T. S. BASETTAPPA v. TUMKUR TOWN VEERASAIVA CO-OP BANK
1980-09-09
N.R.KUDOOR
body1980
DigiLaw.ai
N. R. KUDOOR, J. ( 1 ) ON Preliminary Hearing the petitioner T. S. Baseitappa is a member of the Veerashaiva Co-operative Bank Ltd. , Tumkur (for short the 'bank' ). The activities of the Bank are carried on as per the provisions of the Karnataka Cooperative Societies Act 1959 (hereinafter referred to as the 'act') and the Rules and Bye-laws made thereunder. The management of the affairs of the Bank is entrusted to a Board of Direqtors consisting of 12 Directors as per Bye-Law 59. The election to the Board is held annually. Among the 12 Directors, there will be one President, one Vice president, one Secretary, one Joinit secretary and one Treasurer- The president is directly to be elected by the General Body as per Bye-Law 60 (a ). The remaining 11 Directors are also to, be elected at the same general Body Meeting. The Vice- president, the Secretary, the Joint secretary and the Treasurer are to be elected from the newely elected directors at a meeting of the Directors to be convened as per Bye-law 68. ( 2 ) THE calendar of events for the election of the Board of Directors was notified and the elecjtion was scheduled to be held on 26-10-1979 for the year 1979-80 for all the 12 seats. The petitioner was one of the contestants. The petitioner, having noticed that the election as per the calendar of events published was in contravention of bye- laws 59 and 60 (a), withdrew from the contest and did not participate in the election. Election was held as per the calendar of events on 26-10-1979 at which 12 directors were elected. The petitioner, being aggrieved by the election held on 26-10-1979, raised a dispute under S. 70 of the Act before the 3rd respondent - the Assistant registrar of Co-operative Societies, tumkur Sub-Division, Tumkur. The 3rd respondent, after giving due opportunity to the parties, passed an order da,ted 29-1-1980 declaring that the election of the 12 directors to the board of Management of the Bank held on 26-10-1979 was in conjtravention of bye-law 60 (a) read with Bye-law 59 and so set aside the election as per Annexure-B. As against the said order, respondents 1 and 2 namely the president and the Secretary of the bank preferred an appeal before the 4th respondent, the Karnataka appellate Tribunal. Bangalore.
Bangalore. The 4th respondent, afiqr hearing the parties, passed an order dated 30-6-80 (Annexure-A) allowing the appeal and setting aside the order of the 3rd respondent. The petitioner in this writ petition under Art. 226 of the constitution is challenging the validity and legality of the order passed by the 4th respondent. ( 3 ) THE only point urged by Shri S. Krishnaiah, learned counsel appearing for the petitioner is that the election of the Directors to the Board of management held on 26-10-1979 was in contravention of Bye-Law 60 (a) read with Bye-Law 59 and so it is invalid. in that view, he maintained that the order of the 3rd respondent was unquestionable whereas the appellate order of the 4th respondent was no|t, and liable to be quashed. ( 4 ) AS against this Shri C. R. Nembanna, learned counsel appearing for respondents 1 and 2 advanced two fold contentions in support of the correctness of the order of the 4th respondent. He maintained that the election to the Board of Directors held on 26-10-1979 was in accordance with the provisions of the Act, that, part of Bye-law 60 (a) providing for the direct election of the President by the members of the General Body is contrary to the express; provisions of the Act and the Rules framed thereunder and as such, it has no legal sanction and so invalid. In that view, he maintained that the election held on 26-10-1979 electing all the 12 directors by the General Body was in accordance with law. His second contention is that the petition is bad for non-joinder of the elected directors. ( 5 ) BEFORE considering the question arising for decision in this petition, it is necessary to read first the relevant provisions of the Act and the rules made thereunder. ( 6 ) "committee" as defined under s. 2 (b) of the Act, means the governing body of a co-operative society by whatever name called to which the management of the affairs of the society is entrusted. "officer" as defined under S. 2 (g) means the President, Vice President, chairman, Vice-Chairman, Secretary manager, Treasurer, Liquidator, administrator and includes a Member of a Committee empowered to exercise any power or perform any function in regard to.
"officer" as defined under S. 2 (g) means the President, Vice President, chairman, Vice-Chairman, Secretary manager, Treasurer, Liquidator, administrator and includes a Member of a Committee empowered to exercise any power or perform any function in regard to. the business of the co-operative society or any person empowered under the Rules or the bye-Laws to give directions in regard to the business of a co-operative society. S. 27 deals with the Annual General meeting and lays down that a general meeting shall be held once in a year within a period of three months alter the date fixed for making up its accounts for the year under the rules or bye-laws for the time being in force for the purposes stated in sub-clauses (a) to (d) which includes holding of election if any in the prescribed manner of the members of the Committee, other than nominated members unless the Registrar may by general or special order extend the period for holding such meeting by a period not exceding 6 months. S. 29a deals with the commencement of the term of office. Sub-sec. (1) provides as to when the term of office of the elected members of the Committee shall commence. Sub-sec. (2) lays down when the Committee shall be deemed to be duly constituted1. Sub-sec- (3) provides that the Committee deemed 'to be constituted under subsection (2) shall be competent to exercise all the powers and perform all the functions of the Commiittee of the co-operative society. Sub-section (4) which is very material for our purpose reads thus:"the Secretary of the co-operative society shall, within 15 days from the dajte of election, convene a meeting in the prescribed manner of all the members of the Committee (including nominated and ex-officio, membiers, if any) for the purpose of electing the President, the Vice-President, the Chairman, the Vice-Chairman and such other office bearers as are required to be elected under the bye-laws of the co-operative Society. "sub-Section (5) stipulates that the secretary shall forward to the registrar a copy ol the notice convening the meeting and also a copy of the proceedings of the meeting within 3 days from the date of the meeting. Sub-sec. (6) authorises the Registrar or any other person authorised by him to convene the meeting for the purpose specified in sub-section (4) if the secretary fails :to convene the meeting in accordance with that sub-section.
Sub-sec. (6) authorises the Registrar or any other person authorised by him to convene the meeting for the purpose specified in sub-section (4) if the secretary fails :to convene the meeting in accordance with that sub-section. S. 129 empowers the Sta;te Government to make rules to carry out the purposes of the Act. The Starte government framed the Kamataka co-operative Societies Rules, 1960 (hereinafter referred to as the 'rules;') in exercise of its powers under s. 129. Rule 5 deals with the subject matter of bye-laws. One of ithe matters to be provided for under the bye laws of a co-operative society as per clause (k) of sub-rule (1) of Rule 5 is the mode of appointment and removal of the Committee and other officers, the duties and powers of the Committee and such officers and their terms. Rule, 14 deals with the procedure for election of the members of the committee. Rule 14a which is the relevant rule for our purpose, reads thus:"the Secretary of a co-operative society shall, as soon as the results of the elections of the, Committee of management are declared or their names published in the notice Board of the co-operative society as required under sub-rule (15) of Rule 14, convene a meeting of all the members including nominated and and ex-officio members, if any, by giving a notice of seven days in writing under Registered Post acknowledgment Due to all the members specifying the daite which shall not be more than 15 days from the date of election and the time and place of the meeting of the committee of Management for the purpose specified in sub-section (4) of Section 29a," ( 7 ) THE Bank framed, its bye-laws at the General Body Meeting held on 14-10-1977 which was approved and registered by the Assistant Registrar of Co-operative) Societies, Tumkur, as per his order dated 11-7-1978 (here in after referred to as the "bye-laws" ). ( 8 ) BYE-LAW 59 lays down that the management of. the Bank shall be carried on by a Board consisting of 12 directors. Bye-law 60 (a) provides for the election of one President and the remaining 11 Directors by ballot on the basis of the majority of the voters casting their votes in their favour.
( 8 ) BYE-LAW 59 lays down that the management of. the Bank shall be carried on by a Board consisting of 12 directors. Bye-law 60 (a) provides for the election of one President and the remaining 11 Directors by ballot on the basis of the majority of the voters casting their votes in their favour. Bye-lav 68 provides for convening the meeting of the elected directors for the purpose of electing a Vicer Presidenit, a Secretary, a Joint- secretary and a Treasurer and it further stipulates that the management of the Bank should be carried on through the elected Secretary. ( 9 ) THERE is no dispute that 12 directors were elected by the General Body at its Annual General Meeting held on 26-10-1979. It is also not in dispute, that in that meeting, the President of the Bank wa,g not directly elected by the General Body as provided under bye-law 60 (a ). ( 10 ) THE question now for consideration will be whether the election of all the 12 directors without eleating a president as per Bye-law 60 (a) at the general body meeting held on 26-10-79 was valid in law. S. 27 deals with the Annual General meeting and one of the purposes of the meeting is to hold the election in the prescribed manner for electing the members of the Copimittee other than the nominated members. Sec. 29 provides for the nomination of the representatives of the Government on the committee. Sub-section (4) of S. 29a deals with the convening of a meeting in the prescribed, manner of all the members of the Committee including the nominated and ex-officio members, if any, for the purpose of electing the president, Vice-President, the Chairman, Vice-Chairman and such other office-bearers as are required to, be elected, under the Bye-laws of the co-operative Society- ( 11 ) FROM a bare look at the above provisions, it is very plain that the authority under the Act to elect the members of the Committee other than the nominated members is the annual General Body Meeting, to nominate the representatives of the government on the Committee is the state Government or any authority specified by the State Govt. in that behalf and the authority to elect the office-bearers is the meeting to be convened by the Secretary of ajl the members of the Committee including the nominated and ex-officio members, if any.
in that behalf and the authority to elect the office-bearers is the meeting to be convened by the Secretary of ajl the members of the Committee including the nominated and ex-officio members, if any. The procedure for election of the members of the Committee and of the office-bearers is provided under the rules. Rule 14 prescribes the procedure for election of the members of the Committee and Rule 14a deals with the convening of the meeting of the committee to elect the office-bearers. I see no provision either in the Act or in the Rules providing for the ejection of the President directly by the Annual general Meeting. On the other hand sub-section (4) of S. 29a specifically provides for the election of the officebearers by the members of the Committee; including the nominated and ex-officio members, if any, at a meeting of the Committee to be convened for the purpose in the prescribed manner as provided under Rule 14a. Where there is a specific provision either in the Act or in the Rules for the election of the office-bearers in a particular manner, it seeims to me that the co-operative society cannot formulate its bye-laws contrary to those provisions. ( 12 ) CLAUSE (k) of sub-rule (1) of rule 5 does not empower a co-operativt society to formulate its bye-laws to elect its office-bearers in any manner other than the one provided either under the Act or the Rules. Clause (k) enables the Society only to make bye-laws providing tor the mode of appointment and removal of the committee and other officers, the duties and powers of the Committee and such officers and their terms. I find it difficult to read into clause (k) that it would provide the source of power to the society to formulate its bye-laws prescribing the authority to appoint or elect either the members of the committee; or the other office-bearers contrary to the provisions of the Act which provides for both.
I find it difficult to read into clause (k) that it would provide the source of power to the society to formulate its bye-laws prescribing the authority to appoint or elect either the members of the committee; or the other office-bearers contrary to the provisions of the Act which provides for both. Clause (k) shall have to, be read in the light of the provisions of the Act as well as Rule 14 and 14a and if it is so read, it has allowed the cor operative society to formulate bye- laws prescribing the mode or method of appointment or election of the members to the Committee or other office bearers and not tq prescribe the authority or the forum to appoint or elect them. ( 13 ) BYE-LAW 60 (a) consists of two parts- (. 1) election of the President, and (2) election of the directors by ballot, by a majority, provided that the number of directors including the president shall not exceed the number mentioned in Bye-law 59. So; far as the election of the Directors are concerned, the provision contained in bye-law 60 (a) is in conformity with s. 27 of the Act which provides for the election of the members of the committee other than nominated members at the Annvial General meeting. As regards the election, of the President directly by the voters at the Annual General Meeting stipulated under Bye-law 60 (a), the same is directly in conflict with the provisions of sub-section (4) of S. 29a which provides a separate mode of election of the office-bearers including the President. Sub-section (4) stipulates for the convening of a meeting by the Secretary of the Society within 15 days from the date of election of the committee in the prescribed manner viz-, Rule 14a, of all the members, of the committee including the nominated and ex-officio members if any, for the purpose of electing the office-bearers including the President a,s required to be elected under the bye-laws of the society. Thus it is very plain that the election of the, officebearers is by all the members of the committee including ithe nominated and ex-officio members, if any.
Thus it is very plain that the election of the, officebearers is by all the members of the committee including ithe nominated and ex-officio members, if any. In this context, it is pertinent to note that bye-law 68 which provides for the election of the office-bearers other than the -President by the elected direc- tors at a meeting to be called by them is also, conflicting with the provisions of sub-section (4) of S. 28a- Since part of bye-law 68 dealing with, the ejection of the President and bye-law 68 dealing with the election of office bearers other than the President are contrary to the provisions of sub-section (4) of s. 29a and Rule 14a, the same shall not have binding force on the bank in electing its President. The right to elect the President under sub-secition (4) of S. 29a is specifically provided for all the members of the Committee including the nominated and ex-officio members, if any, and not directly by the voters at the annual Gen. Meeting. If the contention of Sri Krishnaiah on behalf of the petitioner is accepted, then it would amount to approval of an action in the matter of electing the president con- tary to the provisions of the Act and the Rules made thereunder. In that view, the election held on 26-10-1979 electing all the 12 directors of the board as prescribed under bye-law 59 at the Annual General Meeting of the Society was valid in law and is not open to question. ( 14 ) SHRI S. Krishnaiah, learned counsel for the petitioner, in support of his argument regarding the validity of part of bye-law 60 (a) providing for the election of the President directly at the Annual General Meeting, has attempted to draw support from a ruling of the Supreme Court in kasturiranga Seity v. T. C. Basappa (1 ). ( 15 ) THE facts of the case before the. Supreme Court were that in the year 1962, the 2nd respondent-society appointed a Bye Law Committee to frame new bye-laws. The new bye- laws were passed by the general body meeting held on 20-1-63 and were duly approved by the Registrar of the co-operative Societies.
( 15 ) THE facts of the case before the. Supreme Court were that in the year 1962, the 2nd respondent-society appointed a Bye Law Committee to frame new bye-laws. The new bye- laws were passed by the general body meeting held on 20-1-63 and were duly approved by the Registrar of the co-operative Societies. The amended bye-law 59 (a) ran as follows: "the members shall elect at the annual General Fleeting one President and the Directors by ballot by a majority provided that the number of directors including the President shall not exceed the number mentioned in bye-law 58. " bye-law 67, as amended, provided that immediately after the annual general meeting, the newly elected directors should elect the Vice-President, secretary, treasurer and joint-secretary and shall carry on the administration of the Bank through the secretary. ( 16 ) THE question that arose for decision in the above civil appeal was whether the new bye-law 59 (a) providing for the direct election of the president together with the election of the members of the executive committee at the same general body meeting was ultra vires the Act and the Rules. On a consideration of the relevant provisions of the Act as well as the Rules as they stood then, in particular Sec. 27 and Rule 14, the supreme Court observed that there was no provision in the Act or the rules which provided for the election of the President or any of the officers of the Society, which was apparently left to be provided for by the society through its bye-la,ws and in that viqw bye-law 59 (a) was held to be not in contravention of any of the provisions of the Act or the Rules. ( 17 ) NO doubt the amended bye-law 59 (a), the validity of which came up for consideration before the Supreme court in Kasturiranga Seity"s case, is in pari materia with bye-law 60 (a) in this case. However, there has been a substantial change brought about bqth in the Act as well as in the Rules regarding the election of the office bearers of the society. S- 29a was placed on the statute for the first time by the Karnaitaka Amending Act 39)1975 and gained its present form by the subsequent amending Acts 19|1976 and 7111976.
However, there has been a substantial change brought about bqth in the Act as well as in the Rules regarding the election of the office bearers of the society. S- 29a was placed on the statute for the first time by the Karnaitaka Amending Act 39)1975 and gained its present form by the subsequent amending Acts 19|1976 and 7111976. Sub-section (4) of S. 29a not only provides for the forum at which the office bearers including the President are to be elected but also specify the voters entitled to participate at such election. It provides that the Secretary of the Society shall, within 15 days from the date of election of the committee, convene a meeting in the prescribed manner qf all the members of the committee including the nominated and ex-officio members, if any, for the purpose of electing the President, the vice-President, the Chairman,, (the vice-Chairman and such other office bearers as are required to be elected under the bye-laws of the co-operative society. Rule 14a was added to the rules by a notification dated 8-12-77 which prescribes the mode of convening the meeting of all. the members of the committee for the purpose specified in sub-section (4) of S. 29a. Thus, it is clear that the Act as well as the rules provide for the mode of election of the President and other office-bearers. When the Supreme Court upheld the validity of amended bye-law 59 (a) which is in pari materia with bye-law 60 (a) in this case, there was no provision either in the Act or in the Rules for electing the President and the other office-bearers and, that was the reason why the Supreme Court observed in its decision that 'the election of the President and other office-bearers was apparently left to be provided for by the society through its bye-laws and in that view upheld the validity of the amended bye-law 59 (a) holding that it was not in contravention of any of the provisions of the Act or the Rules. In view of the engraft of sub-sec- (4) of S. 29a on the statute, the ratio of the decision in Kasturiranga Setty's case would not apply to the facts of the case. ( 18 ) SRI Krishnaiah next contended that the addition of sub-sec.
In view of the engraft of sub-sec- (4) of S. 29a on the statute, the ratio of the decision in Kasturiranga Setty's case would not apply to the facts of the case. ( 18 ) SRI Krishnaiah next contended that the addition of sub-sec. (4) of S. 29a did not bring about any change in the legal position regarding the election of the office-bearers to the society and notwithstanding sub-sec (4) of S. 29a, it is still open to, the society to formulate its bye-laws providing the mode or method of electing the office bearers and as such the ratio of the Supreme Court decision in Kasturiranga Setty's case would apply to declare the validity of bye- law 60 (a) and for which he placed reliance on the last part of sub-section (4) immediately following the wards "and such other office-bearers", which reads thus:"as are required to be elected under the, bye-laws of the cooperative society. "placing reliance on the above, Shri krishniah contended that it, is open to a co-operative society to frame its own bye-laws prescribing the mode or method of electing the office-bearers including the President. To put it in, other words, his contention is that sub-section (4) of S. 29a still gives adequate power to the society to frame its bye-laws not only for providing the method of electing the officebearers but also the forum at which, and the voters by whom they are to be elected. ( 19 ) I am afraid that this construction tried to be placed by Shri Krishnaiah on the words"as are required to be elected under the bye-laws of the co-operative society"occurring in sub-section (4) of S. 29a would render nugatory part of the sub-section that precede the above words, which not only specify the person authorised to call the meeting in the prescribed manner of all the members of the committee including the nominated and ex-officio members, if any, but also the time within which such a meeting should be called for the purpose of electing the President, the vice-President, the Chairman,, the vice Chairman and such ather officebearers.
In thisi context the words"as are required to be elected under the bye-laws of the co-operative society"that followed immediately after the words"for the purpose of electing the President, the Vice- President, the Chairman, the Vice-Chairman and such other office bearers"would mean the number and category of officers required for a society as specified in -the bye-laws to be elected. In other words, it is open to a cooperative society to prescribe under the bye-laws who are the officers needed or required to carry on the management of the society. I am unable to persuade myself to read into the words"as are required to be elected under the bye-laws of the co-operative society'"that those words would authorise the society to formulate its bye-laws prescribing a forum or the electoraj. body to elect the office-bearers contrary to the one provided jnder sub-section (4) of S. 29a. In that view, I am inclined to hold that there is no force in this contention urged by Shri Krishnaiah. ( 20 ) FROM what has been stated above, it follows that the election of the 12 directors at the election held on 26-10-1979 was perfectly in accordance with law as provided under the Act as well as the Rules notwithstanding the fact that it was not in conformity with bye-law 60 (a ). ( 21 ) IN the view that I take on this question, I do not propose to deal with the second point raised by Shri C. R. Nembanna that the writ petition is bad for non-joinder of the elected directors. ( 22 ) IN the result, for the reasons stated above, I am inclined to hold that no useful purpqse will be served by issuing rule nisi in this case. Accordingly, the writ petition is dismissed. However, in the circumstances of the case, I direct each party to bear his own costs. --- *** --- .