GANGADHARAN v. ADMINISTRATOR — 1987 DIGILAW 425 (KER)

Judgment :- 1. Learned Government Pleader takes notice on behalf of respondents 1, 2.4.5 and 6 in the former O.P. and respondents 2 and 6 in the latter O.P. T find it unnecessary to issue notice to other respondents in both the cases. I have heard both sides. 2. Petitioner in O.P. No. 6667 of 1987 is one of the present Directors (Member) of the Board of Directors (Managing Committee) of a credit cooperative society affiliated to the Ernakulam District Co-operative Bank Limited. He claims to have been elected delegate by the Managing Committee of the society to represent the society in the general body meeting of the Co-operative Bank to be held on 23-8-1987 for electing members of the Managing Committee (Board of Directors) of the bank. He has filed nomination papers for election to the post of Member of the Managing Committee which is to consist of ten members who are to be elected by the general body of the bank giving representation to specified types of societies as stated in bye-law No. 26 of the bye-laws of the bank. Third respondent is the Returning Officer appointed for the purpose. He has issued election notice as seen in Ext. P2. Process of election has commenced. Meanwhile in as many as 25 affiliated societies Managing Committees have been replaced by Administrators appointed under S.33 of the Kerala Co-operative Societies Act (for short'the Act'). Petitioner believes that the Joint Registrar has instructed the Returning Officer not to allow the delegates of these societies to vote in the general body meeting but to allow Administrators to exercise franchise. Twenty five societies have been impleaded as respondents 4 to 28. He seeks writ of mandamus directing the authorities to allow the elected delegates of the affiliated societies to participate in the election to be held on 23-8-1987, writ of prohibition prohibiting the Administrators of the affiliated societies from exercising franchise in the election and declaration that elected delegates of affiliated societies alone are entitled to vote. 3. Petitioner in O.P. No. 6693 of 1987 is a Member of the third respondent. Chittur Service Co-operative Bank Limited, which is affiliated to Palghat District Co-operative Bank Limited. In the election to the Managing Committee of the affiliated bank held in 1982 be filed his nomination, but that was rejected. Ultimately the Tribunal as per Ext.P1 judgment declared him elected. Petitioner in O.P. No. 6693 of 1987 is a Member of the third respondent. Chittur Service Co-operative Bank Limited, which is affiliated to Palghat District Co-operative Bank Limited. In the election to the Managing Committee of the affiliated bank held in 1982 be filed his nomination, but that was rejected. Ultimately the Tribunal as per Ext.P1 judgment declared him elected. However, the term of office of the committee expired on 30-6-1984 and since then affiliated bank is under the administration of the first respondent. He claims to have been elected by the previous Managing Committee, which held office till 30-6-1984 as delegate to the District Cooperative Bank. He also claims that the first respondent in his capacity as Administrator of the affiliated bank under Ext. P2 dated 1-8-1984 appointed him delegate of third respondent to the Palghat District Co-operative Bank. The Managing Committee of District Co-operative Bank is to vacate office on 31-81987 and election is to take place at the general body meeting to be held on 29-8-1987. He apprehends that the first respondent will pass fresh order withdrawing him as delegate and nominating himself or another person. He has therefore filed the original petition seeking declaration that he is entitled to continue as delegate for the Palghat District Co-operative Bank till the expiry of the term of office of the latter Bank and writ of prohibition restraining the first respondent from withdrawing the petitioner as a delegate or from appointing any other person as delegate. 4. The two original petitions have been heard together since common question arise for consideration. Learned counsel for the petitioners urged the following arguments. (i) The decision of a learned single judge of this court in Sudhakaran v Dy. Registrar of Co-op. Societies (1980 KLT 658) has been dissented by another learned single judge of this court in Gopalan v joint Registrar of Co-operative Societies (1985 KLT 446), and the dissent stands notwithstanding the decision of a Division Bench of this court in George v. Joint Registrar of Co-op. Societies (1985 KLT 836). Therefore the power of the Administrator is not co-extensive with that of Managing Committee. Societies (1985 KLT 836). Therefore the power of the Administrator is not co-extensive with that of Managing Committee. (ii) The right of management vested in the Administrator must be construed in a restricted sense as to prevent him from interfering in matters like enrolment of members, appointment of delegates, withdrawal of delegates etc (iii) The same result will follow on a consideration of R.46 of the Kerala Co-operative Societies Rules (for short'the Rules'). (iv) The proposed action of the authorities is mala fide and partisan. 5. What the petitioner in OP. No.6667 of 1987 wants is to prevent the Administrators of twenty five affiliated societies from themselves acting as delegates or nominating delegates to participate in the general body meeting of the Ernakulam District Co-operative Bank. Petitioner in OP. No 6693 of 1987 has no such claim. He himself is a delegate appointed by the Administrator and wants to ensure that he continues as delegate at the general body meeting scheduled to be held on 29-8-1987 and wants to prevent the administrator of the society from withdrawing the delegation or appointing another delegate. 6. Before considering the decisions referred to by learned counsel, it is necessary to refer to the statutory provisions. S.2(n) of the Act defines 'officer' as President, Vice President, Chairman, Vice Chairman. Secretary, Manager, Member of the Committee or Treasurer, Administrator etc. S.21 deals with manner of exercising vote. Ordinarily every member of a society shall exercise bis vote in person. Obviously this cannot apply to a case where primary societies are members of societies or other institutions like District Co-operative banks. Sub-section (2) of S.21 states, inter alia, that a society, committee or other body of persons, which is a member of another society may, subject to any rules made under the Act, appoint one of its members to vote on its behalf in the affairs of that other society. Evidently the expression'delegate' used in the original petitions would refer to a member appointed as contemplated under S.21(2). 7. S.28 deals with appointment of committee. Sub-section (1) states that the general body of a society shall constitute a committee in accordance with the bye-laws and entrust the management of the affairs of the society to such committee. 8. Evidently the expression'delegate' used in the original petitions would refer to a member appointed as contemplated under S.21(2). 7. S.28 deals with appointment of committee. Sub-section (1) states that the general body of a society shall constitute a committee in accordance with the bye-laws and entrust the management of the affairs of the society to such committee. 8. S.32 deals with supersession of Managing Committee and contemplates appointment of an Administrative Committee or one or more Administrators to manage the affairs of the society for a period not exceeding one year as may be specified in the order, which period may, at the discretion of the Registrar, be extended from time to time, so however that the aggregate period does not exceed two years. Sub-section (4) states that the committee or administrator or administrators so appointed shall, subject to the control of the Registrar and to such instructions as he may from time to time give, have power to exercise all or any of the functions of the committee or of any officer of the society and take all such action as may be required in the interests of the society. 9. S.33 deals with appointment of new committee or administrator on failure to constitute committee etc. This section has to be invoked when a new committee cannot be constituted before the expiry of the term of office of the existing committee or where a committee ceases to be functioned or where a new committee is prevented from entering upon office etc. Under this provision also the administrator or the administrative committee is to be appointed to manage the affairs of the society. Sub-section (2) states that the committee or administrator or administrators appointed under sub-section (1) shall, subject to the control of the Registrar and to such instructions as he may from time to time give, have power to exercise all or any of the functions of the committee or any officer of the society and take all such action as may be required in the interests of the society. 10. In Sudhakaran's case (1980 KLT. 658) this court had to consider the question whether an Administrator or Administrative Committee appointed under S.33 (1) is competent to admit new members to the rolls of the society. Enrolment of new members is a significant function since members ordinarily will have right to vote in the election to the Managing Committee. 10. In Sudhakaran's case (1980 KLT. 658) this court had to consider the question whether an Administrator or Administrative Committee appointed under S.33 (1) is competent to admit new members to the rolls of the society. Enrolment of new members is a significant function since members ordinarily will have right to vote in the election to the Managing Committee. In the order appointing Administrator in that case it was specifically stated that the Administrator shall have right to manage the day to day affairs of the bank. It was argued before the court that enrolment of new members is a vital function which cannot be performed by the Administrator who is only to manage the day to day affairs of the bank. Bhaskaran, J. (as he then was) referring to the specific provision in S.33(2) and the absence of any provision statutorily restricting the power or function of an Administrator held that an Administrator could discharge the functions of the Managing Committee and admit new members to the society and it was not the intention of the legislature to take away that right and duty vested in the committee from the administrator. 11. In Gopalan's case (1985 KLT. 446) an administrator appointed under S.23 enrolled large number of new members to the society. The original petition was filed seeking to quash the election notice on various grounds including admission of ineligible persons as members of the society with consequent right to vote and to have the election conducted with the voters list as on the date on which the previous committee was superseded by the administrator. By an interim order election was conducted keeping the votes of the new members in a separate box. Subsequently the original petition was amended seeking declaration that the election conducted was null and void. Learned single judge of this court struck down the appointment of the administrator as illegal and held that ineligible persons admitted to membership by the administrator could not be treated as eligible voters and election was therefore declared void. Sukumaran, J. in the course of the judgment expressed the view that an administrator could not perform the function of admitting new members; the question, however, did not require decision and the view expressed is clearly obiter. Sukumaran, J. in the course of the judgment expressed the view that an administrator could not perform the function of admitting new members; the question, however, did not require decision and the view expressed is clearly obiter. This is clear from the following observation of Sukumaran, J. in Para.13 of the judgment; "It is, however, unnecessary for the purpose of the present case, to consider whether a second look at the decision in 1980 KLT. 658 supra is necessary, for even assuming that the decision is correct, the enrolment of the members by the administrator, is found to be incompetent and invalid, for the reasons indicated later" 12. A Division Bench of this court had occasion to consider both these decisions in George v. Joint Registrar (1985 KLT. 836). In Para.9 of the judgment the court quoted the following observations in Sudhakaran's case: "On a careful consideration of the scheme of the Act and the Rules it could be found that admitting members to the rolls of the society, which in the normal course is the routine function of the Committee, is not anything extra-ordinary in character so as to take it out of the purview of what is described in S.33(2) of the Act as day-to-day administration of the society". In Para.10, Division Bench observed that "We endorse this view as correct. We however hasten to add that the power of the administrator can be curtailed in appropriate cases by the Registrar who appoints him or by the court exercising powers under Art.226 of the Constitution." 13. In Para.11 of the judgment in George's case (1985 KLT 836) the Division Bench referred to the observation of Sukumaran, J. in Gopalan's case (1985 KLT 446) wherein the learned judge had drawn an analogy from the Companies Act and observed that the General Manager appointed by the Board of Directors of a company could not exercise the power of the Board to take new members to the company. In Para.12 of the judgment after referring to the observations of the learned single judge that the provisions do indicate that membership of a society is something more important and more fundamental than a matter relating to the routine management of a society and in any event it is not to be treated as a matter of management and if it is not a matter of management, the Administrator, who is after all only a passing phase and a stop-gap arrangement, cannot, tinker with the constitution and membership of the society. The Division Bench observed as follows: "The width of the power of the administrator is outlined in S.33 (2) of the Act. It is not necessary to curtail the ambit of that power by any judicial interpretation of the scope of the expression 'manage' occurring in S.33 (1) of the Act, for, the statute does not insist that the administrator should be given all the powers provided for under S.33(2). These powers can be controlled, curtailed, defined and limited in appropriate cases by the appointment order itself. The administrator is not a body subordinate to the committee or Board of Directors. He is the committee or the Board itself." In Para.13 of the judgment. Division Bench observed: "In the present case, the appointment of the administrator shows that he functioned as a committee (the Board of Directors) and not under a committee. The appointment order did not deny to him the powers statutorily conferred under S.33 (2) He could exercise all the powers conferred on the committee of this society under the Act, the rules and the bye-laws of the society." The court held that the administrator appointed to manage the society has the necessary power to admit new members. The Division Bench has thus set the controversy at rest. 14. I have referred in detail to both these decisions since learned counsel for the petitioners concede that if the decisions in Sudhakaran's case (1980 KLT. 658) and George's case (1985 KLT. 836) are to be followed, it roust necessarily follow that the administrator who is to discharge the functions of the Managing Committee is competent to withdraw a delegate or nominate another delegate. Learned counsel for the petitioners submit that while the Division Bench has affirmed the view expressed in Sudhakaran's case, it has not dissented from the views expressed in Gopalan's case. I am unable to agree. Learned counsel for the petitioners submit that while the Division Bench has affirmed the view expressed in Sudhakaran's case, it has not dissented from the views expressed in Gopalan's case. I am unable to agree. The Division Bench has not only affirmed the former decision but has disagreed with the latter decision. The Division Bench has specifically observed that the restriction sought to be imposed in Gopalan's case on the words 'manage' and 'management' cannot be accepted. Alternatively learned counsel contends that this view requires re-consideration and therefore prays that the original petitions may be referred to a Division Bench. 15. I find that an important provision of the Act was not brought to the notice of any of the benches which decided the above cases. I am referring to sub-section(i) of S.28 of the Act. S.28 deals with the appointment of committee, i.e., Managing Committee or Board of Directors. Sub-section (1) states that the general body of the society shall constitute a committee in accordance with the bye-laws and entrust the management of the affairs of the society to such committee. The general body of the society undoubtedly is the plenary authority and in accordance with the bye-laws entrusts the management of the affairs of the society to the managing committee. The society in its bye-laws spells out the functions, powers and rights of the committee. The committee can function exercising the rights conferred and subject to the restrictions imposed by the bye-laws and of course subject to statutory rules if any, having a bearing on that aspect. What is significant is that the committee is entrusted with the management of the affairs of the society. In S.32(1) and 33(1) administrative committee or administrator are to be appointed 'to manage the affairs of the society'. In other words, according to the statutory scheme, administrator is appointed in the place of the Managing Committee and to discharge the functions of the Managing Committee. In the case of S.32 the administrator displaces the Managing Committee because the lapses on the part of the Managing Committee require that Managing Committee should not be allowed to continue. In the case of S.33, administrator displaces the Managing Committee not because the Managing Committee is guilty of any act or omission prejudicial to the society, but because the committee either cannot function or cannot be constituted etc. In the case of S.33, administrator displaces the Managing Committee not because the Managing Committee is guilty of any act or omission prejudicial to the society, but because the committee either cannot function or cannot be constituted etc. When the committee is guilty of lapses and therefore is superseded under S.32 or when the committee has ceased to be effective or cannot be constituted as contemplated in S.33, administrator is to function in the place of the committee. This statutory intention is made further clear by sub-section (4) of S.32 and sub-section (2) of S.33 which declare in identical terms that the administrator shall subject to the control of the Registrar and to such instructions as he may from time to time give have power to exercise all or any of the functions of the committee or of any officer of the society and take ail such action as may be required in the interests of the society. Of course it is open to the Registrar to limit the power or the function of the administrator. Where there is no such limitation, these provisions make it clear that the administrator has power to exercise all the functions of the Managing Committee. What is implicit in the provisions relating to appointment of administrator in the place of the committee is made clear beyond all doubt by the latter provisions in the sections. 16. Can expressions 'manage' or 'management' in S.33 be interpreted in such a manner as to derogate from the status of administrator as a substitute for the managing committee or from the statutory functions vesting in the administrator? The analogy of a Manager of a company does not appear to be apposite. The Manager of a company is a servant appointed by the Board of Directors of the company. He cannot discharge the functions of a Board of Directors. He can discharge only such functions as are conferred on him by the Board of Directors. This is not so in the case of an administrator. The statute has conferred on the administrator all the functions of the Managing Committee, subject of course to such restrictions as the Registrar may impose. The expressions 'manage' and 'management' cannot be considered out of context. This is not so in the case of an administrator. The statute has conferred on the administrator all the functions of the Managing Committee, subject of course to such restrictions as the Registrar may impose. The expressions 'manage' and 'management' cannot be considered out of context. They have to be appreciated in the context of the provision in S.28(1) which states that the general body of the society shall constitute Managing Committee and entrust the management of the affairs of the society to such committee. The elected committee is to manage the affairs of the society. Proviso to sub-section 28(1) also contemplates cases where first Managing Committee is to be nominated by the Registrar. In such cases the nominated committee shall be in management of the affairs of the society. So also the administrator will be in management of the affairs of the society. It is difficult to draw a distinction between the powers of an administrator and the powers of an elected or nominated Managing Committee in the management of the affairs of the society. The powers of the committee are delineated in the bye-laws of the respective co-operative societies; there is no dispute that powers include power to enrol new members, to nominate or withdraw delegates etc. Necessarily these powers must vest with the administrator also, subject to any restrictions imposed by the Registrar. 17. In Gopalan's case, a narrow view of the word 'manage' is commended mainly because of the desirability to the committee important functions such as enrolment of new members. This sentiment, it appears to me, ignores the statutory scheme, which provides for appointment of administrator either where Managing Committee is guilty of serious lapses or where it has become non-functional. This court has been a witness to allegations in a large number of OPs. filed under Art.226 of the Constitution of India complaining of deliberate denial of membership by Managing Committees to persons eligible to membership. There have been cases where on orders of this court administrators have taken up for consideration and disposed of hundreds of pending applications for membership. At tiroes Managing Committees may be enthusiastic in admitting some persons as members; they may not be equally enthusiastic in admitting certain others to membership, the suggestion that committees always act rationally and properly and administrators cannot act so may not be realistic 18. At tiroes Managing Committees may be enthusiastic in admitting some persons as members; they may not be equally enthusiastic in admitting certain others to membership, the suggestion that committees always act rationally and properly and administrators cannot act so may not be realistic 18. It has been argued that co-operative movement should be allowed to function on the basis of the principles of democracy, and if administrators are enabled to admit persons to membership or to nominate delegates or withdraw delegates that will destroy the democratic content of the cooperative movement. I am free to concede an element of truth inherent in this submission. But then even petitioners do not have a contention that it is desirable to grant complete freedom to co-operative societies. Such is not the scheme of the statute either. The statute allows considerable degree of freedom of action to Managing Committees of societies; at the same time, possibility of not functioning and non-functioning of co-operative societies has been guarded against by provisions such as S.32 and 33. Democracy in the co-operative movement is a necessity; arbitrary and despotic control over co-operative societies is the negation of democracy. Wisdom must caution us that total freedom as well as total control are to be avoided. The golden via media is that which assures high substantial degree of autonomy and democracy in the functioning of co-operative societies and which at the same time ensures that they function lawfully and with propriety for the good of the people. Any aberration would damage the co-operative movement. Interpretive process should be guided by an appreciation of the central theme of the statute which is the promotion of healthy co-operative movement which will serve the needs of the people. 19. Reliance is placed on R.46 of the Co-operative Societies Rules to contend that administrator appointed under S.33. unlike in the case of an appointee under S.32 cannot withdraw or nominate a delegate. This argument proceeds on a total misreading of the rule. R.46 lays down circumstances under which delegate of one society sitting on the committee of another society shall cease to be a member of such committee, namely, if the society which elected him as a delegate withdraws him or elects another delegate in bis stead or in case be was elected as a delegate by a society on the supersession of the committee under S.32. Proviso to the rule states that the person or persons appointed under S.32 shall have power to nominate himself or one among them or any member of the society to the committee of another society. The two aspects of the rule have to be borne in mind. One is that impact of the rule is in regard to a delegate of one society sitting on the committee of another society. The other is that rule provides for automatic termination of membership of the committee of another society. The rule has no bearing on the appointment by the Managing Committee of one society of a delegate to participate in the general body of another society. There is no dispute that according to the bye-laws delegate is to be nominated by the Managing Committee of the affiliated society. There is also no dispute that Managing Committee can also withdraw the delegate and appoint another delegate in his place. 20. I hold that the administrator appointed under S.33 of the Act has the power to discharge the functions of the Managing Committee and such functions include appointment of a delegate and withdrawal of a delegate. There is no case for the petitioners that in the orders appointing administrators any restriction has been imposed on the powers and functions of the administrators. With, respect, I agree with the ratio in George's case and do not find it possible to agree with the obiter in Gopalan's case. 21. Petitioners have raised allegations of mala fides, political, partisanship and the like. There are no materials before the court to lend support to the allegations. Hence the petitioners are not entitled to any relief in these petitions. 22. The view taken by me in regard to the functions and powers of the administrator or administrative committee does not mean that existence or conferment of such powers is either healthy or desirable. Administrator or Administrate Committee are only nominees of the Registrar. Choice of personnel has to be made keeping in mind the best interest of the society and so as to generate confidence among members of the society. However, there is considerable scope for manipulation in the matter of choice of personnel. The co-operative sector in the State has become highly politicised. Choice of personnel has to be made keeping in mind the best interest of the society and so as to generate confidence among members of the society. However, there is considerable scope for manipulation in the matter of choice of personnel. The co-operative sector in the State has become highly politicised. Appointment of non officials as members of the administrative committee or as administrators may give rise to allegations of partisanship in the matter of selection of personnel. Appointment of officials as administrators also may be less controversial. The official administrator being an officer in the co-operative department may have constraints in exercising free will and judgment. Official administrator may not have the same zeal and commitment which an elected committee may have. There may be circumstances where imposition of an administrative committee or administrator is not only desirable but also necessary. To reduce the adverse impact of such of an appointment it is desirable that statutory restrictions are imposed, on the powers and functions of the administrative committee or administrator. It is not desirable that they should be enabled to exercise all the powers and functions of the Managing Committee; it may be sufficient to enable them to discharge only routine functions. It is for the State Government to consider these aspects and take necessary steps to introduce statutory measures supportive of democratic functioning of co-operative societies and to reduce to the minimum areas where administrative committees or administrators can exercise powers and functions. 23. The original petitions are accordingly dismissed. A copy of this judgment will be forwarded to the Chief Secretary to Government of Kerala.