Ajai Singh v. State of U. P — 1979 DIGILAW 1373 (ALL)

JUDGMENT K.C. Agarwal, J. - This is a petition under Article 226 of the Constitution for a writ of mandamus directing the respondents not to hold the getting for the consideration of no confidence motion fixed for the 9th of June, 1979. A writ of certiorari has also been claimed for quashing the order of the District Magistrate, dated May 7, 1979, permitting the members of the Committee of Management of Zila Sahkari Bank Limited, Basti (hereinafter referred to as `the Bank') to move the resolution. 2. The brief facts are these. Zila Sahkari Bank Limited, Basti, is a Central Society registered under U. P. Co-operative Societies Act, 1965 (hereinafter called the Act), and the Rules framed thereunder (briefly stated as the Rules'). The Management of the Bank vests in a committee known as the Committee of Management, constituted under Section 29 of the Act- Section 29 provides for the constitution of the Committee of Management. It lays down that a Committee of Management shall be constituted in accordance with tax Act, the Rules and the By-laws, which shall exercise such powers and perform such duties as may be conferred by the Act. Section 30 lays down that every co-operative society shall have a Chairman elected, nominated or appointed in accordance with the provisions of the Act, the Rules and the By-laws. Ajai Singh, the petitioner, was elected as the Chairman of the Bank in September, 1978. 3. On May 7, 1979, some of the members of the Committee of Management moved a resolution expressing want of confidence in the petitioner elected as Chairman of the Bank. The resolution was addressed to the District Magistrate of the district, and since twelve months had not elapsed after the election of the petitioner as Chairman, an application for prior permission of the District Magistrate was also moved. The resolution was accompanied with an affidavit. On May 7, 1979, itself the District Magistrate granted the prior approval of moving of the resolution and also fixed time, date and place for holding the meeting for the purpose of consideration of the proposed no confidence motion. As was required by Rule 458 of the Rules, the meeting was directed to take place on July 9, 1979. which would have given 35 days notice to all concerned. As was required by Rule 458 of the Rules, the meeting was directed to take place on July 9, 1979. which would have given 35 days notice to all concerned. Before the resolution could come up for consideration before the Committee of Management of the Bank, the petitioner moved the present writ petition in this Court and sought the reliefs stated above, 4. Four grounds were pressed before us. The first was that the period of twelve months having not elapsed after the election of the petitioner as Chairman, the resolution presented to the District Magistrate was in contravention of the provisions of the Rules, and as such, the District Magistrate had no authority to fix a date for consideration of the same. The second ; argument was that since the permission to move the resolution was granted by the District Magistrate without giving a hearing to the petitioner. The impugned order granted prior permission was invalid. The third submission was that Rule 455 (b) of the Rules which confers power on the District Magistrate to grant permission for moving the resolution, unguided and having not laid down the guidelines, was ultra vires Article 14 of the Constitution. The forth submission was that the Rules incorporated in Part VII of the Rules framed under the Act dealing with the removal of Chairman by vote of no confidence being in contravention of the provisions of the Act, was void. 5. The question that arises for determination before us is whether the District Magistrate had power to permit the moving of the resolution of no confidence against the petitioner before the expiry of twelve months. In this connection, a reference may be made to Rule 455(b). The relevant portion of (his Rule reads as under :- "No resolution expressing want of confidence in any person elected as Chairman or Vice-Chairman of a Co-operative Society shall - (a) (b) where twelve months had not elapsed after the expiry of his election as Chairman or Vice-Chairman, as the case may be, be moved, except with the prior permission of the authority specified in Rule 465." 6. The normal rule is that a motion of no confidence cannot moved against a Chairman before the expiry of twelve months of his election. The rule, however, confers power on the District Magistrate to waive the requirement of moving the resolution before the expiry of this period. The normal rule is that a motion of no confidence cannot moved against a Chairman before the expiry of twelve months of his election. The rule, however, confers power on the District Magistrate to waive the requirement of moving the resolution before the expiry of this period. For this purpose, the rule provides that prior permission of the District Magistrate would be required to be taken. While giving prior permission for moving a resolution, it is although not provided but is implied that the District Magistrate will satisfy himself about the expediency of the matter the affidavit which is required to be filed along with the motion of no confidence, under Rule 457 of the Rules. In this connection, he can also get satisfied that the resolution is in order and on such a satisfaction he can grant permission to move the resolution. The giving of permission does not require any right of hearing to be granted to the person against whom the resolution is proposed, the obvious reason being that while granting permission the District Magistrate is not determining any question affecting the parties. Where there is no power of adjudication in the sense of passing an order which will not by itself adversely affect any one, no useful) purpose would be served insisting upon the right of hearing to be granted. The District Magistrate has no authority to make any order which may affect the rights of a person against whom motion of no confidence is proposed to be moved. He only, directs the motion to be placed before the body entitled to consider it. The power conferred by Rule 455 is purely discretionary, it does not require consideration of evidence or other facts. Hence, the procedural safeguard of hearing is not required. 7. The next argument made by the learned counsel for the petitioner that the order of the District Magistrate permitting the moving of no confidence motion twelve months was not supported by the rule, has no merit. We have already stated above that Rule 455 (b) conferred power on the District Magistrate. Under this rule, the District Magistrate could accord prior permission and permit the moving of the resolution even before the expiry of the period of twelve months. 8. We have already stated above that Rule 455 (b) conferred power on the District Magistrate. Under this rule, the District Magistrate could accord prior permission and permit the moving of the resolution even before the expiry of the period of twelve months. 8. The third submission of the petitioner's counsel was that in the absence of any guideline, the power of granting prior permission to move the resolution is capable of being discriminately used and as such, clause (b) of Rule 455 in so far as it permits the moving of a resolution before the expiry of twelve months, confers arbitrary power, and therefore, contravenes Article 14 of the constitution. The submission made has no substance. There is sufficient indication in the various provisions of the laying down the principles and policy to give effect to which power conferred by clause (b) of Rule 455 could be exercised by the District Magistrate. 9. One of the most important principles of co-operative societies is that admission of co-operative societies is to be catbird on democratically. Cooperative societies is a democratise body. A democratise body can function only so long as it retains confidence of those by whom the persons administering the body had been elected. A co-operative society is managed or administrated by a Committee of Management. Section 29 deals with the constitution of Committee of Management. Under Section 30, a Chairman is required to be elected by the members of the Committee of Management in accordance with the procedure prescribed in the Rules. The Chairman represents the majority and can function only so long as the majority has confidence in him. If the majority loses confidence, it would be idle to think: that the Committee of Management founded for running a co-operative society can function. The purpose of Rule 455 (b) is to confer power on the District Magistrate to permit the moving of a resolution of no confidence if he finds a situation has arisen that the members of the Committee of Management be permitted to move the resolution against the Chairman. It, therefore, appears to us that the argument of having conferred unguided and arbitrary power on the District Magistrate has no legs to stand. 10. There is yet another thing which has to be borne in mind while dealing with this question. It, therefore, appears to us that the argument of having conferred unguided and arbitrary power on the District Magistrate has no legs to stand. 10. There is yet another thing which has to be borne in mind while dealing with this question. The same is that the power of granting prior permission has been conferred by Rule 465 on a District Magistrate. The District Magistrate is a high authority in the hierarchy of the State officials. Hence, the charge of having conferred power capable of exercising arbitrarily, cannot be accepted. A District Magistrate is likely to act within the scope of his powers on relevant materials. Counsel contended that there might be cases in which the power is exercised in such an obviously arbitrary or perverse fashions without regard to the actual and undeniable facts, or, in other words, so unreasonably as to leave no room for doubt that there has been an excess of power. Such a case even if was supposed to happen, would not render Rule 455 (b) invalid. What may be invalid is the order of the District Magistrate. On that basis it is not possible to hold that the conferment of power is bad on account of the provision contained in Article 14 of the Constitution. 11. In our view, the nature of the power for considering the validity of Rule 455 (b) is also material We have already noted above that at the stage of dealing with an application for permission under Rule 455 (b), the District Magistrate does not decide any right. He is expected to grant prior permission on the satisfaction that the facts of a particular case demand permission to be granted. The satisfaction is a subjective one and cannot be tested with reference to any objective test. There may be wide range of situations which may arise. As such, no guidelines can exhaustively be laid down for the guidance of the District Magistrate. The decision of the District Magistrate would not &be one which can be based on what the Supreme Court of United States has described. "Judicially discoverable and manageable standards ." It would be a judgment for which guidance could not be provided by laying down the preconditions to be observed before giving prior permission. Accordingly this submission also has no merit. 12. "Judicially discoverable and manageable standards ." It would be a judgment for which guidance could not be provided by laying down the preconditions to be observed before giving prior permission. Accordingly this submission also has no merit. 12. The next submission of the learned counsel was about the validity of the rules contained in Part VII. Part VII contains rules dealing with the removal of Chairman or Vice-Chairman by motion of no confidence. It lays down a well knit and complete machinery for the purpose of moving a motion of no confidence. Counsel's argument was that these rules travel beyond the permissible limits of the Act and, as such, they were invalid. 13. For dealing with the argument of the learned counsel, reference may be made to Section 130. Sub-section (1) of Section 130 empowers the State Government to make rules to carry cut the purposes of the Act. Sub-section (2) of the said section enumerates various matters in respect of which rule can be framed. One of the matters mentioned in sub-section (2) is in clause (v), it would be found that the State Government is empowered to make rules with regard to the constitution of the Committee of Management. Constitution obviously means the form in which a society has to be organised. In other words, it relates to the matters and the rules in accordance with which a cooperative society is to be governed. Reference to Section 29 has already been made above which deals with the constitution. Reading these three provisions together, it appear to us that Rules 455 to 465 have been framed laying down the manner in accordance with which a co-operative society has to function. 14. Counsel for the petitioner referred to Section 27 of the Act and pointed out that the said section be exhaustive on the point of removal, expulsion of a member of a society, the rules of Part VII dealing with removal of a Chairman or Vice-Chairman by no confidence motion or directly hit by Section 27. He contended that Section 27 is exhaustive on the question of removal of a member and. as such, the framing of the rules of removal by passing a motion of no confidence, is in contravention of Section 27. On the same ground the argument made with respect to Section 38 of the Act is also liable to be repelled. 15. He contended that Section 27 is exhaustive on the question of removal of a member and. as such, the framing of the rules of removal by passing a motion of no confidence, is in contravention of Section 27. On the same ground the argument made with respect to Section 38 of the Act is also liable to be repelled. 15. The submission made has no merit. Section 27 deals with a situation altogether different from the one which has been contemplated by Rules 455 to 465. Section 27 confers power of removal of a person from membership of a society, whereas Rules 465 to 465 do not at all concern themselves with the removal of a person from membership. These rules only enable the Directors constituting the Committee of Management to move a motion of no confidence. If a resolution ultimately succeeds, that may result in the removal of the Chairman, but this removal would not be from the membership but only from the officer of the Chairmanship. Thus the object and purpose of Section 27 is altogether different from that which has been intended to be achieved by Rule 455: 16. Another ground on which the framing of the rules can be justified is that they have been made for carrying out the purposes of the Act, which is permissible under Section 130 (1). Recently, the scope of the expression "For carrying out the purpose of the Act", came up for decision before a Full Bench of this Court in Dr. Shamshuddin v. Dr. (Smt.) Zaibumissa, 1979(5) Allahabad Law Reports, page 327 at page 333]. Relevant portion of the said judgment may be extracted below : "The general power to make rules for carrying out the purpose of the Act, however, cannot be used to widen the scope or the purpose of the Act and to add new and different means for carrying out or to depart from and vary its term. See Shanhan v. Spot This case has been approved by the "Privy Counsel in Utah Constructions v. Pataky. Subject to the above limitation, the power to make rule is liberally construed and the opinion of the rule-making authority that a rule made by it is to carry out the purposes of the Act is generally accepted. See Shanhan v. Spot This case has been approved by the "Privy Counsel in Utah Constructions v. Pataky. Subject to the above limitation, the power to make rule is liberally construed and the opinion of the rule-making authority that a rule made by it is to carry out the purposes of the Act is generally accepted. A rule made by an authority in exercise of its powers for carrying out the purposes of the Act can be declared invalid only on the following grounds (1) Bad faith, i. e., the powers entrusted for one purpose has been deliberately used with the design of achieving another. (2) That It shows on its face a misconstruction of the enabling Act or a failure to comply with the conditions which that Act has prescribed for the exercise of powers. (3) That it is not capable of being related to any of the purposes mentioned in the Act. This proposition can be called . out from the principles laid down in Attorney General for Chanda v. Hallet and Carry Ltd. ; Rose Chunts v. Papado Pouldos and Meeldoney v. Forde ." 17. The purpose of the Act, as already said above, is to develop cooperative movement in various directions on democratic lines. Section .7 of the Act deals with the registration of co-operative societies. Section 9 provides that the registration of a society shall render it a body corporate by the name under which it is registered, having perpetual succession and its power to hold property and to do all things necessary for the purpose for which it was constituted. The Management of a co-operative society is to be done by a Committee of Management which is constituted of the directors. 18. The question that arises is about the removal of directors or officers elected in the Committee of Management It appears that in a case of election of a person as Chairman, the power to remove has been accepted. In American jurisprudence Volume 14, page 547. paragraph 1106, the law relating to removal of directors or officers has been laid down in the following words "Stock holders, who are empowered to elect directors, have the inherent powers to remove, them from cause, subject requirement of service of the specific charges, adequate notice and full opportunity or meeting the accusations. In American jurisprudence Volume 14, page 547. paragraph 1106, the law relating to removal of directors or officers has been laid down in the following words "Stock holders, who are empowered to elect directors, have the inherent powers to remove, them from cause, subject requirement of service of the specific charges, adequate notice and full opportunity or meeting the accusations. Such inherent power to removal for cause exists notwithstanding a contractual agreement of the stock holders to continue a particular individual in the directorate " 19. Halsbury's laws of England, Fourth Edition, Volume 9, paragraph 1263, also deals with this question. The law, as stated by it is : "The power to disfranchise is incident to a corporator at large,'. 20. Distinguishing a motion of no confidence from disfranchise, Halsbury has stated in paragraph 1266 of the same volume that a power of a motion is incident to a corporator, unless it has been taken away by State (See Booth v. Arnold, (1965) 1 Q, B. page 571 at page 578). 21. It may be true that there is a distinction between disfranchisement and a motion of no confidence. But, for our purposes, it would suffice to mention that according to Halsbury even a power of a motion is incident to corporation. That obviously means that it is inherent in the system itself. Hence, no specific provision was required to be made in the Act, and when the Act dealt with the constitution of the Committee of Management, the State Government could make rules to effectuate the said object by laying down the matter in accordance with which a motion of no confidence could be passed. Making of the rules on motion of no confidence providing for the manner and method in accordance with which it had to be dealt with is only to give effect to the provision dealing with the constitution of the Committee of Management in the Act. The object of framing the motion of no confidence is that a Chairman should be permitted to function only so long as he enjoys confidence of the majority which he is representing. If a Chairman is permitted to function as such irrespective of the fact that he has lost confidence by majority, that would be permitting him to work against all canons of democratic principles. If a Chairman is permitted to function as such irrespective of the fact that he has lost confidence by majority, that would be permitting him to work against all canons of democratic principles. Dealing with the provisions of Article 356 of the Constitution, which empowers the President to dissolve a legislature assembly, Bhagwati J., laid down : "The consent of the people is the basis of democratic form of Government and when that is withdrawn so entirely and unequivocally as to leave no room for doubt about the intensity of public feeling against the ruling party, the moral authority of the Government would be seriously undermined and a situation may arise where the people may cease to give respect and obedience to governmental authority and even conflict and confrontation may develop between the Government and the people leading to collapse of administration (State of Rajasthan v. Union of India, AIR 1977 SC 1361 , paragraph 147)." 22. These are the consequences which cannot be said to be unlikely to arise if the power of moving a motion of no confidence against a Chairman not conceded to in favour of the directors constituting the Committee of Management. The Directors represent the members of the Society and, therefore. in order to inspire confidence in the system itself, it is necessary that the rule relating to no confidence being only an incident to the main purpose of running a co-operative society on democratic lines may be accepted. 23. For these reasons, the writ petition fails and is dismissed With costs. The stay order is discharged.