Research › Search › Judgment

Kerala High Court · body

2000 DIGILAW 530 (KER)

Thomas v. Jaihind Powerloom Industrial Coop Society Ltd

2000-10-11

R.BHASKARAN

body2000
JUDGMENT R. Bhaskaran, J. 1. Petitioners and three others were the Directors of the first respondentCooperative Society. Out of seven Directors, K. S. Mohini became disqualifieddue to her absence for more than four meetings. Shri B. G. Jose tendered hisresignation. Thereafter, according to the petitioners, the resignation of ShriParameswaran (4th petitioner) was obtained by force in the night of 29th June2000. The next day, the 4th petitioner met the Secretary of the Society andapprised him of the incident and requested him not to remove him from theDirectorship. On 30th June 2000, 5 Directors participated in the meeting. 2. The 4th respondent President resigned from the Director Board. Thepetitioners made Ext. P4 representation to elect a new President. However, byExt. P5 an Administrator was appointed for the Society. The Original Petitionwas filed to challenge Ext. P5. 3. The main contention raised in the O.P. was that the procedure fixed underS.33(1) of the Cooperative Societies Act was not complied with before issuingExt. P5. It is also stated that as per the Bye law 20(d), the resignation takeseffect only when the Director Board approves the resignation. Since it was notplaced before the Director Board there was still the quorum and theAdministrator could not be appointed. 4. The Original Petition was admitted on 19th July 2000 and urgent noticeordered in the O.P. and the application for stay. On 21st August 2000, theadditional 6th respondent issued Ext. P6 election notification for conductingelection cm 6th October 2000. The petitioners amended the Original Petition tochallenge Ext. P6 election notification. The Original Petition was heard andJudgment reserved on 4th October 2000. There was also an interim order tostay the declaration of the result of the election to be held on 6th October2000. 5. The grounds raised in the O.P. are that Ext. P5 order is illegal as no noticewas published inviting objection as required under the proviso to S.33(1) of theAct. It is only in cases where the Registrar is satisfied that it is not practicableto do so that notice is dispensed with under the Act. As per the bye law of theSociety R.20(d) the resignation of a Director takes effect only when theDirector Board approves the resignation. The resignation of the three Directorswere not approved by the Director Board. The resignation of the 4th petitionerwas obtained by force and the same was intimated to the Secretary the nextmorning itself. The consequent election notification also is illegal. 6. The resignation of the three Directorswere not approved by the Director Board. The resignation of the 4th petitionerwas obtained by force and the same was intimated to the Secretary the nextmorning itself. The consequent election notification also is illegal. 6. A counter affidavit is filed on behalf of the 2nd respondent. It is stated in thecounter affidavit that there is no clause in S.33(1) of the Kerala CooperativeSocieties Act for publishing a notice by the Registrar before appointing anAdministrator. It is also stated that out of the seven Directors, one committeemember became disqualified. Out of the remaining six, Shri P. T. Thomasresigned and his resignation was accepted by the Committee on 15thSeptember 1999. Thereafter, he withdrew his resignation which was alsoaccepted by the Committee. It is contended that once a member resigns itcould not be withdrawn and therefore he ceased to be a member of thecommittee. In that view of the matter, after the resignation of Mr. Jose and thePresident, the question whether the 4th petitioner's resignation was valid ornot was not very relevant as even otherwise there was no quorum and theSecretary was justified in requesting for appointment of an Administrator. 7. A reply affidavit is filed by the first petitioner Shri P. J. Thomas. It is statedthat his resignation was not accepted by the Board of Directors. As per R.38 ofthe Kerala Cooperative Societies Rules, the resignation take effect only whenit is accepted by the Board of Directors. Even after 15th September 1999, thefirst petitioner was attending the Board meeting. He has attended 10 meetingsof the Board of Directors alter the so - called resignation. 8. In the above circumstances, the questions for decision are: 1. Whether Ext. P5 order of appointment of Administrator without notice by the Registrar is valid. 2. Whether P. J. Thomas was a committee member at the relevant time and whether the withdrawal of his resignation was valid. 3. Whether the finding that there was no quorum for the Managing Committee to continue is correct. 4. Whether the declaration of election and conduct of the election is valid. 9. The proviso to S.33(1) of the Cooperative Societies Act makes it mandatoryto order a notice on the notice board of the Headquarters of the Societyinviting objections to the making of the order of appointment of Administratorand consider such objections. 4. Whether the declaration of election and conduct of the election is valid. 9. The proviso to S.33(1) of the Cooperative Societies Act makes it mandatoryto order a notice on the notice board of the Headquarters of the Societyinviting objections to the making of the order of appointment of Administratorand consider such objections. However, the further proviso states that, it shallnot be necessary to publish such notice in cases where the Registrar issatisfied that it is not reasonably practicable to do so. in the present case Ext.P5 does not disclose any reason for dispensing with the notice. Moreover, thecounter affidavit filed by the 2nd respondent also does not show that the noticeunder the proviso to S.33(1) was not reasonably practicable. On the otherhand, the definite case in Para.6 of the counter affidavit is that S.33(1) of theKerala Cooperative Societies Act does not provide any clause fur publishing anotice by the Registrar before appointing an Arbitrator in a Society. 10. The second proviso to S.33(1) cannot be interpreted in such a way as totake away the effect of the first proviso and it is only in cases where thecircumstances show that issue of a notice under the first proviso is reasonablynot practicable that a notice can be dispensed with. Any other interpretationwould nullify the effect of the first proviso and lead to arbitrary action on thepart of the authorities to meddle with the democratic functioning of a society. 11. This Court in Sadasivan v. Joint Registrar [ 1994 (2) KLT 238 ] hasconsidered the case of an order passed after notice and the order only statedthat the explanation is not satisfactory. It is held by this Court that appointmentof an Arbitrator is a very serious matter and it entails civil consequences. It isstated that a quasi judicial order which has serious impacts ought to givereasons in support of it, particularly on the facts of the case when there is amass of conflicting versions and materials either way, with assertions andcounter assertions. 12. In Registrar of Cooperative Societies v. Sasi [ 1992 (2) KLT 942 ], aDivision Bench of this Court had occasion to consider a case of similar natureas in Ext. P5. In that case also the order appointing Arbitrator did not give anyreason for not publishing a notice inviting objections. This. 12. In Registrar of Cooperative Societies v. Sasi [ 1992 (2) KLT 942 ], aDivision Bench of this Court had occasion to consider a case of similar natureas in Ext. P5. In that case also the order appointing Arbitrator did not give anyreason for not publishing a notice inviting objections. This. Court said asfollows: "We are not satisfied that he acted mindlessly and in disregard or in violationof the requirement regarding the publication of notice." Another Division Benchof this Court in Deputy Registrar of Cooperative Society v. George [1974 KLT189] has stated that it is quite unnecessary that an order passed under S.33(1)should expressly recite that the requirement of the notice has been dispensedwith. But in that case the counter affidavit has stated that it was not practicableto issue notice to the members. In the absence of any averment even in thecounter affidavit that notice under the proviso to S.33(1) was not practicable, itis possible to contend that Ext. P5 has to be struck down for violation of theprocedure prescribed for appointment of Administrator and there is great forcein the contention also. However, on the facts of this case, I do not think thatthere is sufficient ground to interfere in exercise of my jurisdiction underArt.226 of the Constitution of India. 13. As already noticed, out of the seven members of the managingCommittee, K. S. Mohini became disqualified on account of not attending thecommittee meeting for four consecutive meetings. Shri P. J. Thomas, who isthe first petitioner in this petition had admittedly resigned from the Board ofDirectors. In the counter affidavit, it is stated that the resignation was acceptedby the committee in its meeting held on 15th September 1999 and on 11thOctober 1999, he withdrew his resignation and the committee accepted thewithdrawal at the meeting held on 28th October 1.999. It is stated in thecounter affidavit that this withdrawal has no authority as per the clause inS.33(1) of the Act and the decision in Sadasivan's case [ 1994 (2) KLT 238 ]. Inthe reply affidavit filed by the first petitioner, it is stated that his resignation wasnever accepted by the Board of Directors and it takes effect only when thesame is accepted by the Board. Inthe reply affidavit filed by the first petitioner, it is stated that his resignation wasnever accepted by the Board of Directors and it takes effect only when thesame is accepted by the Board. It is however stated that even after 15thSeptember 1999 he was acting and attending in the meetings in the capacityof a member of the Board and he has attended several meetings about 1,0which could be seen from the minutes book and other related documents.Prima facie, it is impossible for a member who has tendered his resignation tocontinue in the managing committee and no provision has been pointed out forthe managing committee to accept the withdrawal of resignation. Theconsistent view taken by this Court in all the decisions quoted above is thattendering of resignation will have the effect of terminating membership fromthe committee. This is also clear from the Explanation to S.33(1) of the Act.The learned Government Pleader also brought to my notice the unreportedJudgment in O.P. No. 13060 of 1998 and connected cases where a learnedsingle Judge of this Court took note of the decision in Varma v. Joint Registrar[ 1987 (2) KLT 420 ] and Sadasivan v. Joint Registrar [ 1994 (2) KLT 238 ]. It isstated that though sub-rule (4) of R.38 requires the President to place theresignation before the committee for consideration, the committee has no roleto play in the matter of acceptance or non acceptance of the resignation,inasmuch as it takes effect on its being tendered to the President. In the lightof the above statement of law, the continuance of the first petitioner in themanaging committee does not seem to be according to the Act and the rules.Out of the remaining five members Shri B.G. Jose also tendered hisresignation. The resignation is not in dispute. It is the resignation of the 4thpetitioner Shri Parameswaran that is in dispute. In his case also, he admits theresignation in the letter of resignation, but he states that it was obtained bythreat. He has not elaborated in the O.P. as to the circumstances under whichhe signed in the resignation letter. Therefore, by his resignation the minimumnumber of persons required to have the quorum of the committee meeting wasnot available. In his case also, he admits theresignation in the letter of resignation, but he states that it was obtained bythreat. He has not elaborated in the O.P. as to the circumstances under whichhe signed in the resignation letter. Therefore, by his resignation the minimumnumber of persons required to have the quorum of the committee meeting wasnot available. It is possible to contend that the question whether theresignation of the 4th petitioner was valid or was made under threat wouldhave been considered if a proper notice was issued under the proviso toS.33(1) and a finding by the Registrar in that respect would be very material.This Court could have directed an enquiry regarding that fact. But thePresident of the Committee Shri C. S. Preman also resigned on 3rd July 2000.Therefore, it is clear that the majority of the committee members had resignedfrom the committee and it is not possible to conduct the affairs of the Societyin a satisfactory manner. No doubt, in Sadasivan's case, this Court has heldthat there is no automatic cessar of the committee by want of quorum. But it isalso clear that it is not possible to take any policy decision for the properworking of the society and it is not in the interest of the society in such a stateof affairs have to continue in office. 14. Pending the O.P., an election have been conducted to the managingcommittee and there is no case for the petitioners that the Administrator hasenrolled new members and the interest of the existing members is in any wayprejudiced by the act of the Administrator. Since the election is already overand the declaration of the result alone is withheld on the basis of the interimorder in the O.P., I think it will be only in the interest of the Society if the resultis declared and the new committee takes charge of the affairs of the Society. In the result, the O.P. is dismissed.