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2004 DIGILAW 178 (KER)

Anil Akkara v. The Registrar of Co-Operative Societies

2004-04-19

A.LEKSHMIKUTTY, CYRIAC JOSEPH

body2004
Judgment :- Cyriac Joseph, J. 1. The question that arises for consideration in this Writ Appeal is whether the Representative General Body of a co-operative society is competent to amend the byelaws of the Co-operative society. 2. This Writ Appeal is filed against the judgment in O.P.No.31240 of 2002 which was dismissed by the learned Single Judge. The appellant herein was the petitioner in the Original Petition and the respondents herein were the respondents in the Original Petition. 3. The petitioner is a member and share holder of the third respondent – Adat Farmers Service Co-operative Bank Limited (hereinafter referred to as ‘the Bank’) which is governed by the provisions of the Kerala Co-operative Societies Act, 1969 (hereinafter referred to as ‘the Act’) and the Kerala Co-operative Societies Rules, 1969 (hereinafter referred to as ‘the Rules’). 4. An election to the managing committee of the Bank was held on 28.11.1998 and the elected managing committee took charge on 5.12.1998. As per the provisions contained in Section 28 of the Act and in the Bye laws of the Bank, the term of office of the managing committee was only three years and hence the term of office of the managing committee which took charge on 5-12-1998 was due to expire on 4.12.2001. In the meanwhile Section 28(1) of the Act was amended with effect from 1.1.2000 providing that the general body of a Co-operative society shall constitute a committee for a period not exceeding five years in accordance with the bye laws and entrust the management of the affairs of the Co-operative society to such committee and that a Committee constituted prior to the commencement of the Kerala Co-operative Societies (Amendment) Act, 1999 shall be eligible to continue for a period of five years. In Thopramkudy Service Co-operative Bank Ltd. v. Assistant Registrar of Co-operative Societies, [2001 (2) KLJ 400], a Division Bench of this Court held that when the bye laws of a Society provided a term of three years for its managing committee, the committee could not continue beyond the term of three years merely by virtue of the amendment brought about to Section 28(1) of the Act. It was also clarified that the Third Proviso to Section 28(1) of the Act only provided that a committee constituted prior to the commencement of the Kerala Co-operative Societies (Amendment) Act 1999, would be eligible to continue in office and that it did not provide that such a committee would continue for a period of five years. In other words, the said Proviso merely made such a committee eligible to continue in office and section 28(1) of the Act did not automatically extend the term of the Managing Committee. It only limited the period of the Managing Committee to a maximum of five years. Unless there was an amendment of the bye laws enhancing the term of the managing committee to five years, the managing committee could not continue beyond the original term of three years stipulated in the bye laws. Hence, the managing committee of the Bank which took charge on 5-12-1998 could continue in office beyond the period of three years only if the byelaws of the Bank were amended enhancing the term of the managing committee. Therefore, the Representative General Body of the Bank at its meeting held on 18.2.2001 amended Clauses 21(1) and 24(1) of the byelaws of the Bank to stipulate that the term of the Committee and of the elected members of the Committee shall be five years from the date of taking charge. The said amendments to Clauses 21(1) and 24(1) of the byelaws of the Bank were registered by the Joint Registrar of Co-operative Societies, Thrissur as per Ext.P3(a) letter dated 15.5.2001. Thereafter the Representative General Body of the Bank at its meeting held on 7th October, 2001 further amended Clause 24 of the byelaws by adding sub clause (1)(a) which provided that the term of office of the existing Managing Committee of the Bank shall be five years from the date of taking charge. The object of the above amendment to Clause 24 of the byelaws was to clarify that the Managing committee which took charge on 5.12.1998 could continue in office for a period of five years from 5.12.1998, i.e., upto 4.12.2003. The above mentioned amendment to Clause 24 of the bye laws was registered by the Joint Registrar of Co-operative Societies, Thrissur as per Ext.P3(b) letter dated 3.11.2001. The above mentioned amendment to Clause 24 of the bye laws was registered by the Joint Registrar of Co-operative Societies, Thrissur as per Ext.P3(b) letter dated 3.11.2001. Thus the Managing Committee which took charge on 5-12-1998 continued in office even after the expiry of the period of three years. 5. While so in the Mathrubhoomi Daily of 17.9.2002 the Bank published Ext.P4 notification dated 14.9.2002 inviting applications for the posts of Junior Clerk, Typist and Peon. It was stated in Ext.P4 that the Bank had earlier published a notification dated 2.4.1999 in the Express Daily and another notification dated 5.4.1999 in the Desabhimani Daily inviting applications for the same posts and that the persons who had applied in response to the said notifications were not required to submit applications again. When Ext.P4 came to his notice, the petitioner submitted Ext.P5 representation dated 21-10-2002 to the first respondent-Registrar of Co-operative Societies pointing out that the term of the Managing Committee had expired on 27.11.2001 and that the amendments to clauses 20 and 24 of the byelaws had been made by the Representative General Body which had no power to make such amendments. The petitioner also requested that all the decisions taken by the Managing Committee from 28.11.2001 onwards should be rescinded and the Managing Committee should be removed from office. Thereafter the petitioner filed the original petition (O.P.No.31240 of 2002) alleging that the Managing Committee was taking hasty steps to make appointments pursuant to Ext.P4 notification. The petitioner prayed for a direction to the first respondent – Registrar of Co-operative Societies – to supercede the Managing Committee of the Bank and to appoint an Administrator to take over the affairs of the Bank. He also prayed for a declaration that the term of office of the Managing Committee of the Bank expired on 2.11.2003 and that the resolution passed by the Representative General Body extending the term of office of the Managing Committee from 3 years to 5 years is illegal and is in violation of the Act, the Rules and the byelaws of the Bank. Later the original petition was amended to include a prayer for quashing Exts.P3(a) and P3(b) letters of the Joint Registrar of Co-operative Societies, Thrissur. Later the original petition was amended to include a prayer for quashing Exts.P3(a) and P3(b) letters of the Joint Registrar of Co-operative Societies, Thrissur. The contention of the petitioner was that the Representative General Body of the Bank was not competent to amend the byelaws of the Bank enhancing the term of office of the Committee from 3 years to 5 years and that the Continuance of the Managing Committee in office beyond the period of three yeas was illegal and that any decision taken by the Managing Committee after the expiry of the period of three years was unauthorized. According to the petitioner, only the General Body of the Bank is competent to amend the Byelaws of the Bank. However, the learned Singled Judge rejected the contention of the petitioner and held that the Representative General Body was competent to amend the byelaws of the Bank enhancing the term of the office of the Committee from 3 years to 5 years and that the action of the Joint Registrar of the Co-operative Societies in registering the impugned amendments was legal and valid. Accordingly, the original petition was dismissed by the learned Single Judge. Aggrieved by the dismissal of the original petition the petitioner has filed this writ appeal. 6. The statutory provision enabling the constitution of the Representative General Body is contained in Section 27(2) of the Act. For the sake of convenience Section 27 is extracted hereunder. “27. Final authority in a Society: (1) Subject to the provisions of this Act, the rules and the byelaws, the final authority of a society shall vest in the general body of the members; Provided that nothing contained in this sub-section shall affect the exercise by the committee or any officer of a society of any power conferred on such committee or such officer by this Act or the rules or the byelaws. (2) Notwithstanding anything contained in sub-section (1) where the area of operation of a society is not less than such area as may be prescribed, or where the society consists of such number of members as may be prescribed, the society may provide by an amendment of its bye-laws for the constitution of a smaller body consisting of such number of members of the society as may be prescribed, elected in accordance with the rules (hereinafter referred to as the representative general body to exercise all or any of the powers of the general body as may be specified in the bye-laws except the power to conduct election of members of the committee and any reference by whatever form of words, in this Act to the general body or a meeting thereof shall where a representative general body has been constituted under this sub-section, have effect in respect of the powers exercisable by the representative general body as if such reference were a reference to the representative general body or a meeting thereof, as the case may be; Provided that the representative general body shall not alter any provision in the bye-laws relating to its constitution or powers. (3) The exercise of any power by the representative general body shall be subject to such restrictions and conditions as may be specified in the rules or the bye-laws.” It is clear from sub-section (1) of Section 27 that subject to the provisions of the Act, the Rules and the Byelaws, the final authority of a society is vested in the General body of its members. But in the case of societies where the area of operation is not less than such area as may be prescribed or where the Society consists of such number of members as may be prescribed, sub-section (2) of Section 27 authorizes the society to amend its byelaws and provide for the constitution of a smaller body called Representative General Body consisting of such number of members of the Society as may be prescribed. According to sub-section (2) of Section 27, the Representative General Body is constituted to exercise all or any of the powers of the General Body as may be specified in the byelaws except the power to conduct election of members of the Committee. According to sub-section (2) of Section 27, the Representative General Body is constituted to exercise all or any of the powers of the General Body as may be specified in the byelaws except the power to conduct election of members of the Committee. Where a Representative General Body has been constituted, any reference, by whatever form of words, in the Act to the General Body or a meeting thereof shall have effect in respect of the powers exercisable by the Representative General body as if such reference were a reference to the Representative General Body or a meeting thereof. However, the Representative General Body shall not alter any provision in the byelaws relating to its constitution or powers. The exercise of any power by the Representative General Body is subject to such restrictions and conditions as may be specified in the Rules or the byelaws. Thus, even though the power to make or amend the bye-laws of a society is ordinarily vested in the General Body, where a Representative General Body has been constituted as per Section 27(2) of the Act, the Representative General Body is competent to amend the byelaws of the society except the byelaws relating to its own constitution or powers and the exercise of such power to amend the byelaws is only subject to the restrictions and conditions, if any, specified in the Rules or the byelaws. 7. It is not disputed that as authorized by Section 27(2) of the Act, the byelaws of the Bank were amended to provide for the constitution of the Representative General Body and that a Representative General Body was constituted. Clause 20(1)(a) of the byelaws of the bank states that the Bank shall have a Representative General Body for the purposes mentioned in sub-sections (2) and (3) of Section 27 of the Act. According to sub-section (2) of Section 27, the Representative General Body is constituted for the purpose of exercising all or any of the powers of the General Body as may be specified in the byelaws except the power to conduct election of members of the Committee. According to sub-section (3) of Section 27, the exercise of any power of the Representative General Body is subject to such restrictions and conditions as may be specified in the rules or the byelaws. 8. According to sub-section (3) of Section 27, the exercise of any power of the Representative General Body is subject to such restrictions and conditions as may be specified in the rules or the byelaws. 8. The powers of the General Body of the Bank are specified in clause 19 of the byelaws. As per clause 19(1), in all matters relating to the administration of the Bank the final authority is vested in the General Body. As per clause 19(2), the General Body shall not interfere with the exercise, by the Director Board or any officer of the Bank, of any power conferred on the Director Board or the officer by the byelaws of the Bank. As per clause 19(3), in addition to other matters, the following matters also can be dealt with by the General Body:- (i) The activities for the next year. (ii) Election of members of the Director Board. (iii) Removal of members of the Director Board. (iv) Approval of the statement of accounts and annual budget of the Bank. (v) Annual report to be sent to the Registrar of Cooperative Societies and the Financing Bank. (vi) The Last Audit Report of the bank. (vii) Amendment, if any, of the byelaws of the bank. (viii) Distribution of net profit. (ix) Removal of any member. In view of sub-section (2) of Section 27 of the Act, the Representative General Body is competent to exercise all the above mentioned powers and functions of the General Body of the Bank. Thus the Representative General Body of the Bank has the power to amend the byelaws of the Bank which is a power conferred on the General Body by clause 19(3)(vii) of the byelaws. But in view of the proviso to Section 27(2) of the Act, the Representative General Body is not competent to alter any provision in the byelaws relating to its constitution or powers. Admittedly, the amendments impugned in the writ petition are not amendments altering any provision relating to the constitution or the powers of the Representative General Body. Hence the impugned amendments are not hit by the proviso to Section 27(2) of the Act. 9. As already mentioned, in view of sub-section (3) of Section 27 of the Act, the exercise of any power by the Representative General Body shall be subject to such restrictions and conditions as may be specified in the Rules or the byelaws. Hence the impugned amendments are not hit by the proviso to Section 27(2) of the Act. 9. As already mentioned, in view of sub-section (3) of Section 27 of the Act, the exercise of any power by the Representative General Body shall be subject to such restrictions and conditions as may be specified in the Rules or the byelaws. The Kerala Co-operative Societies Rules do not specify any restrictions or conditions regarding the exercise of any power by the Representative General Body. But clause 20(1)(b) of the byelaws of the Bank specifically states that the Representative General Body does not have the following powers:- (i) Election of members of the Director Board. (ii) Removal of the elected members of the Director Board. (iii) Decision on of the constitution and powers of the Representative General Body. (iv) Election of the members of the Representative General Body. (v) Removal of the members elected to the Representative General Body. (vi) Removal of any member. Thus, the power to amend the byelaws of the Bank is not among the powers specifically excluded by clause 20(1)(b) of the byelaws of the Bank. Hence the power of the Representative General Body to amend the byelaws of the Bank is not hit by clause 20(1)(b) of the byelaws of the Bank. In other words, the byelaws of the Bank do not specify any restrictions or conditions regarding the exercise of the power to amend the byelaws by the Representative General Body. 10. Therefore, Section 27(2) of the Act and clauses 19(3)(vii) and 20(1)(b) of the byelaws of the Bank make it abundantly clear that the Representative General Body of the Bank is competent to amend the byelaws of the Bank provided that the amendment does not alter any provision in the byelaws relating to its constitution or powers. Admittedly, the impugned amendments do not alter any provision in the byelaws relating to the constitution or powers of the Representative General Body. By the impugned amendments the term of office of the Committee was enhanced from 3 years to 5 years and the said enhancement was made applicable to the existing committee which was elected on 28.11.1998 and which took charge on 5.12.1998. By the impugned amendments the term of office of the Committee was enhanced from 3 years to 5 years and the said enhancement was made applicable to the existing committee which was elected on 28.11.1998 and which took charge on 5.12.1998. Hence we are of the view that there is no merit in the contention that the Representative General Body of the Bank had no power or competence to make the impugned amendments to the byelaws which were registered by the Joint Registrar of Co-operative Societies, Thrissur. Therefore, the learned Single Judge was right in dismissing the original petition and upholding the impugned amendments and the action of the Joint Registrar of Co-operative Societies, Thrissur in registering the said amendments. 11. Learned counsel for the appellant contended that as per clause 18(2) of the byelaws of the Bank, the byelaws can be amended only by the passing of a resolution by 2/3 (two-third) members present and voting in the meeting of a General Body of the Bank. The said clause only means that the power to amend the byelaws is vested in the General Body of the Bank and that the resolution to amend the byelaws has to be passed by 2/3 (two-third) members present and voting in the meeting of the General Body. The said power of the General Body can be exercised by the Representative General Body of the Bank in view of Section 27(2) of the Act and clauses 19 and 20 of the byelaws. It has to be specially noted that as per clause 20(1)(b) of the byelaws, the Representative General Body shall have all the powers of the General Body except the powers specifically excluded in clause 20(1)(b). The power to amend the byelaws is not a power excluded in clause 20(1)(b). Hence the contention based on clause 18(2) of the byelaws of the Bank is devoid of merit. 12. The learned counsel for the appellant further contended that as per Rule 9 of the Kerala Co-operative Societies Rules every proposal for amendment to the byelaws of a Society shall be made only by a resolution passed by a 2/3 (two-third) majority of the members present and voting in the General Body of the Society. Rule 9 of the Kerala Co-operative Societies Rules only lays down the procedure regarding the amendment of byelaws. Rule 9 of the Kerala Co-operative Societies Rules only lays down the procedure regarding the amendment of byelaws. It does not specify any restrictions or conditions in the exercise of any power by the Representative General Body. In view of the provisions contained in Section 27(2) of the Act, in the case of societies where Representative General Body has been constituted, the reference to ‘General Body’ and its meeting in Rule 9 has to be taken as reference to ‘Representative General Body’ and its meeting. The contention of the learned counsel for the appellant based on rule 9 of the Kerala Co-operative Societies Rules cannot be accepted in view the provisions contained in Section 27(2) of the Act and clause 19(3)(vii) and 20(1)(b) of the byelaws of the bank. 13. In the light of the position explained above, the Committee of the Bank which was elected on 28.11.1998 and which took charges on 5.12.1998 was entitled to continue for a period of five years from the date of taking charge and the Committee was entitled to discharge the functions and powers of the Committee during such period. Therefore, the complainants of the petitioner against the continuance of the Committee in office beyond the period of three years and against the action taken by the Committee to make appointments have no legal basis. The petitioner was not entitled to any of the reliefs claimed in the original petition and the learned Single Judge rightly dismissed the original petition. 14. The conduct of the petitioner was mischievous. He claims to be a member of the Bank and hence he is expected to be aware of the developments in the Bank. The impugned amendments to the byelaws of the Bank were passed by the Representative General Body at its meetings held on 18.2.2001 and 7.10.2001. The petitioner never challenged those amendments immediately. Only when Ext.P4 notification dated 14.9.2002 regarding certain appointments in the Bank was published he submitted Ext.P5 representation dated 21.10.2002 to the Registrar of Co-operative Societies. The belated challenge against the amendments to the byelaws was apparently a mischievous attempt to prevent the Committee of Bank from making appointments in the Bank. Hence the challenge of the petitioner against the impugned amendments to the byelaws of the Bank was without bona fides. 15. The belated challenge against the amendments to the byelaws was apparently a mischievous attempt to prevent the Committee of Bank from making appointments in the Bank. Hence the challenge of the petitioner against the impugned amendments to the byelaws of the Bank was without bona fides. 15. For the reasons stated above, we hold that there is no merit in the writ appeal and that it is liable to be dismissed. Hence the writ appeal is dismissed. No costs.