Vijayan v. Deputy Registrar Of Co Operative Societies Trichur
1975-07-08
T.CHANDRASEKHARA MENON
body1975
DigiLaw.ai
JUDGMENT Chandrasekhara Menon, J. 1. The petitioner who claims that he continues to be President of Kuzhur Service Co-operative Societies Limited, No. 540 (hereinafter referred to as society) is challenging the validity of Ext. P-8 order by which the Deputy Registrar of Co-operative Societies, Trichur”1st respondent in the O.P. informed the Secretary of the Trichur District Co-operative Bank that the Board of Directors of the society has passed a non-confidence motion against him, that he is no longer the President of the society and also that the Board has duly elected Sri Aravindakshan, additional second respondent as President of the society. Ext. P-8 further mentions that the election of the new President is legally valid. He also seeks a writ of mandamus for directing the respondents to dispose of the application which he had filed as President of the society that Sri A. P. Kurien, additional 3rd respondent, who is a Government nominee in the Board of Directors is a defaulter to the society and under rule 44 he cannot be a member of the Board of Directors, and therefore for passing appropriate orders on the same. The petitioner takes up the position that no non-confidence motion has been passed against him in a legally constituted meeting of the Board nor has Sri Aravindakshan been elected in any such meeting. The facts of the case are as follows:” The petitioner had intimated the Deputy Registrar of Co-operative Societies, Trichur on 11th December 1974 that Sri A. P. Kurien is a defaulter to the society and hence incurred the disqualification to be a member of the Board of Directors. Sri Kurien had been nominated as member of the Board by the Government on 7th November 1974. As the Deputy Registrar did not take any action on Ext. P-2 the petitioner is alleged to have sent again another communication marked as Ext. P-3 in the case, wherein he requested for a decision in Kurien' matter. The meeting of the Board of Directors was called on 3rd February 1975 as per Ext. P-5. Agenda of the meeting was consideration of the letter by five members of the Director Board expressing non-confidence against the President.
P-3 in the case, wherein he requested for a decision in Kurien' matter. The meeting of the Board of Directors was called on 3rd February 1975 as per Ext. P-5. Agenda of the meeting was consideration of the letter by five members of the Director Board expressing non-confidence against the President. The Secretary had issued a registered notice to Sri Kurien intimating him the fact of automatic cancellation of his membership of the Board of Directors as per rules 37 and 44 of the Kerala Co-operative Societies Rules, 1969 (hereinafter referred to as the Rules) and that he is not competent to attend the meeting of the Board of Directors proposed to be held on 3rd February 1975. He had been asked not to be present at the meeting. Ext. P-6 is the copy of that. According to the petitioner on 3rd February 1975 all the members of the Board assembled exactly at 11-30 a.m. with the petitioner in the Chair. Sri A. P. Kurien also entered the meeting place and took a seat among other Directors, which was objected to by the President who asked him, to leave the hall. According to the petitioner, Sri Kurien disobeyed the request of the President and chaos and confusion resulted. Therefore, it is said the President unable to conduct the meeting disbursed the meeting which was recorded in the minutes book of the society; Ext. P-7 is the copy of the relevant minutes. It is seen to be signed by only 3 members including the petitioner. Subsequently it would appear a meeting was held without the petitioner, wherein Sri Aravindakshan is said to have been elected. Consequent on this Ext. P-8 communication was sent by the Deputy Registrar. The contention taken up by the petitioner in the O.P. are that as per rule 44 (4) of the rules and as per section 36 (a) 6 of the bye-laws of the society Sri A. P. Kurien is a disqualified person to be a member of the Director Board from 28th February 1974. As per rule 37 of the Rules if a person is nominated by the Registrar as a member of the Board of Directors of a society his membership in the Board of Directors will automatically cease from the date on which he becomes disqualified. This fact has been brought to the notice of the Deputy Registrar as per Exts.P-2 and P-3.
This fact has been brought to the notice of the Deputy Registrar as per Exts.P-2 and P-3. The Deputy Registrar failed in his duty in not taking any action. It is, therefore, contended by the petitioner that Kurien had no right to move a non-confidence motion against the President and he had no right to attend the meeting held on 3rd February 1975 as per Ext. P-5 notice. It is also stated that the meeting of the Board of Directors held on 3rd February 1975 was disbursed without taking any decision. On these grounds the validity of the order Ext. P-8 is attacked. Originally the Deputy Registrar of Co-operative Societies, Trichur alone was a party to the proceedings. This court had issued an order of stay in C.M.P. 2865/75 wherein the court had put in suspense Ext. P-8 till the disposal of the O.P. Additional respondents 2 to 6, who are members of the Director Board including the said Kurien filed an application for impleading themselves in the O.P. allowed the application for impleading stating that they are necessary parties to the O.P. Subsequently C.M.P. 4779/75 was filed for vacating the stay. Then I directed the Deputy Registrar of Co-operative Societies, Trichur to conduct an enquiry into the question with notice to the members of the Board of Directors whether the petitioner has been removed from Presidentship of the society and Sri Aravindakshan elected the new President. I also directed therein that on the basis of the enquiry the Deputy Registrar can give appropriate directions in the matter for the working of the society. The enquiry was to be conducted within a period of ten days so that there may not be a stalemate in the working of the society. The Deputy Registrar seems to have conducted an enquiry consequent on this and according to him the resolution expressing non-confidence in the petitioner and removing him from the Presidentship has been passed by a majority of the members of the Board (5 out of 9) on 3rd February 1975 and Sri Aravindakshan elected new President in his place. He has declared that Sri Aravindakshan is the president and that the petitioner has ceased to be the President. In an affidavit filed by the 5th respondent in support of the petition filed by him to vacate the stay, the petitioner averments have been denied.
He has declared that Sri Aravindakshan is the president and that the petitioner has ceased to be the President. In an affidavit filed by the 5th respondent in support of the petition filed by him to vacate the stay, the petitioner averments have been denied. Five members of the Board moved a non-confidence motion against the President, the petitioner and a meeting was convened for the purpose of considering the resolution on 3rd February 1975. At the meeting all the members were present. Apart from the members of the Board, representatives of the Trichur District Co-operative Bank Mr. Balakrishna Menon and the Bank Inspector as well as the Co-operative Inspector Sri Ramankutty Menon were present at the meeting to watch the proceedings. The District Co-operative Bank has large interest in the proper functioning of the society because it has advanced huge amounts to the society. The President, it is alleged, taking the signatures of three members left the meeting abruptly taking the Minutes Book with him knowing that the non-confidence motion would be carried. It is further stated in the said affidavit that since the President has no power to stop or adjourn the meeting, the remaining members continued the meeting electing the 5th respondent to be the Chairman of the meeting. Non-confidence motion was passed against the President, the petitioner. In the meeting Sri Aravindakshan was then duly elected President. The result of the meeting was reported to the Deputy Registrar by Secretary of the Society and the Deputy Registrar by his order G. 1812/75 dated 14th February 1975 approved the proceedings and held the election to be valid. After hearing counsel on both sides, I think this is a matter which calls for interference by this court in its extraordinary jurisdiction under Article 226. On 11th December, 1974 the President of the society had issued a communication to the Deputy Registrar of Co-operative Societies, the 1st respondent wherein it was pointed out that Sri A. P. Kurien is a defaulter to the society and he cannot continue as a member of the Director Board. Again by his letter of 18th December, the 1st respondent was requested by the petitioner to take a decision on the question of Kurien right to continue in the Board.
Again by his letter of 18th December, the 1st respondent was requested by the petitioner to take a decision on the question of Kurien right to continue in the Board. Under rule 44 of the Rules no member of the society shall be eligible for being elected or appointed as a member of the committee of the society if he is in default to the society or to any other society in respect of any loan or loans taken by him in which he has stood surety for such period, as is prescribed in the bye-laws of the society or in any case for a period exceeding three months or is a defaulter to the society or to any other society. A member of the committee shall also cease to hold office if he becomes so disqualified. If any person is or becomes disqualified to be a member of the committee, the Registrar may on his own motion or on a representation made to him by any member of the society or by its Financing Bank by an order in writing declares that he shall cease to be a member of the committee of the society concerned from the date of such disqualification. Before passing the order, the Registrar has to hear the person against whom the action is proposed. There cannot be any doubt that the Deputy Registrar failed in his statutory duty in not deciding the question of Sri Kurien alleged disqualification expeditiously, in any case before the non-confidence motion was taken up for consideration by the committee. There cannot be any unreasonable delay in these matters. In the circumstances it cannot but be said that there has been undue delay on the part of the Deputy Registrar. On his decision will depend whether Sri Kurien is entitled to be a co-mover of a non-confidence motion against the President or whether he could take part in the meeting. There is also some force in the argument of the petitioner that the meeting convened on 3rd February 1975 was only for consideration of the letter Ext. P-5. The non-confidence move was not the item on the agenda but only consideration of the letter forwarded by the five members proposing to move a non-confidence motion.
There is also some force in the argument of the petitioner that the meeting convened on 3rd February 1975 was only for consideration of the letter Ext. P-5. The non-confidence move was not the item on the agenda but only consideration of the letter forwarded by the five members proposing to move a non-confidence motion. In considering the letter certainly the question will crop up whether one of the signatories to the letter is a member of the Board or has ceased to be a member on account of default. The agenda of the meeting as per notice Ext. P-5, which is in Malayalam is as follows:” (MALAYALAM) Therefore the meeting was called not for consideration of non-confidence as such but only for deciding the further steps in pursuance of the letter given by the five members. A notice must state clearly the nature of any special business to be transacted in a meeting as no other business can be transacted in addition or otherwise, unless the notice refers to ordinary business which it is competent for the meeting to transact. The true test would appear to be the construction an absent member would put upon the notice, for the nature of the business may largely determine whether such member shall absent himself from the meeting or not. A notice must be definite”see pages 30 and 31 of Shackleton Law and Practice of Meetings 2nd Edn. The learned Author refers to a case Kaye v. Croydon Tramways Co., 1898-1 Ch. 358. There: "A company registered under the Companies Clauses Act called a meeting for the purpose of authorising the sale of its undertaking to another company, but nothing was said in the notice convening the meeting of the fact that compensation was to be paid to the directors of the selling company out of the proceeds of the sale. It was held that the notice did not conform to the requirements of the said Act (section 71), in that it did not specify the purpose for which the meeting was called, and for this reason an injunction was granted restraining the company from carrying the agreement into effect until it had been duly authorised by a meeting of the company properly convened for the purpose.
A good notice must fairly disclose the purpose for which the meeting is called, must be frank, open, and free from trickiness, and must be in language understood by ordinary people."� Therefore the motion of non-confidence could not have been taken up directly in the meeting on 3rd February 1975. Certainly Mr. Joseph, learned counsel for the respondents onwards is correct in stating that the Chairman of the meeting cannot adjourn a meeting without taking into account the sense of the meeting. A Chairman cannot adjourn a meeting at his own will and pleasure without the consent of the members unless the business for which it was convened has been concluded. If he should vacate the chair or adjourn the meeting regardless of the views of the majority, those remaining, even if a minority, can appoint a Chairman and conduct the business left unfinished by the former Chairman”see Catesby v. Burnett 1916-2 Ch.325. In that case a general meeting of a company was called for the transaction of ordinary business, but owing to considerable opposition among the members present the meeting was adjourned, the only item of business transacted being the appointment of a committee of five share holders to investigate the affairs of the company. At the adjourned meeting there was much hostility towards the Chairman (the defendant) who left the meeting when only the appointment of the auditors had been approved. Those remaining thereupon continued the business of the meeting and elected two directors in the places of those who should have retired. The proceedings, after the Chairman had left the meeting were in certain respects irregular, but in the events that had happened it was held that the two retiring directors, one of whom was the defendant, ceased to be directors, on the date of the adjournment, and that the appointment of the two new directors was valid. See also page 85 of Shackleton Law and Practice of Meetings 2nd Edn. But what could be continued in the meeting when the Chairman leaves could only be the conduct of the business left unfinished as per the agenda. There is no mention in the notice at all of election of new President. Therefore, the election of the new President was also irregular and illegal. In the circumstances I would set aside Ext.
But what could be continued in the meeting when the Chairman leaves could only be the conduct of the business left unfinished as per the agenda. There is no mention in the notice at all of election of new President. Therefore, the election of the new President was also irregular and illegal. In the circumstances I would set aside Ext. P-8 and make the following further directions:” A writ of mandamus would be issued to the 1st respondent to dispose of in accordance with law Ext. P-2 request of the petitioner within a period of two weeks from today. Immediately after the disposal of Ext. P-2 petition, the petitioner-president will direct the Secretary to convene a meeting of the Director Board giving due notice to all the members in accordance with the rules and bye-laws for considering the motion of non-confidence against him. It is, also declared that the election of the 2nd respondent as President of the Society in the meeting held on 3rd February 1975 is not legal. The O.P. is disposed of with the above directions, but I make no order as to costs.