Research › Browse › Judgment

Karnataka High Court · body

1976 DIGILAW 166 (KAR)

MALLIKARJUNA KALLAYYA SWAMI v. STATE OF KARNATAKA

1976-10-11

D.S.TEWATIA, SRINIVASA IYENGAR

body1976
( 1 ) THE short question that falls for determination in this writ petition is as to whether the State Govt-Respt-1 was competent to replace the petitioner by respondent-2 on the Board of Directors of respo,ndent-3 Society, acting under Bye-law 21a of the Society. ( 2 ) IN order to appreciate the import of the question aforesaid, a few relevant facts call for notice. 3rd respondent-Society is a Co-operative Society known as 'doodaganga krishna Sahakari Sakkare Karkhane, Niyamita'. It runs a sugar factory tinder the very name. The State Govt was empowered under Bye-law 21a to nominate the first Board of Directors of the said 3rd respondent-Society. The State Govt acting under the aforesaid Bye-law, nominated the Board of Directors of the said respondent-society which included the petitioner, incidentally, the petitioner at the relevant time happened to be the director of DCC Bank, Belgaum, whose representative had been envisaged by bye-law 21 (e) to be one of the Directors on the Board of Directors of the 3rd respondent-society. ( 3 ) BYE-LAW 21a which is in the following terms;"notwithstanding anything contained in these Bye-laws, the first board of Directors including the Chairman and the Managing Director shall be nominated by the State Govt for a period of five years and the term of such nominated Board shall be extended upto the holding of the next Annual Genera] Body Meeting (i. e. , for the year 1975-76) Any interim vacancy occurring in the nominated Board shall be filled in by the State Government. ",envisaged the nominated Board to function for a period of five years and further envisaged the extension of the said term till the time of holding of the next Annual General Body Meeting (i. e. , for the year 1075-76 ). The term of the nominated Board was io expire on 12-3-1976, the same having been nominated on 12-3-1971, but the Govt by Notification Ext. E dated 12-3-1976, extended the term of the said Board till the holding of the next annual General Body Meeting (for the year 1975-76 ). The State Govt by a further Notification Ext. 'f', which has been impugned in the present writ petition, nominated respondent-2 on the Board of respondent-3-society as representative of the Central Financing Agency i. e. , DCC Bank. Belgaum, in place of the petitioner. The said Notification is in the following terms :"no. RDC 31 COS 76. The State Govt by a further Notification Ext. 'f', which has been impugned in the present writ petition, nominated respondent-2 on the Board of respondent-3-society as representative of the Central Financing Agency i. e. , DCC Bank. Belgaum, in place of the petitioner. The said Notification is in the following terms :"no. RDC 31 COS 76. Karnataka Govt Secretariat, vidhana Soudha, Bangalore, notification Dt. 24th June 1976. In exercise of the powers conferred by Bye-law 21a of the Bye-laws of Sri Doodhagangakrishna SSK, Niyamit, Chikodi, the Govt of karnataka is pleased to nominate Sri Somashekhar Rudrappa Kothiwale, director, Belgaum, DCC Bank Ltd, Belgaum, as Director on the Board of Directors of Sri Doodhagangakrishna SSK, Niyamit, Chikpdi, in place of Sri Mallikarjun Kallayyaswanu Kavatagimath, Chikodi. as representative of the Central Financing Agency (under Eye-law 21 (1) (e) until further orders. By Order and in the name of the Governor of Karnataka, sd/. M. V. Lakshminarasimhaiah, under Secy to Govt, Rural Devt and Co-opn, Dept," ( 4 ) IT has been urged on behalf of the petitioner that the State Govt, by virtue of power vesting in it under Bye-law 21 A, had no power to reconstitute the nominated Board by replacing the existing nominated member by a newly nominated member before the expiry of the term of the nominated Board which, in this case by reason of Notification Ext. 'b' dt. 12-3-76, stood extended till the holding of the next Annual General Body Meeting for the year 1975-76. ( 5 ) WHEREAS on behalf cf respondents 1 and 2 it has been contended that since Bye-law 21 (1) (e) envisaged one representative of Financing Agency i. e. the DCC Bank, Belgaum, on the Board of the 3rd respondent-society, and the petitioner initially had been nominated by the Govt on the recommendation of the said bank and the said bank having now recommended respondent 2, so the petitioner lost his claim to represent the said Bank on the Board of third respondent-society and therefore, the Govt rightly replaced him on the said Board by respondent 2. ( 6 ) PERUSAL of Bye-law 21a leaves no scope for any doubt that the state Govt while acting under the said Bye-law, was not confined to nominate on the Board of the 3rd respondent a person desired by the Bank. ( 6 ) PERUSAL of Bye-law 21a leaves no scope for any doubt that the state Govt while acting under the said Bye-law, was not confined to nominate on the Board of the 3rd respondent a person desired by the Bank. Even at the stage when the petitioner was first nominated by the State govt as the Director, it was open to the Govt to disregard the recommendation of the Bank recommending the petitioner to be nominated as the Director on the Board of Directors of third respondent-society and appoint as such a person other than him. If that be the true position, then any recommendation of the Bank desiring a change of their representative on the said Board, could not carry a greater weight or authority. More so, for the reason that by virtue of the nomination, the petitioner became entitled to continue on the said Board for the period envisaged under bye-law 21a. ( 7 ) BYE-LAW 21a authorises the State Govt to nominate only the first board of Directors of the 3rd respondent-society and any change in the composition of the said Board which is not occasioned by an interim vacancy occurring on the said Board, would tentamount to a nomination of the second Board of Directors, so the promulgation of Notification Ext. 'f' which has such an effect, would be clearly beyond the powers of the State Govt. The above view receives support from a Division Bench decision of this court in M. Lingappa v. Joint Director of Industries and Commerce, (1967) 1 Myslj, 109. In that case, the Bye-law of the Co-operative Bank had provided that the first Board of Directors shall be nominated by the Joint Registrar and shall hold office for a period of two years, and the period may, at the discretion of the Joint Registrar, be extended for a further period of two years. ( 8 ) THE first Board of Directors was constituted by the Joint Registrar by nomination on 25th Sepr, 1964, the said order also provided that the board of Directors would function for a period of one year or until further orders. On 27th April, 1965, he passed another order and directed the continuance of the Board until further orders. On 18th May, 1966, he reconstituted the Board of Directors which, in composition, was different from the one that came into existence by the order dt. On 27th April, 1965, he passed another order and directed the continuance of the Board until further orders. On 18th May, 1966, he reconstituted the Board of Directors which, in composition, was different from the one that came into existence by the order dt. 25th Sepr, 1964. In the new board some existing members were substituted by new members. The stand taken on behalf of the Joint Registrar was that by his impugned order dt. 18th May, 1966, he merely extended the term of the first Board of directors nominated by him by his order dt. 25th Sepr, 1964. It was held that the power vesting in the Joint Registrar by virtue of the second part of Bye-law 22 was merely to continue the Board of Management which was brought into being in the first instance by nomination and he had no power to alter the composition of the Board. And it was ordered that the board as originally constituted would continue to function and not the board which came into existence by virtue of the order dt. 18th May, 1966. The facts of the case in hand are almost identical with the facts of the case referred to supra and the ratio of that decision clearly covers the present case. ( 9 ) ACCORDINGLY, we hold that the notification dt. 24-6-1976 (Ext. F) nominating respondent 2 on the Board of Directors of the 3rd respondent and replacing the petitioner is illegal and beyond the powers of the State government. ( 10 ) IN the result, the writ petition is allowed. The notification dated 24-6-1976 (Ext. F) nominating respondent 2 as Director on the Board of directors of the 3rd respondent-society, is quashed. The petitioner shall have his costs from respondent 1. --- *** --- .