BALAKA CO-OPERATIVE HOUSING SOCIETY LTD. v. SHIBDAS RAHA
1991-08-22
ABANI MOHAN SINHA, S.K.MUKHERJEE
body1991
DigiLaw.ai
ABANI MOHAN SINHA, J. ( 1 ) THIS application under Article 227 of the Constitution for revision, at the instance of the petitioner-Co-operative Society, is directed against the judgment and order passed by member of West Bengal Co-operative Tribunal in Appeal No. 45 of 1989 from the order passed by the Arbitrator, Assistant Registrar, Co-operative Society. It is the case of the petitioner that the opposite party is a member of the petitioner-Co-operative Housing Society which was registered under the bengal Co-operative Societies Act, 1940 in November, 1972. The members were allotted flats in the multi-storeyed building owned by the society and each member was allotted a space for parking one car in the ground floor of the said building. The opposite party on his letter of request given to the Secretary of the Society on 7/09/1987 was permitted to park his second car temporarily in the space of the Co-operative Society in addition to his space, for parking one car. As he continued to keep the car for long he was requested by the Secretary on 13/01/1988 to remove the second car from the compound of the society. As the other members did not agree to the continuance of such permission, the society in the meeting of the Managing Committee held on Aug. 11, 1988 directed the members keeping more than 1 car in the compound to remove it by 12/09/1988. As the opposite member did not remove his extra car, by a resolution adopted in the meeting held on 10/10/1988 which was attended by the opposite party, he was directed to remove the car without delay. The opposite party did not comply with such direction and instead gave a reply by way of show-cause justifying that his action was in accordance with law. The society in the meeting of the Managing Committee held on 10/11/1988 which was attended by the opposite party and other members adopted a resolution against the opposite party imposing a fine of Rs. 30. 00 per day on him payable from 13/09/1988 till the date of removal of the car. The opposite party filed a dispute case before the Registrar of Co-operative Societies, West Bengal challenging the fine imposed upon him as illegal and inoperative and also demanding that this order was liable to be quashed.
30. 00 per day on him payable from 13/09/1988 till the date of removal of the car. The opposite party filed a dispute case before the Registrar of Co-operative Societies, West Bengal challenging the fine imposed upon him as illegal and inoperative and also demanding that this order was liable to be quashed. ( 2 ) THE arbitrator rejected the claim of the opposite party and held that the opposite party as a member violated the bye-law No. 46 (a) framed by the Co-operative Society and as such liable to pay the fine imposed by the society for violation of the bye-laws by keeping an extra car in the compound of the society. Being aggrieved by such judgment and order, the opposite party preferred an appeal before the member of the Co-operative Tribunal against the award of the arbitrator. The Appellate Authority, i. e. , the Tribunal set aside the order of the arbitrator holding that the resolution imposing fine on the opposite party could not be legal and valid as it was not confirmed by the members in the general meeting. Accordingly, he set aside the order of the arbitrator. Being aggrieved by such decision, the society has come up in revision before this court under Art. 227 of the Constitution. ( 3 ) THE short point involved in this case is the impugned resolution dt. 10/11/1988 imposing fine on the opposite party is legal and valid. ( 4 ) MR. Nirmal Ghosal, learned Advocate, duly assisted by Sri Mihir Das and Sri B. K. Ghosal representing the petitioner has taken us to the relevant provisions of the different Sections and the rules thereunder contained in West Bengal Co-operative Societies Act, 1940, 1973 and 1984 and has urged that the resolution imposing fine on the opposite party is valid and legal and that no confirmation of such resolution by the members in the general meeting was necessary for making it effective. ( 5 ) MR. B. B. Ghose, learned Advocate, duly assisted by Mr. P. K. Patra on the other hand has urged that the judgment and order of the Appellate Authority, i. e. member of Co-operative Tribunal are correct and the impugned resolution of the Managing Committee without being confirmed by the members in the general meeting is invalid and illegal and is liable to be quashed. They have supported the judgment of the Appellate Authority.
They have supported the judgment of the Appellate Authority. It has further been urged that the bye-laws 46 (a) of the petitioner-Co-operative Housing Society specifically lays down that the committee shall have the power to fine a member by votes of 2/3rd of the members of the committee present and voting; but subject to the confirmation by the general meeting. He adds that as the impugned resolution was not confirmed by the general meeting, it must be held to be invalid and illegal and as such it was rightly set aside by the Appellate Authority. ( 6 ) FOR the sake of clarity the relevant bye-law 46 (a) of petitioner-Society may be quoted below :46 (A) : "to dispose of applications for membership and to allot shares, to admit new members and to fine, suspend, remove or expel existing members by votes of 2/3rd of the members of the committee present and voting at a meeting; subject to confirmation by the general meeting in case of fine, suspension, removal and expulsion. " ( 7 ) IT is not disputed by the contesting parties that the impugned resolution though supported by 2/3rd members of the committee present and the voting at a meeting of the Managing Committee was not confirmed by the members in any general meeting. It is also the admitted case of both sides that each member of the Housing Society was allotted space for parking one car belonging to him. The member of Co-operative Tribunal, the Appellate Authority, on consideration of the materials on record came to such finding that other things remaining equal, a defaulting member who is guilty of occupying additional space of the society for keeping more than one car would be dealt with under bye-law 46 (a) and could be punished by Managing Committee to pay a fine. But such resolution of the Managing Committee in the first place, must be approved by 2/3rd of the members of such committee present and voting at the meeting and secondly, such resolution must receive the confirmation of the members in the general meeting. So far as the first part of the order is concerned, it is not disputed by either side that it was supported by 2/3rd members present and voting at the meeting. The dispute is over the second part.
So far as the first part of the order is concerned, it is not disputed by either side that it was supported by 2/3rd members present and voting at the meeting. The dispute is over the second part. In other words, it has been urged that the impugned resolution have not been confirmed by the members in the general meeting in terms of the bye-law 46 (a) and as such it was illegal and should not have been carried into effect. Mr. Ghosal, learned Advocate for the petitioner, has on the other hand argued that the second part of bye-law 46 (a) is a redundant provision or is in excess of the Rule 48 of the West Bengal Co-operative Societies Rules, 1987 which authorises a Co-operative Society to frame bye-law in this regard. It is said that the second part being inconsistent or in conflict with the provisions of the Act and the Rules framed thereunder be taken to be void and the provisions of the Act and Rules shall prevail. ( 8 ) THE bye-laws framed and registered by the societies indicate that the society was registered in November, 1972 in accordance with Bengal Co-operative Societies Act, 1940 and Rules framed in 1942 under such Act were followed in framing the bye-laws. Sub-rules (2) and (3) of Rule 12 of the 1942 Rules lay down that every Co-operative Society must be authorised by the Registrar by general and special order to make bye-laws in respect of imposition of fine and penalties on members. In the subsequent Act, i. e. , West Bengal Co-operative Societies Act, 1973 and the rules framed thereunder in 1974, this position was changed enlarging the scope of this rule. Sub-rule (2) of Rule 12 of these rules empowers societies to make bye-laws for imposition of fine and penalties on members and consequences of failure of any member to pay any sum due. Next he has drawn our attention to the West Bengal Co-operative Societies Act, 1983 and the rules framed thereunder in 1987. This Act was made effective from 1984. Section 3 of this Act specifically repeals the West Bengal Co-operative Societies Act, 1973. Sub-Section (2) of this Section indicates that any action taken or proceeding commenced under the previous Act of 1973, 1940 and 1912 shall be deemed to have been done and suffered or taken under this Act (1983 Act ).
This Act was made effective from 1984. Section 3 of this Act specifically repeals the West Bengal Co-operative Societies Act, 1973. Sub-Section (2) of this Section indicates that any action taken or proceeding commenced under the previous Act of 1973, 1940 and 1912 shall be deemed to have been done and suffered or taken under this Act (1983 Act ). Sub-Section (3) of this Section also lays down that every Co-operative Society which exists at the commencement of this Act and which has been registered or deemed to have been registered under the Co-operative Societies Act, 1912 or the Bengal Co-operative Societies Act, 1940 or under West Bengal Co-operative Societies Act, 1973 shall be deemed to have been registered under this Act and the bye-laws of such societies shall, in so far as they are not inconsistent with the provisions of this Act, continue in force until altered or rescinded and shall to such extent be deemed to be registered under this Act. So, there is no doubt as to the application of the Co-operative Societies Act, 1983 to the petitioner-Society which was registered in 1973 under the relevant Act of such time. Rule 48 of the Co-operative Societies Rules, 1987 which defines the powers of the Board or Managing Committee lays down that the Board of the Co-operative Societies shall have full control over the administration and the business of the societies and shall exercise all or any of the following powers as may be provided in the bye-laws. Clause (b) of the Rule 48 empowers the Board to fine, suspend, remove or expel members. The proviso to such rule again lays down that no such action shall be taken by the Board without giving the members concerned an opportunity of being heard and the decision is taken by a resolution in the meeting passed by 2/3rd of members of the Board present. Mr. Ghosal has drawn our pointed attention to the fact that an evolutionary process, the concept of natural justice has been engrafted in the Rules of 1987 inasmuch as it provides for giving opportunity to the erring or defaulting member of being heard. The second requirement for making such resolution is that it must be passed by 2/3rd of the members of the Board present.
The second requirement for making such resolution is that it must be passed by 2/3rd of the members of the Board present. He has referred to sub-rule (3) of Rule 11 which empowers a Co-operative Societies to make bye-laws on any subject, inter alia, for imposition of fine and penalties on any member of the society. Further he has referred to S. 17 of the 1983 Act which provides for the procedure of amendment of bye-laws. It is laid down that bye-laws for carrying out the functions of a society under the Act and Rules shall not be valid unless they have been registered under Sub-Sec. (1) of S. 15 of the Act. Mr. Ghosal has also drawn our attention to the West Bengal Co-operative Societies (Amendment) Act, 1990 amending certain provisions of the Co-operative Societies Act, 1983. Section 6 of that amending Act inserts a proviso after under S. 17 (1) of the Act. The proviso is to the effect : "provided that the provision of any bye-law shall if is in conflict with the provision of this Act or the Rules, be void and thereupon the matters governed by such bye-law shall be governed by this Act or the Rules until the bye-law is amended to remove the conflict. " According to Mr. Ghosal the condition in bye-law 46 (a) of the society which requires confirmation of the resolution of imposition of fine by the member in any general meeting is clearly in conflict with Rule 48 of 1983 Act which nowhere speaks of ratification or confirmation of resolution of the nature like imposition of fine by the member of the society in any general meeting. Rule 11 of the West Bengal Co-operative, Societies Rules, 1987 in sub-rule (1) says that every Co-operative Societies shall make bye- laws not inconsistent with the provisions of the Act and Rules in respect of the matters which inter alia, include the imposition of fine and penalties on members of the societies. Sub-rule (3) lays down that such bye-laws may be made by the Co-operative Society on matters incidental to the management of its business. Sub-rule (4) of this Rule again clearly lays down that where there is conflict between the rules and the bye-laws the provision of the rule shall prevail. In our view, there is substance in the argument of Mr. Ghosal.
Sub-rule (4) of this Rule again clearly lays down that where there is conflict between the rules and the bye-laws the provision of the rule shall prevail. In our view, there is substance in the argument of Mr. Ghosal. The scheme as made out by the Sections and the rules referred to above clearly speaks in unequivocal term that society registered under the West Bengal Co-operative Societies Act cannot frame any bye-law which. will be in conflict with the Rules or the Act, and that in case of conflict or inconsistency between the rules and the bye-laws, the provision of the rule shall prevail. It has been urged by Mr. Ghosal appearing for the opposite party that it shall be taken that the bye-law 46 (a) which was originally framed by the society in accordance with Co-operative Societies Act, 1940 and the Rules of 1942 continued after the passing of the Co-operative Societies Act, 1973 and the Rules thereunder and lastly, by virtue of S. 3 of the present Act, 1983 and the rules framed thereunder in 1987 should be taken to have been registered under the present Act and should be taken to be valid and legal and as a bye-law framed in accordance with the rules of the present Act. The argument is fallacious. For Rule 48 to which we have occasions to refer more than once does not provide for ratification or confirmation of any resolution of imposition of fine, suspension or removal or expulsion of a members by the member in any general meeting. According to such rules, it would be sufficient for the Board or Managing Committee to adopt such resolution specially of imposition of fine after giving an opportunity to the member concerned on being heard and to get the resolution passed by 2/3rd of the members of the Board or Managing Committee present. The provision for ratification or confirmation, in our view, is in excess of the rule and is inconsistent or is in conflict with the rules and as such cannot be made to prevail in any matter relating. to imposition of fine on any member or other matters like suspension etc. ( 9 ) SECTION 2 (6) of the 1983 Act defines : "bye-law means a bye-law registered under this Act and includes an amendment thereof. " So, we are to fall back upon authorities in defining bye-laws.
to imposition of fine on any member or other matters like suspension etc. ( 9 ) SECTION 2 (6) of the 1983 Act defines : "bye-law means a bye-law registered under this Act and includes an amendment thereof. " So, we are to fall back upon authorities in defining bye-laws. A bye-law has been said to be a ordinance affecting the public or some portion of the public, imposed by some authorities clothed with statutory powers of ordering something to be done or not to be done and accompanied by some sanctions or penalties for its non-observance. Further it involves this consequence that if validly made, it has the force of law within the sphere of its legitimate operation Halsbury's Law of England, 3rd Edition, Volume 24, page 510. In the Commercial Dictionary by A. G. Puller and D. W. Alcock 1st Edn. bye-law has been defined as rules made by some authorities (subordinate to the legislature) for the regulation, administration or management of a certain district, property, undertaking etc. and binding on all persons who come within their scope. To be a valid bye-law it must be intra vires, certain in its terms, positive and reasonable and must not be retrospective or repugnant to the general law of the land. Similar is the definition given in Wharton's Law Laxicon. It has been judicially held that bye-laws must be intra vires the authority, who makes it, and not repugnant to the law of the country, certain in terms, positive and reasonable. It has been held in Municipal Committee v. Firm Kaluram Hiralal, AIR 1944 Nag 73, Division Bench, that a bye-law must not be in excess of the statutory power authorising it, it must not be repugnant to that statute or to the general principles of law and it should not be unreasonable. Repugnancy implies a conflict between two provisions neither of which can be given effect to without infringing the other. If the bye-law keeps to the prescribed limits and is valid, the question of necessity or expedience of it is not open to question in a Court of law unless it is unreasonable (page 75 ).
Repugnancy implies a conflict between two provisions neither of which can be given effect to without infringing the other. If the bye-law keeps to the prescribed limits and is valid, the question of necessity or expedience of it is not open to question in a Court of law unless it is unreasonable (page 75 ). In a recent Division Bench decision of our High Court Commissioner for the Port of Calcutta v. Asit Ranjan Majumdar, AIR 1962 Cal 530 , it has been held that a bye-law can be challenged as bad on any one of the following grounds : 1. That it is not made, sanctioned and published in the manner prescribed by the Statute which authorises its making. 2. That it is repugnant to any other law of the country. 3. That it is repugnant to the statute under which it is made. 4. That it is uncertain. 5. That it is unreasonable (para 26 of the decision), It has further been held in the said decision that the doctrine of pending proceeding does not apply to administrative bodies and the administrative bodies must apply the law as it is on the day when it makes the order or takes the action. Where a new bye-law validly and effectively repealed the old bye-law which was in force on the date of presentation of the petition it is the new bye-law which must be applied to the pending case (Paragraphs 40, 41 and 42 ). ( 10 ) MR. Ghosal has also referred to a Supreme Court decision Co-operative Central Bank Limited v. Additional Industrial Tribunal, AIR 1970 SC 245 : (1970 Lab IC 285 ). It has been laid down in this decision that the bye-laws of a Co-operative Society framed in pursuance of the provisions of the Act cannot be held to be law or to have the force of law. If a statute gives power to Government or other authority to make rules, the rules so framed have the force of statute and are to be deemed to be incorporated as a part of the statute. That principle, it has further been held, however, does not apply to bye-laws of the nature that a Co-operative Society is empowered by the Act to make. The bye-laws are meant for governing the internal management, business or administration of a society.
That principle, it has further been held, however, does not apply to bye-laws of the nature that a Co-operative Society is empowered by the Act to make. The bye-laws are meant for governing the internal management, business or administration of a society. They are of the nature of the Articles of Association of a Company incorporated under the Companies Act. They may be binding between the persons affected by them, but they do not have the force of a statute (Para 10 ). ( 11 ) MR. Ghosal has also referred to Craies on "statute Law", 5th Edition. It has been observed that bye-laws made in pursuance of a statutory power must not go beyond, not be repugnant to, the enactment under which they are made (page 301 ). He has further drawn our attention to the comment made in this book vu the effect of repeal of Act under which bye-laws are made. "if the statute under which by-laws are made is repealed, those bye-laws are impliedly repealed and cease to have any validity unless the repealing statute contains some provisions preserving the validity of the bye-law notwithstanding the repeal. " (307 ). ( 12 ) ON pursuing this legal principle as propounded by judicial decision and authorities, we are of the view that bye-laws cannot be placed higher than that of the rules or Sections of a statute which empowers a society, an establishment, or Government or any of its bodies to frame bye-laws. They cannot go beyond the express authority conferred on them in framing the bye-laws. Nor they can frame any bye-law which expressly or impliedly goes against or beyond the provisions of any Sections, rule or rules of the statute. In the present case, R. 48 of the Co-operative Societies Act, 1983 does not require the resolution of the Board or the Managing Committee of a Co-operative Society for imposition of fine on any of its members to obtain the approval or ratification or confirmation of all the members in any general meeting. So, this provision as to confirmation or ratification by the general members is in excess or is inconsistent with the provision of the rule and, therefore, cannot be valid and legal.
So, this provision as to confirmation or ratification by the general members is in excess or is inconsistent with the provision of the rule and, therefore, cannot be valid and legal. Further it may be said that the bye-laws are meant for the internal management of the society and the purpose of the management will be frustrated if at every stage the Board or the Managing Committee of the Co-operative Society which has been delegated with the authority of the members as an Executive Body to run the day to day administration of a society to seek approval or confirmation or ratification such resolution of the members in general meeting. In this context, such provision may be termed as unreasonable and unsuitable for the purpose of the management of a Co-operative Society. ( 13 ) FURTHER, it may be said that there may be emergencies requiring the suspension, removal or expulsion of any member of the society for gross misconduct, dereliction of duty or violation of the rules and bye-laws of the society or any of the provisions of the Co-operative Societies Act. In such a case, immediate action may be necessary to be taken. If the Executive Body, Board, or Managing Committee of the Co-operative Society or of any Organisation which is constituted under the rules or bye-laws of the society is compelled to wait for confirmation or ratification of such measures by the majority of the members of the Co-operative Society in a general meeting then such measures will be futile and cannot be taken at all in the emergent facts and circumstances of a particular case and the rules and bye-laws if framed, providing for such confirmation and ratification of the measures taken by the Board by the majority of the members in a general meeting, such rules and bye-laws should be termed as unworkable and unreasonable and would destroy the very principle of delegation of powers by the general members to a body selected out of them which may be termed as Executive Committee, Managing Committee or Board. ( 14 ) SO, in our view, the judgment and order of the Appellate Authority cannot be upheld and must be set aside. ( 15 ) THE judgment and order of the Arbitrator should, therefore, be restored. ( 16 ) THE cost of the proceeding is assessed at 10 G. Ms.
( 14 ) SO, in our view, the judgment and order of the Appellate Authority cannot be upheld and must be set aside. ( 15 ) THE judgment and order of the Arbitrator should, therefore, be restored. ( 16 ) THE cost of the proceeding is assessed at 10 G. Ms. ( 17 ) S. K. MOOKERJEE, J. :- I agree. Petition allowed.