Kuldeep Srivastava : Santosh Singh : Dr. Hari Singh v. State of Rajasthan
1990-07-26
M.B.SHARMA
body1990
DigiLaw.ai
JUDGMENT 1. - This order will deal with the above numbered writ petitions in which a common question is involved. Though, the societies in all the cases are not of same class, but the question which has to be decided is in respect of the validity of the orders issued by the State Government under Section 139 of the Rajasthan Co-operative Societies Act, 1950 (Sic 1965) (for short, the Act) read with rule 110 of the Rajasthan Co-operative Societies Rules, 1966 (for short, the Rules) arid the order issued by the Registrar, Co-operative Societies under Section 36 (1) of the Act removing the Board of Directors/Committee of the Society and appointing Administrator to manage the affairs of the society. 2. For the disposal of the present batch of writ petitions, I intend to give the facts of S.B. Civil writ Petition No. 2186/1990. Kuldeep Srivastave v. State of Rajasthan and others as the facts of the cases are not going to make any difference to the ultimate decision of the case. 3. Before I give the facts as aforesaid, I will at the very outset like to clearly specify the points on which action/order of the Registrar of the Co-operative Societies made under Section 36 (1) of the Act has been challenged. A two-fold contention has been raised by the learned counsel for the petitioners that under Section 139 of the Act read with rule 110 of the Rules no power is vested in the State Govt. to exempt the applicability of the principles of natural justice and despite the aforesaid order the principles of natural justice enshrined in rule 36 (6) shall apply. Even if we assume that such a power is vested or could be vested the same could only be exercised in case if any class of the societies involved in the present batch of writ petitions, fell under sub-section (I) of Section 36 of the Act and the case did not so fall. Secondly, the Registrar was required to take independent action under sub-section (I) of Section 36 of the Act and the State Government could not colour or interfere with the discretion of the Registrar, statutory authority, because the Registrar has acted under the order of the State Government and has not exercised his independent discretion, the order removing the Board of Directors/Committee and appointing the Administrator, therefore, cannot be sustained. 4.
4. It may be stated at the very out-set that in all of the writ petitions with which we are concerned, three years period for which the election of the Board of Directors/Committee has been held has expired and it was only after the expiry of the period for which the Board of Directors/Committee was constituted that they are continuing. In other words no part of the period for which the Board of Directors/Committee was constituted as a result of election remains. 5. Kuldeep Srivastava is a member of Kota Sahkari Bhumi Vikas Bank Ltd. Kota and was elected as one of the members of the Board of Directors of that Bank on February 13, 1987 alongwith 8 other members, the total number of elected directors being 9. He was further elected as Chairman of that Bank on February 14, 1987. Thus, the period of three years expired on February 14, 1990. There are bye-laws of the respondent Bank and the relevant bye-law is 26(1) and (2). The period of elected Board of Directors is three years, by it under bye-law 26(2) every member of the Board of Directors even after the expiry of period of three years till fresh Board of Directors is duly elected, shall continue to work. It may be stated that apart from the aforesaid bye-law 26(1) and (2), there is rule 34(a) of the Rules which also provides that the members of the Committee shall continue in office for such period as may be specified by bye-laws or until another committee is constituted. The bye-law (1) and (2) is in respect of Land Development Bank and so far as Central Co-operative Bank/Banks are concerned, the only provision in the relevant bye-law is that the period of elected member of the Board of Directors shall be three years and there is no specific or express provision that even after the expiry of aforesaid period of three years members shall continue to work till such time as a fresh Board of Directors/Committee is constituted. 6. A decision was taken by the State Government on April 30, 1990 that the Board of Directors/Committee of such primary Co-operative Land Development Banks where the period of three years for which they were elected, expired but no fresh election has taken place, should be removed and fresh election should be held and till then Administrator be appointed.
6. A decision was taken by the State Government on April 30, 1990 that the Board of Directors/Committee of such primary Co-operative Land Development Banks where the period of three years for which they were elected, expired but no fresh election has taken place, should be removed and fresh election should be held and till then Administrator be appointed. The State Government in accordance with the powers conferred by Section 139 of the Act read with rule 110 of the Rules also made an order on the same day i.e. April 30, 1990 after taking the aforesaid decision that in such of Primary Land Development Bank as aforesaid the procedure contained in Section 36(1) of the Act and rule 34(2) of the Rules for removal of the Committee or its members by the Registrar shall not be applicable. In other words, the procedure prescribed under sub-section (1) of Section 36 as well as rule 34(2) of the Rules for removal of the Committee or its members in exercise of the powers under Sec 139 of the Act has been exempted. After the aforesaid order was made by the State Government, the Registrar of the Co-operative Societies issued an order dated May 2/3, 1990 dissolving/superseding the Board of Directors with immediate effect and appointed Addl. Collector (Development) Kota as Administrator to manage the affairs of the respondent Bank. The petitioner has challenged the aforesaid order on the grounds which have been stated in the earlier part of this order. 7. Show cause notice was issued and reply has been filed in some cases which shall be read as the reply in all the cases. In the reply the main plea of the respondents is that bye-law 26 was violated by the Society and no annual general meeting for general election was held as required by Section 32 of the Act nor any resolution was passed as such, and it became mandatory for taking action for removal of the Committee, and the State Government in exercise of the powers contained in Section 139 of the Act read with rule 110 of the Rules exempted the Primary Land Development Banks from the provisions contained in Section 36(1) and (6) of the Act and therefore the procedure prescribed for removal of the members of the Committee is not applicable. 8.
8. I will now revert to the two points of challenge to the aforesaid orders, in one of which the policy decision was taken to remove the duly elected Board of Directors/Committee of primary. Land Development Bank and exempting the procedure prescribed in Section 36(1) of the Act read with rule 34(2) of the Rules in respect of removal/supersession of the same. 9. It was contended by the learned counsel for the petitioners that Section 36(1) of the Act could not be attracted and it could be attracted only in the eventualities mentioned thereunder and therefore even despite the fact that the procedure prescribed therein has been exempted, the Registrar could not have removed or superseded the Board of Directors/Committee. 10. Sub-section (1) of Section 36 of the Act reads as under:- "36 Removal of Committee or Member thereof- (1) If. in the opinion of the Registrar, the committee of any co-operative society or any member of such committee persistenly makes default or is negligent in the performance of the duties imposed on it or him by this Act or the rules or the bye-laws or commits any act which is prejudicial to the interest of the society or its members, or wilfully disobeys directions issued by the Registrar for the purpose of securing proper implementation of Co-operative production and other development programmes approved or undertaken by the Government, or is otherwise not discharging its or his functions properly, the Registrar may, after giving the committee or the member, as the case may be a reasonable opportunity to state its or his objections, if any, by order in writing - (a) remove the committee and appoint a Government servant as an administrator to manage the affairs of the society and shall submit his report justifying the removal of the committee to the State Government within a period of fifteen days from the date of removal of the committee, or (k) remove the member and get the vacancy filled up for the remainder of the term of the outgoing member, according to the Dye-laws.
A bare reading of the aforesaid extracted sub-section (1) of Section 36 will show that statutory power has been vested in the Registrar only if in his opinion the Committee or member thereof persistenly makes default or is negligent in the performance of the duties imposed on it or him by the Act or the Rules or bye-laws, or commits any act which is prejudicial to the interest of the society or its members or wilfully disobeyes directions issued by the Registrar for the purpose of securing proper implementation of co-operative production and other development programmes approved or undertaken by the Government or is otherwise not discharging its or his functions properly. A look at the order dated April 30, 1990 or for that matter the order of the Registrar dated May 2/3-1990 will show that it is not mentioned in any of them that because there has been violation of any of the bye-laws therefore the removal of the Board of Directors/Committee was necessary. There is no such satisfaction of the Registrar as required under Section 36 (1) of the Act. A look at the order of the State Government dated April 30, 1990 will show that the policy decision has been taken by the State Government that such of the Primary Land Development Banks whose period of Board of Directors has expired & fresh election has not taken place, they should be removed and fresh elections should be held in accordance with law and till then the Administrator should be appointed. Therefore, the learned counsel for the petitioner is right when he says that it does not fall under section 36(1) of the Act and mere order of the State Government exempting the procedure prescribed thereunder or prescribed under rule 34(2) of the Rules did not vest the power under Section 36 (I) of the Act which alone is the Section for removal of the Committee or members thereof in case the Committee in the opinion of the Registrar does any act or omits to do any act mentioned therein. It was contended by Mr.
It was contended by Mr. M.I. Khan learned Additional Advocate General for some of the respondents that bye-law 26 which has been referred to in the earlier part of this order clearly prescribes that the period of elected members shall be three years and therefore it was incumbent upon the Board of Directors to hold the elections within a period of three years and to vacate the office after the expiry of three years. Thereafter, the new members of the Board of Directors would have stepped in. Because the Board of Directors which was elected for a period of three years failed to act in accordance with the bye-laws, the case clearly falls under Section 36(1) of the Act. But I am unable to agree with Mr. M.I. Khan and the reason is that a perusal of the order dated April 30, 1990 issued by the State Government as well as the order dated May 2/3, 1990 issued by the Registrar will show that there is no mention of any contravention or non-compliance with the bye-laws and therefore action is being taken. 11. A look at the provisions of the Act and Rules made thereunder will show that no power is vested in the State Government to take a decision or issue a direction to the Registrar that the Board of Directors of which the period of three years has expired should be removed or superseded and in its place fresh election should be held and administrator should be appointed. The Scheme of the entire Act and Rules is that the power of removal/supersession of the Board of Directors/Committee of a Co-operative Society is vested in the Registrar and that too if any of the conditions laid down in sub section (1) of Sec 36 of the Act is satisfied. No statutory power is vested in the Government even to lay down the policy by executive orders and it is in the exclusive province of the legislature to formulate legislative policy and to declare the working-out of the policy by setting forth sufficient guidelines. There is no provision in the Act or Rules that on the expiry of the period of elected member of the Board of Directors/Committee, an administrator can be appointed.
There is no provision in the Act or Rules that on the expiry of the period of elected member of the Board of Directors/Committee, an administrator can be appointed. The period for which the elections are required to take place of the Board of Directors or Committee of the Co-operative Society is to be fixed under the bye-laws and as stated in the earlier part of this order, so far as the respondent society is concerned, bye-law 26(1) and (2) provide that the period of elected Board of Directors shall be three years, but even after the expiry of three years unless fresh Board of Directors is elected, the Board of Directors shall continue to function despite the expiry of the period of three years. 12. Under Section 29 of the Act final authority in a co operative society shall, subject to the provisions of the Act and the Rules, vest in the general body of the members provided that where the bye-laws of a co-operative society provide for the constitution of a smaller body consisting of delegates of members of the society elected in accordance with such bye-law, the samller body shall exercise such powers of the general body as may be prescribed or as may be specified in the bye-laws of the society. By virtue of Section 30 of the Act read with Rule 29 and 30 of the Rules, it is in the annual general meeting that election if any in the prescribed manner of the member of the committee other than nominated member is to take place. If no annual general meeting as aforesaid is called for the a foresaid purpose by the co-operative society within the prescribed time it is the Registrar who has power to authorise any person to call such meeting and the meeting shall be deemed to be called for by the society. Similarly, even the powers to call special general meeting under sub-section (1) of Section 31 of the Act vests in the Committee of the society and the committee is bound to call general meeting within one month after the receipt of requisition in writing from the Registrar and even if the special general meeting is not called, the Registrar shall have power to call such meeting and then the said meeting shall be deemed to have been called by the Committee.
It is under Section 33 of the Act that the general body of the co-operative society has to constitute committee and entrust the management of the affairs of the society to such committee. Chapter-IV of the Rules deal with management of the societies and its rule 32 is in respect of election of members of committee by the General Body. The election of the members of the Committee of every society belonging to the classes mentioned therein, and in the present batch of writ petitions the societies belong to one or other of those classes, it is the Registrar who has to appoint the election officer who is to conduct the election in the manner specified in rule 32. Therefore, it after the expiry of the period for which the Board of Directors/Committee of the Co-operative Society has been elected, the committee of the society does not take any action well in time so that the new committee take over after the expiry of the period for which the committee was duly elected, the Registrar could have appointed an election officer under rule 32 of the Rules who was bound to hold elections in the manner specified by rule 32. But there is no provision that if the election of new committee of the co-operative society does not take place, which in my opinion if the Registrar is allowed to work independently without any pressure from political quarter or for that matter, the Government, this situation will not arise or may not arise that there is any interim period in between the expiry of the period of duly elected committee. Be that as it may, the scheme of the Act and the Rules is that even if the term of elected committee has expired it will continue to manage the affairs of the society till fresh elections are held for the committee of the co-operative society. No power except under Section 6(1 )(a) of the Act is vested even in the Registrar to appoint administrator after removing/superseding the committee on the ground that the period for which it was elected has come to an end and the committee has to continue till a new committee is constituted in accordance with the provisions of rule 32 of the Rules. There is an order Annr.
There is an order Annr. 2 dated January 31, 1990 of the Registrar himself wherein reference has been made to rule 34(2) of the Rules and it has been mentioned that the members of the committee shall continue to work till such time in accordance with bye-laws another committee is constituted. A reference has already been made to bye-law 26 and at the cost of repetition it may be said that it provides that the members of the committee shall continue even after the expiry of the per od of three years till such lime another committee is constituted in accordance with law. A bare reading of the order dated April 30, 1990 will show that only such of the provisions of rule 34(2) as well as Sec 36(1) and (6) which relate to the procedure for removal of the committee or its members, have been exempted under Section 139 of the Ait read with rule 110 of the Rules. A reference at this stage can be made to Section 293-A of the Rajasthan Municipalities Act 1959 as it is felt necessary and its clause id provides that whenever the term or extended term of office of a board has expired and a new board has not been constituted in accordance with the provisions of the Municipalities Act, the State Government shall by notification in the official gazette, appoint an administrator for such period as may be specified in the notification and may by like notification curtail oi extend the period of such appointment. If the legislature would have thought it proper to provide that immediately after the term of elected committee of the co-operative society came to an end, an administrator shall be appointed, it would have provided so. But as already stated, under Section 36(1)(a) an administrator can only be appointed if the case falls thereunder and not otherwise. Therefore, the appointment of administrator under Sec 36(1) of the Act is not in accordance with law. From the entire scheme of the Act and Rules it appears that the elected committee has to continue in office not only during the period of three years for which it was elected in accordance with bye law but also till such time that a new committee is constituted as a result of election.
From the entire scheme of the Act and Rules it appears that the elected committee has to continue in office not only during the period of three years for which it was elected in accordance with bye law but also till such time that a new committee is constituted as a result of election. I am therefore of the opinion that the ground on which the action could be taken for removal of the committee under Section 36(1) of the Act did not exist in this case and there is colourable exercise of powers by the State Government and even by the Registrar and even if the provisions of Section 36(1) of the Act as well as Rule 34(2) of the Rules have been exempted it will not make any difference and the committee could not be removed nor it could be superseded and the administrator could not be appointed under clause (a) of sub section (1) of Section 36 of the Act. 13. Let us examine the case from another angle. Assuming for the sake of argument that Section 36(1) of the Act was attracted whether the application of principles of natural justice could be exempted and without affording any reasonable opportunity to the Society concerned, the Committee could be removed or superseded. Under Section 139 of the Act the Government may by general or special order, exempt any co-operative society or any class of societies from any of the provisions of the Act or may direct that such provision shall apply to such society or class of societies with such modifications as may be specified in the order. We are concerned with the first part of Section 139 of the Act and we are not concerned with the latter part of that Section. In these writ petitions there is no challenge to the vires of the provisions of Section 139 of the Act or to rule 110 of the Rules, That apart, the Supreme Court in the case of the Registrar of Co-operative Societies and another v. Kunjabmu and others AIR 1980 SC 350 , dealing with Section 60 of the Madras Co-operative Societies Act (6 of 1932) said that Section 60 which vest powers in the State Government to exempt societies from the application of the provision; of the Act or application with modification is not void on the ground of excessive delegation.
There can be no dispute that the law is settled that even the administrative bodies are also bound to act justly and fairly which brings in the requirement of natural justice. In the case of Rampal Agrawal v. State of Rajasthan and others 1986 KLR 782 , I had the occasion to examine the provisions of the Act and Rules in so far as the principles of natural justice are concerned, though no controversy was there in that case whether under Section 139 of the Act or rule 110 of the Rules even the principles of natural justice could be exempted, but it was said by this court in para 6 page 788 that- "It has already been said earlier that giving an opportunity of being heard before a Committee or its Member could be removed is envisaged in Section 36 of the Act. Even if there would not have been any rule, still it would have been necessary that before the expiry of the extended term of the Board of Directors i.e. August 31, 1986, if it was proposed to remove or supersede the Board of Directors or remove any of the Directors or Chairman an opportunity of being heard should have been given." It will therefore be clear that even if sub-section (1) of Section 36 of the Act could have been applicable in this case, there would not have been any prohibition of being given a reasonable opportunity of being heard before removal/supersession of the Committee elected or nominated, and it was still necessary that reasonable opportunity to state its objections should have been given to the committee. Therefore, mere exempting the provisions of Section 36(1) of the Act under the order of the Government dated April 30, 1990, does not make any difference. In my opinion, the principles of natural justice are still attracted and before even such a committee whose term for which it was elected has expired, could be removed or superseded, the principles of natural justice must have been complied with and reasonable opportunity to state its objections by order in writing must have been given to the committee.
In my opinion, the principles of natural justice are still attracted and before even such a committee whose term for which it was elected has expired, could be removed or superseded, the principles of natural justice must have been complied with and reasonable opportunity to state its objections by order in writing must have been given to the committee. I am further of the opinion that as stated earlier even the administrative bodies are also bound to act justly and fairly which brings in the requirement of natural justice and the maxim audi alterm partem can only be exempted by specific provision of legislation and not by executive orders. Therefore, even under Section 139 of the Act the State Government could not have exempted the applicability of the principles of natural justice contained in subsection (1) of Section 36 of the Act in respect of procedure for removal/supersession of the committee. It has already been said earlier that Section 36 of the Act is not attracted in this case and therefore, even otherwise the Government could not have made the order under Section 139 of the Act and the order has been made in colourable exercise of the powers by the Government. As a result of non-compliance with the principles of natural justice the impugned orders dated April 30, 1990 and May 2/3, 1990, in my opinion, are nonest and have to be set aside. 14. Coming to the next contention of the learned counsel for the petitioners that even if Section 36(1) of the Act would have been applicable, the Registrar was required to exercise his own discretion which the Statute has vested in him and a bare reading of the order dated May 2/3, 1990 will show that the Registrar has not acted independently and statutory discretion of the Registrar has been interfered by the Government order dated April 30, 1990. There can be no dispute and the law is settled that statutory authority is required to exercise its discretion independently unaffected by any quarter whatsoever including the government. The State Government cannot colour or interfere the discretion of statutory authority.
There can be no dispute and the law is settled that statutory authority is required to exercise its discretion independently unaffected by any quarter whatsoever including the government. The State Government cannot colour or interfere the discretion of statutory authority. A look at Section 36(1) of the Act will show that even if the case would have fallen under the aforesaid section alongwith rule 38 of the Rules, it was the Registrar who alone being of the opinion about the commission or omission of any of the acts mentioned in sub-section (1) of Section 36 of the Act by the committee, who could have removed the committee and could have appointed a Government servant as its administrator to manage the affairs of the society. In the instant case a bare reading of the order dated April 30, 1990 will show that first the Government has taken policy decision that such of the Primary Land Development Banks whose period of election has come to an end and no election has taken place should be removed and fresh election should be held and administrator should be appointed and only thereafter the order dated May 2/3-1990 was made by the Registrar. The proximity of the order dated May 2/3-1990 to the order dated April 30, 1990 will go to show that the Registrar has not applied his independent mind and does not appear to be of the opinion that such of the aforesaid committee whose term has expired and where no election has taken place, should be removed/superseded and administrator should be appointed. A bare reading of the order dated May 2-3-1990 will show that there is clear reference in the first para of that order about the order of the Government and it can therefore be said that statutory functionary has not independently exercised its discretion which has been influenced by the order of the State Government. A look at the provisions of the Act and Rules will show that the Government has no power to even issue guidelines or instructions and any guidelines or instructions even if are issued by the Government will not have any statutory force and the Registrar could not have and should not have acted upon such guidelines.
A look at the provisions of the Act and Rules will show that the Government has no power to even issue guidelines or instructions and any guidelines or instructions even if are issued by the Government will not have any statutory force and the Registrar could not have and should not have acted upon such guidelines. The very fact that the Registrar even did not examine whether under Section 36 (1) of the Act any case is made out and the order of supersession of the committee or Board of Directors, goes to show that it is a case of total non-application of mind by the statutory functionary i.e. the Registrar. On this ground the order of removal/supersession cannot be allowed to stand. 15. It was contended by Mr. M.I. Khan, learned Additional Advocate General that the State Government has already issued election programme and therefore despite the fact that this court might take a view that the order of the State Government and Registrar should be set aside, this court should not give any relief to the petitioners and should allow the administrator to manage the affairs of the society till such time fresh elections are held. In this connection, learned counsel has referred to the case of Dhula Ram v. State of Rajasthan 1982 RLR 589 = AIR 1983 Rajasthan 29 , to which I was a party and moreso its para 14. In that case I had said that balanced view should be taken and allowed the committee nominated by the Government, the nomination of which was set aside, to work for a period of one month till the administrator was appointed. Each case has to be decided on its own facts. In the insiant case it appears that the Government has issued an order No. F/15/Savira/Niyam/P./90 dated June 21, 1990 but neither any election officer has been appointed nor it has issued any programme of election and all that is mentioned in the aforesaid order is that procedure for election should start from September 1, 1990 and the programme of election should be notified in accordance with rule 32 of the Rules. It can therefore not be said that election process has started, rather it can be said that there is possibility that the election process may start in September, 1990.
It can therefore not be said that election process has started, rather it can be said that there is possibility that the election process may start in September, 1990. Therefore, in my opinion it cannot be a ground that because the process of election has started, the impugned orders should not be set aside. It may be stated that as stated earlier, it was the Registrar who was to appoint an ejection officer and he can straight-away appoint election officer, who thereafter may conduct the elections in accordance with rule 32 of the Rules. If the election has not yet taken place and it is the Registrar who alone is responsible for the same, as it is his statutory duty to take action in accordance with rule 32 of the Rules, the rule of law has to prevail and in this case it appears that removal/supersession of the respondent society is not in accordance with law. 16. Consequently, I allow each of the writ petit ions and hereby quash order dated April 30, 1990 Annr. 3 and order dated May 2/3-1990, Annr. 4, in Writ Petition No. 2186/1990 Kuldeed Srivastava v. State . I hereby quash and set aside the order dated April 30, 1990, Annr. 4, and order dated May 2, 1990, Annr. 5 in writ petition No. 2354/90 (Santosh Singh v. State) . I hereby quash and set aside the order Annr. 2, dated May 28, 1990 and Annr. 3, dated May 29, 1990 in so far as it relates to the petitioner, in Writ Petition No. 2359/1990. The removal/supersession of the committees of the respondents Bank/society is set aside and the appointment of the administrator is also set aside. The committees of the respondents Banks/society shall be allowed to manage the affairs of the Bank/society till such time a new committee is elected for which the Registrar will be free to initiate action immediately in accordance with rule 32 of the Rules. Costs made easy.Petitions Allowed. *******