nomination may at the discretion of the Registrar, be made for a period of one year or such shorter period as may be found necessary at a time". From the language adopted in the aforesaid transitory bye-law, it would appear that in all cases of first set of members of a committee it is the Registrar who should nominate the members of the committee including the President and the Vice-President. It is contended for the petitioner that in exercising this power under Transitory By-law No. 20, the Registrar cannot nominate any one who is not a member of the society and that inasmuch as the Joint Registrar, in the instant case, has nominated five outsiders as members of the committee, the order is vitiated. On behalf of the first respondent it is submitted that it is not obligatory on the Registrar to nominate only members to the first committee, that it is not provided either in the Act or in the bye-laws that only members of the society could be nominated and that in the absence of such a provision, it is open to the Registrar to appoint anybody he likes if such persons, in his opinion, are interested in the business of the society. 4. Section 28 of the Act deals with disqualifications for members of committee. This section consists of six sub-sections. Sub-section (1) deals with the disqualification of persons to be elected or appointed as a member of the committee. Subsection (2) enumerates the cases in which a member of a committee shall cease to hold his office if he incurs any one of the disqualifications detailed therein. Subsection (3) enumerates further disqualifications. These disqualifications, broadly speaking, refer to members being members of more than a specified number of societies. The object underlying this sub-section is to prevent persons monopolising all offices in co-operatives and to prevent the tendency on the part of the co-operators to become professional co-operators. But these disqualifications mentioned in sub-section (3) are not applicable to a member nominated to the committee by the Government or the Registrar. This exception is provided in clause (e) of sub-section (3). It is unnecessary to refer to the purport of the other sub-sections as they are not relevant for consideration in this case. 5.
But these disqualifications mentioned in sub-section (3) are not applicable to a member nominated to the committee by the Government or the Registrar. This exception is provided in clause (e) of sub-section (3). It is unnecessary to refer to the purport of the other sub-sections as they are not relevant for consideration in this case. 5. It would thus be seen that subsection (1) of section 28 deals with election and appointment of a member of the committee. But sub-section (2) is worded in general terms and merely refers to a member of the committee without specifying whether such a member is an elected member or an appointed member or a nominated member. Subsection (3), by reason of clause (e) of that section, would apply only to cases of members elected or appointed. It would thus be seen that the Legislature in enacting section 28 has maintained the distinction between election, appointment and nomination. But so far as the supervening disqualifications enumerated in sub-section (2) are concerned, the Legislature has referred to the members as members generally without indicating whether such members are nominated members, or elected members or appointed members. It is, therefore, contended on behalf of the petitioner, that, when the Government or Registrar nominates the members of the first committee by virtue of the power conferred under the second proviso to subsection (1), of section 27 they can nominate only a member of the society. One of the supervening disqualifications on account of which a member shall cease to hold his office is his cessation of membership of the society. That means, if, at the time of his becoming a member of the committee, whether by election, appointment or nomination, he was a member of the society, and if thereafter he ceases to be a member of the society, he shall cease to hold his office as a member of the committee. By reason of this provision it is contended for the petitioner that if, at the time of nomination by the Registrar, the person concerned is not a member of the registered society, he cannot, by necessary implication, be nominated as a member of the committee. 6. I think the foregoing contention is well-founded. Section 2 (2) defines "committee" as meaning the governing body of a registered society to whom the management of its affairs is entrusted.
6. I think the foregoing contention is well-founded. Section 2 (2) defines "committee" as meaning the governing body of a registered society to whom the management of its affairs is entrusted. According to sub-section (6) of section 2, "member" means a person joining in the application for the registration of a society and a person admitted to membership after registration in accordance with the Act, the rules and the bye-laws and includes a nominal and an associate member. Inasmuch as the function of the Committee is to manage the affairs of the society, it is reasonable to infer that when a person is to be nominated by the Government or Registrar as a member of the committee, he should be one interested in the affairs of the society. The interest of the person concerned can be best judged by ascertaining whether he is 3. member or not a member. If he is not a member, it cannot normally be expected that he would be interested in the affairs of the society, and cannot be said to be a competent person to whom, along with others, the management of the affairs could be entrusted. The second proviso to section 27 no doubt does not say that the person to be nominated by the Government or the Registrar should be a member of the society. But having regard to the scheme of the Act and the provisions contained in sub-section (2) of section 28 dealing with the supervening disqualifications, it is reasonable to infer that in making the nomination by virtue of the power under the second proviso to sub-section (1) of section 27, the Government or the Registrar cannot nominate any one who is not a member of the society. 7. To hold, that the Government or the Registrar can nominate even non-members would lead to anomalous results. If the person nominated does not choose to become a member after nomination, he would continue to be a non-member. To allow him to continue to be a non-member would result in flagrant violation of sub-section (2) of section 28 which inter alia states that a member of the committee shall cease to hold his office if he ceases to be a member of the registered society.
To allow him to continue to be a non-member would result in flagrant violation of sub-section (2) of section 28 which inter alia states that a member of the committee shall cease to hold his office if he ceases to be a member of the registered society. To hold that even non-members can serve on the committee if they are nominated by the Government or the Registrar would go against the very spirit of the Act. 8. My attention was drawn to the decision of Kailasam, J., in Sami Rao v. The Registrar of Co-operative Societies1, in which the learned Judge has taken a different view. That decision does not appear to have been reported so far. In that case, the contention appears to have been urged that the word “appointed” would include the word “nominated”. The learned Judge rejected that contention and took the view that the requirement that an elected or an appointed member should be a member of the society cannot be applicable to the case of a nominated member. With respect, I am unable to agree with this conclusion. The learned Judge has further observed that sub-sections (1) and (2) of section 28 which deals with disqualifications are not applicable to nominated members. On this aspect also I am, with respect, unable to agree. Whereas sub-section (1) of section 28 explicitly refers to a member being either an elected member or an, appointed member, sub-section (2) does not make any such distinction. Sub-section (2) is worded in a general way so as to comprehend within it elected, appointed and nominated members. If the intention of the Legislature was that sub-section (2) should be applied only to an elected or an appointed member, there would have been no difficulty in using appropriate language. As I have already pointed out, sub-sections (1) and (3) deal with disqualifications of members elected or appointed, whereas sub-section (2) is general in its terms. Inasmuch as my view is in conflict with the view of Kailasam, J., in the case referred to above, I think it is better that the matter is decided by a Bench, as this question is likely to be of importance in the administration of co-operatives.
Inasmuch as my view is in conflict with the view of Kailasam, J., in the case referred to above, I think it is better that the matter is decided by a Bench, as this question is likely to be of importance in the administration of co-operatives. I would, therefore, place the papers before my Lord the Chief Justice for referring the case to a Bench for decision on the question whether in exercise of the powers under the second proviso to sub-section (1) of section 27, the Government or the Registrar can nominate any person as a member of the committee even if he is is not a member of the society. K.V. Shankaran and K. Ranganathan, for Petitioner. The Government Pleader for Respondents 1 and 2. G. Venkatesan and N. Rajasekaran, for 3rd Respondent. The Judgment of the Court was delivered by Veeraswami, C.J.- The petition comes before us because Palaniswamy, J., found that he could not agree with Kailasam, J., in Sami Rao v. The Registrar of Co-operative Societies1, on the effect of the. second proviso to section 27 (1) of the Tamil Nadu Co-operative Societies Act, 1953, read with the relative bye-laws. The petitioner claims to be the promoter of Tamil Nadu Road Transport Financing Co-operative Society Ltd., Madras. He seeks to quash the order of the Joint Registrar of Co-operative Societies, dated 14th March, 1970 by which he nominated, eight persons as members of a committee of management for the society. The society was promoted by the petitioner and nine others. Out of the eight persons, five are non-members, of whom one is the Deputy Registrar, for whose inclusion there is no objection. The Joint Registrar in nominating the members of the committee acted in exercise of his power under the second proviso to section 27 (1) of the Act read with bye-law 20 of the bye-laws of the society. Section 27 (1) relates to the appointment of committees. The general body of a registered society shall constitute a committee in accordance with the bye-laws and entrust the management of the affairs of the registered society to such committee.
Section 27 (1) relates to the appointment of committees. The general body of a registered society shall constitute a committee in accordance with the bye-laws and entrust the management of the affairs of the registered society to such committee. By the first proviso power is given to those persons who have signed the application to register the society to appoint a committee to conduct the affairs for a period of three months from the date of registration of the society, or for such further period as the Registrar may consider necessary. The committee so appointed shall however cease to function as soon as a committee has been constituted in accordance with the bye-laws. Then comes the second proviso which has provided further that where the bye-laws so provide, the Government or the Registrar may nominate all or any of the members of the committee for such period as may be specified in the by-laws. Bye-law 20 relates to the constitution of the committee and this bye-law contains the transitory bye-law which is: “ Notwithstanding any (sic) contained in these by-laws, the first set of the members of the Committee including the President and Vice-President may be nominated by the Registrar for a period of 3 years, which if found necessary may be extended to a further period, of three years at the discretion of the Registrar.. Such nomination may at the discretion of the Registrar, be made for a period of one year or such shorter period as may be found necessary at a time”. The contention of the petitioner is that the said proviso as also the transitory bye-law read with the general tenor and scheme of the entire Act would indicate that nomination to the committee of non-members is not contemplated. It was on this question Palaniswami, J., and Kailasam. J., have differed. 10. A registered society is defined to mean a society registered or deemed to be registered under the Act. Section 4 (1) indicates that a society may be registered with the co-operative principles-kept in view and it contemplates members forming the society.
It was on this question Palaniswami, J., and Kailasam. J., have differed. 10. A registered society is defined to mean a society registered or deemed to be registered under the Act. Section 4 (1) indicates that a society may be registered with the co-operative principles-kept in view and it contemplates members forming the society. A committee is defined to mean the governing body of a registered society to whom the management of its affairs is entrusted and a member means a person joining in the application for the registration of a society and a person admitted to membership-after registration in accordance with the Act, the rules and the bye-laws and the expression includes a nominal and an associate member. The bye-laws of the society too contemplate election of the members of the committee. Section 28 (1) speaks of disqualifications for membership of committee. The first proviso to section 27 (1) relates to appointment and the second proviso provides for nomination. On a reading of these provisos and the the bye-law in a harmonious way, we are inclined to think that it is not the intention of the provisos that the power of nomination should be limited only to members. As a matter of fact, the proviso does not contain any words of limitation. Equally the transitory bye-law framed under bye-law 20, which we have set out above, is also not indicative that only members can be appointed to the committee. 11.It is vehemently contended for the petitioner that he being one of the signatories to the application for registration of the society, he would never have asked for forming the society if he had known that the transitory committee would be manned by non-members. This argument does not take us anywhere. What matters is not the intention of the petitioner, or what he would have done in certain circumstances. We are here concerned with the language of the second proviso to section 27 (1). The committee being purely of a transitory character and, therefore, could be formed at the initial stage of the formation of a society. It may be that in a given case, there may not be enough number of members out of whom a committee could be formed.
The committee being purely of a transitory character and, therefore, could be formed at the initial stage of the formation of a society. It may be that in a given case, there may not be enough number of members out of whom a committee could be formed. It may be for this reason, the second proviso to section 27 (1) and also the transtory bye-law aforesaid, do not specifically direct that the nomination to the transitory committee could only be from members of the society. 12. But this petition has been pending in this Court since 1970. A transitory committee is not expected to survive that long. As a result of stay granted by this Court, we are told that the committee never came into existence, or if it came into existence, it never operated. That being so, we think it would suffice if we direct that the committee nominated by the Registrar will not be allowed to function, but instead a committee will be brought into existence in accordance with the by-laws and the provisions of the Tamil Nadu Co-operative Societies Act. In bringing into existence a fresh committee of management, due notice should necessarily have to be taken of the fact that even at the time of the registration of the society, there were as many as 15o members, or even more, and the fact that the society is expected to function on the principles of co-operation, which include representation. Subject to these observations, the petition is dismissed. No costs.