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1998 DIGILAW 419 (KER)

Hassan v. Joint Registrar of Co-operative Societies

1998-08-28

K.K.USHA, K.NARAYANA KURUP, S.MARIMUTHU

body1998
Judgment :- K.K. Usha, J. The question referred for consideration of Full Bench is whether the view expressed by a Division Bench of this Court in George v. Joint Registrar, 1985 KLT 836 on the powers of the Registrar of Co-operative Societies to enroll new members to the society, have been impliedly over-ruled by the Supreme Court in K. Shantharaj & Am. v. M.L. Nagaraja & Ors., JT 1997 (5) SC 680. 2. We heard learned counsel appearing on behalf of the petitioners in these original petitions, learned Advocate General and counsel for party respondents. We also heard learned counsel Sri. George Poonthottam and Sri. Somasundaram who are appearing for petitioners in other original petitioners where similar points are raised, but are not posted before us. We heard learned counsel Sri. K. Radhakrishnan who is appearing on behalf of the respondents in O.P. 7311/98, which is not posted before us, but where similar contentions are raised by the petitioners. 3. The issue to be considered is the scope of the power of an administrator appointed under S.32 of the Kerala Co-operative Societies Act, 1969, in supersession of a committee of a Society to enroll new members to the Society. S.32 of the Kerala Co-operative Societies Act, 1969 thereinafter referred to as 'the Act') reads as follows: "32. Supersession of Committee: (1) If the Registrar is satisfied that the committee of any society persistently makes default or is negligent in the performance of the duties imposed on it by this Act or the rules or bye-laws or commits any act which is prejudicial to the interests of the society or wilfully disobeys or wilfully fails to comply with any lawful order or direction issued under this Act or the rules, the Registrar may, after giving the committee an opportunity to state its objections, if any, by order in writing remove the committee and (a) appoint a new committee consisting of not more than three members of the society in its place; or (b) appoint one or more administrator or administrators who need not be a member or members of the society, to manage the affairs of the society for a period not exceeding one years 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. " (2) The Registrar shall consult the financing bank and Circle Co-operative Union or State Co-operative Union as the case may be before passing an order under sub-s.(1). (3) Not withstanding anything contained in sub-s.(1) or sub-s.(2) it shall not be necessary to give an opportunity to the committee to state its objections and to consult the Unions and financing banks, in case where the Registrar is of the opinion that it is not reasonably practicable to do so, subject however to the condition that in such cases the period of supersession shall generally be for six months and in case a new committee, cannot be constituted or enter upon office in accordance with the bye-laws of the society within the period of supersession the period may be extended for a further period not exceeding six months-fa) in the case of a co-operative society only after consulting the circle co-operative union concerned; and (b) in the case of an Apex Society or a Central Society only after consulting the State Cooperative Union. (4) The committee or administrator or administrators so appointed shall, subject to the control of the Register 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. (5) The committee or administrator or administrators shall before the expiry of its or his or their term of office, arrange for the constitution of a new committee in accordance with the bye-laws of the society. (6) Every order made by the Registrar under sub-s.(1) shall be communicated to the circle co-operative union." 4. According to the petitioners, the power given to the administrator under Sub-s.(4) of S.32 would not take in the power to enroll new members to the society. Registrar is only expected to carry on the day to day functions of the Society and see that election is conducted and a new committee in accordance with the bye-laws of the Society be constituted. They would submit that a contra-view taken by a Division Bench of this Court in 1985 KLT 836 supra is no longer good law in the light of the decision of the Supreme Court in JT 1997 (5) SC 680 supra. 5. They would submit that a contra-view taken by a Division Bench of this Court in 1985 KLT 836 supra is no longer good law in the light of the decision of the Supreme Court in JT 1997 (5) SC 680 supra. 5. On the other hand, learned Advocate General would submit that the-view expressed by the Supreme Court has to be understood in the nature of the provisions contained under Ss.30 and 30A of the Karnataka Co-operative Societies Act, 1959 and the above decision cannot have any application to the Kerala Act. It was pointed out that even in the judgment of the Karnataka High Court, it is noted that sub-s.(2) of S.33 of the Kerala Act is differently worded. Since the decision of the Karnataka High Court was affirmed by the Supreme Court according to learned Advocate General, it has to be taken that the Supreme Court has concurred with the view of the Karnataka High Court that the wording of the Kerala Act is different. It is further contended by the learned Advocate General that the decision of the Supreme Court has to be taken as the one affirming the view of the Division Bench in 1985 KLT 836. A copy of the judgment of the Division Bench of the Karnataka High Court, which was affirmed by the Supreme Court in JT 1997 (5) SC 680 was made available by the learned Advocate General. 6. In 1985 KLT 836, the Division Bench had to consider the case of an administrator appointed under S.33 of the Act. Sub-s.(2) of S.33 reads as follows: "(2) The committee or administrator or administrators appointed under sub-ss.(1) & (1A) 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 interest of the society." The Division Bench took the view that 'the administrator functions as the managing committee of the society, in its absence. The administrator is the de jure committee in power when there is no elected committee. He has thus all the powers of the committee. It is admitted that the committee was entitled to enroll new members. The administrator is the de jure committee in power when there is no elected committee. He has thus all the powers of the committee. It is admitted that the committee was entitled to enroll new members. If so, S.33(2) statutorily clarifies that the administrator also has the same powers." The Bench affirmed the view taken by Bhaskaran, J. as His Lordship then was, in Sudhakaran v. Dy. Registrar of Co-operative Societies, 1980 KLT 658 as follows: "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 f the Committee, is not anything extra-ordinary in character so as to take it out of the purview f what is described in S.33(2) of the Act as day to day administration of the society." The Bench disagreed with the view taken by Sukumaran, J. in Gopalan v. Joint Registrar of Co-operative Societies, 19S5 KLT 446 where the learned judge had observed as follows: "Tiie power of enrolment of a member is provided in S.16 of the Co-operative Societies Act, which occurs in Chapter III having its heading: "Members of Co-operative Societies and their rights and liabilities". The statutory scheme is such that the-membership in a society is a matter I of crucial importance. That is why qualifications for membership are statutorily provided." "A denial of membership' is to be intimated to the applicant with reasons therefore. Expulsion of members is to be done only by the general body. These 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. The importance pertaining to membership is reflected in the rules providing for the procedure for admitting a person as a member of the society. Under R.16 a person has to make an application in writing in the form if any, laid down by the society. His application must be approved by the committee of the society. He must have fulfilled all the conditions laid down in the Act or bye-laws. There are matters which are properly left, to such a committee, which due to its intimacy with men and matters of the locality would be well-equipped to assess the qualifications and disqualifications of an applicant. His application must be approved by the committee of the society. He must have fulfilled all the conditions laid down in the Act or bye-laws. There are matters which are properly left, to such a committee, which due to its intimacy with men and matters of the locality would be well-equipped to assess the qualifications and disqualifications of an applicant. It is not to be treated as a routine act. In any event, it is not to be treated as a matter of management. 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". As mentioned earlier, the Division Bench took the view that administrator of the Society appointed to manage the Society has necessary power to admit new members. In Gangadharan v. Administrator, 1988 (1) KLT 624, U.L. Bhat, J. as His Lordship then was and in John v. Joint Registrar, 1992 (I) KLT 669, Viswanatha Iyer, J. disagreed with the view taken by Sukumaran, J. in 1985 KLT 446 and followed the Bench decision in 1985 KLT 836. 7. Before we go into the question whether the view taken by the Division Bench in 1985 KLT 836 has been impliedly over-ruled by the Supreme Court in JT 1997 (5) SC 680, we will first examine in detail, the judgment of the Karnataka High Court which was affirmed by the Supreme Court. One of the questions considered by the Division Bench of the Karnataka High Court was whether administrator appointed under S.30 of the Karnataka Co-operative Societies Act has power to enroll new members to the Society while he is in management of the same. It was noted that at the time of administrator's appointment, there were 234 members in the Society and the administrator admitted new membership to the extent of 222 members between 5.3.1992 and 23.10.1993 during the pendency of the Writ Petition. Following are the provisions of law under the Karnataka Co-operative Societies Act enabling appointment of administrator and special officer: "30. It was noted that at the time of administrator's appointment, there were 234 members in the Society and the administrator admitted new membership to the extent of 222 members between 5.3.1992 and 23.10.1993 during the pendency of the Writ Petition. Following are the provisions of law under the Karnataka Co-operative Societies Act enabling appointment of administrator and special officer: "30. Supersession of Committee: (1) If, in the opinion of the Registrar (a) the committee of a co-operative society persistently makes default or is negligent in the performance of the duties imposed on i t 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 is otherwise not functioning properly; or (b) a co-operative society is not functioning in accordance with the provisions of this Act, the rules or bye-laws or any order or direction issued by the State Government or the Registrar, the Registrar may, after giving the committee an opportunity to state its objections, if any, order in writing remove the-said committee, and appoint an administrator to manage the affairs of the society for such period, not exceeding one year, as may be specified by the Registrar. (2) The Administrator so appointed shall subject to the control of the Registrar and such instructions as he may give from time to time, exercise all or any of the functions of the committee or of any officer of the co-operative society and take such action as he may consider necessary in the interest of the society. (3) The administrator shall, before the expiry of his term of office arrange for the constitution of a new committee after holding the election in accordance with this Act, the Rules and the bye-laws of the Co-operative Society; Provided that in such an election no member of the Committee removed under sub-s.(1) shall, notwithstanding any tiling contained in this Act, the rules or the bye-laws, be eligible for being elected as a member of the committee, for a period of four years from the date of supersession of the committee under the said sub-section. Provided further that if the committee elected in accordance with this sub-section is also superseded within a period of one year from the date of its election, such supersession may extend to a period not exceeding three years. 30A. Provided further that if the committee elected in accordance with this sub-section is also superseded within a period of one year from the date of its election, such supersession may extend to a period not exceeding three years. 30A. Appointment of Special Officer: (1) Where the State Government on a report made to it by the Registrar or otherwise, is satisfied that any co-operative society is not functioning in accordance with the provisions of this Act or the rules made thereunder or its bye-laws or any order, direction, circular issued by the State Government or the Registrar it may, notwithstanding anything contained in this Act, by order, appoint a Special Officer for such co-operative Society for such period not exceeding two years: Provided that the State Government may, if it considers it necessary extend the said period of two years by such further period not exceeding one year. (3) The Special Officer subject to the control of the State Government and the Registrar, exercise and perform all the powers and functions of the committee of the co-operative society or any officer of the co-operative society and take all such actions as may be required in the interest of the co-operative society". It was observed by the Division Bench that Special Officer appointed under S.30A has wider powers and functions than the Administrator appointed under S.30. It was observed that while the administrator has to perform only the 'functions' of the committee, the Special Officer is entitled to perform all the 'powers' and also do the 'functions' of the committee. So also, the administrator is appointed only for managing the affairs of the society whereas a special officer is appointed for a co-operative society. 8. S.28A of the Karnataka Act provides that the management of a co-operative society shall vest in a committee constituted in accordance with the Act, Rules and bye-laws of such society. It further provides: "The committee shall exercise such powers, discharge such duties and perform such functions as may be conferred or imposed upon it by this Act, the rules and the bye-laws." The Division Bench observed that out of the three categories of authorities vested in the committee, the administrator can only perform the 'functions' of the committee, but cannot exercise the 'powers' vested in the committee. The Division Bench then.. The Division Bench then.. proceeded to consider whether admission of new members to the society is a power or function of the committee. It found that bye-law 15 of the bye-law of the society gives the authority to the committee to consider the applications for membership and the committee was entitled to either allow the application and admit members or reject the same. In such circumstances, admission of members is not a mere 'function' of the committee, but it is the 'power' of the committee to admit members or not. By the exercise of that authority, the legal relationship of the applicant vis-a-vis of the society is changed and accordingly, is a 'power' and not a mere 'function'. Reference was then made to Salmond on jurisprudence -12th Edition, page 229 where it was stated as follows: "A power may be defined as ability conferred upon a person by the law to alter, by his own will directed to that end, the rights, duties, liabilities or other legal relations, either of himself or of other persons." Definition of the words 'power' and 'function' in Black Law Dictionary, were referred and quoted as follows: "Power - The right, ability, authority or faculty of doing something. A power is an ability on the part of a person to produce a change in a given legal relation by doing or not doing a given act." "Function-"Function' means so perform, execute, administer". The Division Bench then proceeded to hold as follows: "On a reading of S.30 of the Act, it is clear that an Administrator is entitled to only perform function of the committee and to manage its affairs and he is not vested with the power of the committee as is the case of a Special Officer appointed under S.30A of the Act, If that be so„ admission of new members by the Administrator was clearly without authority and the learned judge was right in excluding them from taking part in that election." 9. Reference was made to the judgment of this Court in 1985 KLT 836 and it was held that the dictum 1 aid down therein cannot have any application while considering the authority of the Administrator and Special Officer under Ss.30 and 30A of the Karnataka Act. Reference was made to the judgment of this Court in 1985 KLT 836 and it was held that the dictum 1 aid down therein cannot have any application while considering the authority of the Administrator and Special Officer under Ss.30 and 30A of the Karnataka Act. The reason given for distinguishing the Kerala decision was as follows: "But it has to be noted that the wording of S.33(2) of the Kerala Co-operative Societies Act is slightly different from the wording of S.30 of the Act. In the Kerala Act, the Administrator has power to exercise all or any of the functions of the committee, whereas, in the Karnataka Act, the Administrator can only exercise all or any of the functions of the committee. Moreover, as stated earlier, the difference in the authority vested in an Administrator and a Special Officer, as is made in the Karnataka Act is not considered in the Kerala decision. The difference in the authority vested in an Administrator and the Special Officer in the Karnataka Act, is very significant which is absent in the Kerala Act". 10. The Division Bench of this Court, which referred the matter for consideration of a Full Bench had observed that it could not find any difference between the wording of the two provisions under the Karnataka Act as well as Kerala Act. For a comparative consideration, those provisions were quoted side by side as follows: "Section 32(4) of the Kerala Co-operative Section 30(2) of the Karnataka Co-opera Societies Act reads as follows: Live Societies Act reads as follows: The committee or administrator or adminis- The administrator so appointed shall subject tractors so appointed shall, subject to the to the control of the Registrar and such control of the Registrar and to such instruc- instructions as he may give from time to time, tions as he may be from time to time give, exercise all or any of the functions of the have power to exercise all or any of the committee or of any officer of the co-opera functions of the committee or of any officer tive society and take such action as he may of the society and take such action as may consider necessary in the interest of the be required in the interest of the society." society." We are in full agreement with the view expressed in the reference order. The Division Bench of the Karnataka High Court, while holding that the administrator has no power to enroll new members, considered the difference between the concept of the terms 'power' and 'function'. I came to the conclusion that enrolment of new members is in exercise of a power and not a mere function of the committee. If we apply the same principles to the wording of Ss.(4) of S.32 or sub-s.(2) of S.33, it can be seen that the power that has been given to the administrator was only to exercise all or any of the functions of the committee and not the powers of the committee. If that be so, we have no hesitation to hold that there is no difference in the scope of the two provisions under the Karnataka Act and the Kerala Act. But, if we refer to S.30A of the Karnataka Act, it can he seen that the special officer was empowered to perform all the powers and functions of the committee. Of course, the Division Bench of the Karnataka High Court has noted that this aspect has not been considered in 1985 KLT 836. 11. Now, we will come to the decision of the Supreme Court in JT 1997 (5) SC 680 supra, which affirmed the Karnataka decision. After quoting Ss.30 and 30A of the Karnataka Act, the Apex Court observed as follows: "It would be clear from the language of these provisions that the Administrator or special officer, subject to control of any of the functions of the society, and in the interest of the society take such action as is necessary for proper functioning of the society as per law. He should conduct elections as is enjoined thereunder. In other words, he is to conduct election with the members as on the roles and by necessary implication, he is not vested with power to enroll new members of the society." If there is any doubt, it has been further clarified in paragraph 8 of the judgment as follows: "Shri. Santhosh Hedge, learned senior counsel, contends that since the Administrator has power to conduct elections, by necessary implication, he has power to update the electoral lists by either enrolling the new members or substituting the legal representatives of the members in accordance with the bye-laws; therefore, he has power to enroll the members. We find that there is no force in the contention. We find that there is no force in the contention. The power of Administrator given under the statute to conduct election should be confined within the parameters set under the relevant provisions of the Act, Rules and Bye-laws. The Division Bench has minutely and carelessly gone into all the questions and agreed with the learned single judge that the Administrator has no power to enroll new members; but he has the power to organise election process in accordance with the provisions of the Act, the rules and the bye-laws of the society. In that view of the matter, we think that the High Court has not committed any error of law warranting interference". 12. Learned Advocate General and counsel appearing on behalf of the respondents could not bring to our notice any provision under the Act, Rules or the bye-laws of the Society which gives specific power to the administrator to enroll new members to the society. If no such specific power is given, it can be brought only under his general authority given under the provisions of S.32 or under S.33 of the Act. If we apply the dictum laid down by the Supreme Court in JT 1997 (5) SC 680, the provisions under Ss.32 and 33 would not be sufficient to give him the power to enroll new members. 13. We find no merit in the contention that since the decision of the Karnataka High Court, where 1985 KLT 836 has been distinguished, is affirmed by the Supreme Court, it has to be taken that the Supreme Court approved the decision in 1985 KLT 836. A reading of the judgment of the Supreme Court would not give such a meaning at all. Merely because the particular paragraph of the judgment of Karnataka High Court where a finding is entered that the administrator is not entitled to enroll new members, which also contained a reference to the Kerala decision has been quoted by the Supreme Court, it does not mean that the Supreme Court had approved the judgment of this Court in 1985 KLT 836. On the other hand, we find that the apex Court had specifically posted the question regarding the power to enroll new members in paragraph 8 of the judgment and held that the administrator has no power to enrol new members since such a power is not specifically given under the Act, Rules and Bye-laws and that such a power cannot be spelt out from the authority given to conduct the election. Therefore, the view taken by this Court in 1985 KLT 836 that the power given to the administrator to exercise all or any of the functions of the committee under sub-s.(2) of S.33 would take in the power to enrol new members is impliedly over-ruled by JT 1997 (5) SC 680. 14. In the case referred before us, it is submitted that the administrator was appointed under S.32 of the Act. Since the wording of sub-s.(4) of S.32 and sub-s.(2) of S.33 are similar, the dictum laid down by the Supreme Court in JT 1997 (5) SC 680 would be applicable in these cases also. 15. The question referred is answered as above. It is submitted by counsel appearing on both sides that apart from the question referred, there are other individual issues involved in these Writ Petitions. We therefore remit these Original Petitions for being heard by appropriate Benches on merits.