Nedumon Service Co-Op Bank Ltd. represented by its President v. Joint Registrar of Co-Op. Societies (G)
2014-07-24
K.SURENDRA MOHAN
body2014
DigiLaw.ai
Judgment : 1. The Nedumon Service Co-operative Bank Ltd No.2720, Ezhamkulam, Pathanamthitta has filed this writ petition challenging Exhibit P3 order of the Joint Registrar who is the first respondent herein. The petitioner is a co-operative society registered under the provisions of the Kerala Cooperative Societies Act, 1969 and the Rules thereunder (hereinafter referred to as 'the Act' and 'the Rules' for short). As per Exhibit P3, the first respondent has rescinded a resolution adopted by the Managing Committee on 17.04.2014 deciding to enroll as the members of the society, as many as 485 persons. The order Exhibit P3 has been passed in exercise of the powers of the first respondent under Rule 176 of the Rules. The circumstances under which the impugned order came to be passed are summarised as under. 2. As per resolution dated 17.04.2014, which is produced as Exhibit P1, the Managing Committee of the petitioner decided to admit as the members of the Society, 485 persons. According to the petitioner, since there were complaints against the manner in which the said persons were decided to be admitted, the petitioner was issued with a show cause notice directing them to explain why the resolution should not be rescinded. The petitioner responded to the show cause notice by submitting Exhibit P2 objections. Thereafter, as per Exhibit P3 order, the first respondent Joint Registrar has rescinded the resolution of the petitioner. The contention of the petitioner is that, since the Managing Committee had decided to admit the said persons as members of the Society, the only way in which they could be removed is by following the procedure that is stipulated by Rule 16(3) and (4) of the Rules. The said provisions stipulate that each member should be issued with notice and afforded an opportunity of being heard before they are removed from the membership of the society. The said procedure not having been adopted in the present case, the indirect method of divesting them of their memberships, validly conferred on them, by rescinding the resolution, is absolutely uncalled for and unsustainable in law and fact. It is contended that, the power available to the Joint Registrar under Rule 176 of the Rules is not available in the matter of divesting the members of a society of their memberships, even if it is assumed that, they were not validly admitted to the membership of the society.
It is contended that, the power available to the Joint Registrar under Rule 176 of the Rules is not available in the matter of divesting the members of a society of their memberships, even if it is assumed that, they were not validly admitted to the membership of the society. Various decisions are also relied upon in support of the above contention. Inasmuch as the procedure prescribed by the Rules for removing a person from the membership of a society has not been adopted in the present case, it is contended that Exhibit P3 is wrong and liable to be set aside. 3. The contentions of the petitioner are opposed by the learned Special Government Pleader Sri. D. Somasundaram who appears for the first respondent. According to the learned Special Government pleader, the petitioner had admitted a large number of persons as members of the Society, without following the procedure stipulated by the Act and the Rules. The entire exercise was done with an eye on the election to the Managing Committee that was in the offing, at the fag end of the term of office of the Managing Committee. One of the Board Members, the third respondent had complained to the Joint Registrar alleging that most of the persons who had been admitted were not eligible to be made members of the society. It was also alleged that, the Managing committee had not considered the applications properly and that, the members had been admitted en masse, solely on political considerations. 4. On such complaint being received, the Assistant Registrar was directed to conduct an enquiry and to submit a report. Accordingly, the Assistant Registrar conducted an enquiry and submitted a report finding that there were a number of irregularities in the manner in which the members were admitted. The first respondent thereupon ordered an inspection under Section 66(2) of the Act on 22.04.2014. The report of the inspection also revealed that there were gross irregularities in the manner in which the members were admitted. Therefore, a show cause notice was issued to the petitioner. Though they submitted written objections, none of them attended the personal hearing that was notified. Therefore, after considering all the relevant aspects of the case, Exhibit P3 order has been passed.
Therefore, a show cause notice was issued to the petitioner. Though they submitted written objections, none of them attended the personal hearing that was notified. Therefore, after considering all the relevant aspects of the case, Exhibit P3 order has been passed. It is contended that, the procedure stipulated by Sub Rules 3 and 4 of Rule 16 of the Rules applies only to persons validly admitted to the membership of the society. Therefore, it is contended that, the Registrar was perfectly within his powers in rescinding the resolution, invoking Rule 176 of the Rules. For the above reasons, according to the learned Special Government Pleader, the writ petition is only to dismissed. It is also pointed out that, the petitioner has an equally efficacious and alternative remedy by way of an appeal provided by Section 83(1)(j) of the Act. 5. Additional respondents 2 and 3 were impleaded as per order in a petition filed by the petitioner. Advocate VG Arun appears for the additional respondents. A counter affidavit has also been filed. According to the additional respondents, as per the bye-laws of the society, only persons who are residing within the area of operation of the society are eligible to become members. On 17.04.2014, the bank decided to admit 485 persons as members. The said decision was taken even without obtaining proper application forms from those persons and without making any enquiries regarding their eligibility to be admitted to the membership of the society. One of the members of the Board, the third respondent had objected to the manner manner in which the resolution was pushed through and had submitted a complaint to the first respondent. The complaint was duly got enquired into through the Assistant Registrar. Thereafter, an inspection of the records was also conducted invoking Section 66(2) of the Act. The petitioner was granted an opportunity to submit objections. Though a personal hearing was afforded, they did not participate in the hearing. Therefore, after considering all the relevant aspects, Exhibit P3 has been passed, which is fully justified in the facts and circumstances of the case. For the above reasons, respondents 2 and 3 also sought for the dismissal of the writ petition. 6. This writ petition was posted before me for admission on 08.07.2014 and 15.07.2014.
Therefore, after considering all the relevant aspects, Exhibit P3 has been passed, which is fully justified in the facts and circumstances of the case. For the above reasons, respondents 2 and 3 also sought for the dismissal of the writ petition. 6. This writ petition was posted before me for admission on 08.07.2014 and 15.07.2014. Since the learned Special Government Pleader wanted time to get instructions and to file a statement, the matter was adjourned to 18.07.2014. A counter affidavit has been filed on behalf of the first respondent. As already noticed above, respondents 2 and 3 have also filed a separate counter affidavit. Since the matter was represented to be urgent, in view of the election to the Managing committee that has been notified, it was agreed by all parties that, the writ petition could be heard and finally disposed of. Accordingly, I have heard the matter in detail. I have also considered the rival contentions advanced before me, anxiously. 7. The facts in this case fall within a very narrow compass. As per resolution dated 17.04.2014, as many as 485 persons were admitted as members of the society by the Managing Committee in office. The term of the Managing Committee has expired on 30.06.2014. However, they are continuing in office because their term has been extended by a period of five months in view of the Lok Sabha Elections that had intervened, making it impossible for a fresh election to be conducted before the expiry of their term of office. An election has been notified by the Election Commission as per notification dated 08.07.2014. The actual polling is scheduled to be conducted on 17.08.2014. Therefore, on 17.04.2014, when the resolution was adopted by the Managing Committee, they had only a little more than two months tenure in office left. The allegation against Exhibit P1 resolution is that, 485 persons were admitted to the membership of the society on a single day by the said resolution, with the object of garnering support for the ruling Managing Committee members at the election that was expected to be conducted shortly. Exhibit P1 resolution shows that, one of the members, the third respondent herein had objected to the adoption of the resolution. Therefore, the resolution has been adopted with his objections recorded. 8. On receipt of the objections, the first respondent got an enquiry conducted through the Assistant Registrar.
Exhibit P1 resolution shows that, one of the members, the third respondent herein had objected to the adoption of the resolution. Therefore, the resolution has been adopted with his objections recorded. 8. On receipt of the objections, the first respondent got an enquiry conducted through the Assistant Registrar. The Assistant Registrar who conducted the enquiry reported that there were irregularities in the manner in which the members were admitted. In view of the findings of the Assistant Registrar, the first respondent had an inspection under Rule 66(2) of the Act conducted. The inspection revealed a number of serious irregularities. The counter affidavit lists the various irregularities detected. A number of persons had not submitted proper applications. The bank had not conducted any process of verification regarding the eligibility of the applicants and no document proving their eligibility was seen filed or produced for verification. It was found that, some of the applications were submitted only on 16.04.2014 and were accepted and approved on 17.04.2014. It has been concluded by the first respondent therefore, that the allegation regarding bulk enrolment of members without personal appearance of the applicants, with an eye on the forthcoming elections, was justified. It has also been found that the signatures of the applicants who were admitted to the membership of the bank and had remitted the share amount were different in the application forms as well as in the Admission Register. Though registered show cause notices were issued to a number of such members calling upon them to submit their objections, none of them submitted any objections or presented themselves before the Inspecting Officer for a personal hearing. The circumstances so gathered at the time of inspection substantiated the allegations made against the resolution that was under challenge. The Inspecting Officer recommended that the resolution be rescinded in view of the irregularities referred to above. Though the above allegations have been elaborately set out in the counter affidavit, no reply affidavit has been filed by the petitioner in answer to the said allegations. Therefore, the allegations in the counter affidavit remain uncontroverted. 9. The learned Special Government Pleader took me through Exhibit P3 order in detail. Exhibit P3 order narrates the circumstances that were detected and taken note of during the inspection that was conducted on the basis of the complaint of the third respondent.
Therefore, the allegations in the counter affidavit remain uncontroverted. 9. The learned Special Government Pleader took me through Exhibit P3 order in detail. Exhibit P3 order narrates the circumstances that were detected and taken note of during the inspection that was conducted on the basis of the complaint of the third respondent. The circumstances being extraordinary in nature, it is contended that, the action to rescind the resolution was proper and perfectly justified. 10. The above summation of the facts show that, the circumstances under which Exhibit P3 was issued are not in dispute. According to the counsel for the petitioner, Sri PN Mohanan though 485 persons had been admitted to the membership of the society as per the resolution, all of them had not become members or they did not pay the share money. 255 persons only have been actually admitted. For the above reason, it is contended that there has not been any proper application of mind by the first respondent. The above contention cannot be accepted for the reason that, what the first respondent had to consider was whether the resolution Exhibit P1 had to be rescinded or not. The first respondent has arrived at his conclusion that the resolution had to be rescinded, taking into account all the facts and circumstances that were brought to his notice initially by report of the Assistant Registrar who conducted an enquiry and later on by the report of the Inspecting Officer who inspected the Society under Section 66(2) of the Act. The fact that only a lesser number of persons had been actually admitted does not in any way affect the said conclusion, if the irregularities reported were actually in existence. As already noticed above, details of the irregularities detected have been set out in detail in the counter affidavit. No reply affidavit has been filed by the petitioner in answer to the said allegations. Even at the time of arguments, no explanation was put forward in justification of the action , of admitting 485 members. The contentions of the counsel for the petitioner centered essentially around the question of law that he has raised, namely that the members could be removed only by following the procedure stipulated by Sub Rules 3 and 4 of Rule 16. The said provisions cannot be overreached by adopting a round about method of invoking the power under Rule 176.
The contentions of the counsel for the petitioner centered essentially around the question of law that he has raised, namely that the members could be removed only by following the procedure stipulated by Sub Rules 3 and 4 of Rule 16. The said provisions cannot be overreached by adopting a round about method of invoking the power under Rule 176. The above question, I shall consider a little later. Suffice it to note at present that, the factual details in the case are not in dispute. Therefore, I proceed on the basis that, the facts stated in Exhibit P3 and reiterated in the counter affidavit of the first respondent are not seriously disputed. The only dispute of the counsel for the petitioner is that, though 485 persons were initially resolved to be admitted, only 255 persons have actually been admitted. However, the fact remains that some of the applications submitted were received by the society only on 16.04.2014 and that the said applications were considered on 17.04.2014 and allowed. It is clear that, the society had not made any enquiry regarding the eligibility of the persons so admitted. Viewed in the background of the allegation raised that, the persons admitted are not eligible to be admitted, the conduct assumes importance and cannot be brushed aside. The enquiry conducted by the Assistant Registrar as well as the inspection under Section 66(2) have revealed that there were a number of discrepancies. The signatures of the persons in their applications and in the Admission Register are found to be different even on casual observation. Therefore, it is held that, the factual circumstances in the present case fully justify the issue of Exhibit P3. 11. The learned Special Government Pleader as well as the counsel for respondents 2 and 3 have raised a preliminary objection that the writ petition itself is not maintainable, in view of the statutory appellate remedy that is available to the petitioner under Section 83(1)(j) of the Act. The counsel for the petitioner Sri PN Mohanan places reliance on the decision in State of Himachal Pradesh v. Gujarat Ambuja Cement Ltd [ (2005) 6 SCC 499 ] to contend that, the existence of an alternative remedy is not a bar where the allegation is that, the principles of Natural Justice have been violated.
The counsel for the petitioner Sri PN Mohanan places reliance on the decision in State of Himachal Pradesh v. Gujarat Ambuja Cement Ltd [ (2005) 6 SCC 499 ] to contend that, the existence of an alternative remedy is not a bar where the allegation is that, the principles of Natural Justice have been violated. In the present case, it is pointed out that, Sub Rules 3 and 4 of Rule 16 mandate that every member be granted an opportunity of being heard before he is removed from the membership of a society. The said principle of Natural Justice that has been statutorily ingrained has been violated. Therefore, it is contended that the alternative remedy is no bar. 12. Since the contention of the petitioner is that, the mandatory provisions of Sub Rules 3 and 4 of Rule 16 which stipulate the observance of Natural Justice by affording an opportunity of being heard to a member who is sought to be removed, has not been observed in the present case, I shall consider the question raised on the merits, holding that this writ petition is maintainable. It is also worth noticing that no factual issues are raised to be decided in this case. The questions of law raised also require to be considered and therefore, I shall proceed to consider the said questions of law. 13. According to Advocate PN Mohanan, the exercise of power under Rule 176 of the Rules by the first respondent in the present case is vitiated for the reason that, the effect of Exhibit P3 order is to divest the persons who have been admitted to the membership of the society pursuant to the resolution that has been rescinded. The said indirect method cannot be accepted according to the counsel. Reliance is placed on the decision of this Court in President C.V.V Co-operative Society v. Project Officer [1980(1) KLT SN 14 (Case No.25)]. The said decision has laid down that, the Registrar's power under Rule 176 has been conferred, "notwithstanding anything contained in the bye-laws" of the society and not anything contained in the Act or Rules. Therefore, the said power is subject to the other provisions of the Act and Rules. Sub Rules 3 and 4 of Rule 16 being part of the Rules, would therefore limit the amplitude of the power that is available to the Registrar under Rule 176.
Therefore, the said power is subject to the other provisions of the Act and Rules. Sub Rules 3 and 4 of Rule 16 being part of the Rules, would therefore limit the amplitude of the power that is available to the Registrar under Rule 176. According to the counsel, it is the privilege of the Committee in office to admit members in exercise of its powers. Such resolutions adopted by the Managing Committee are to be given effect to, in full. Reliance is also placed on another decision of this Court reported in Porinchu v. Joint Registrar of Co-operative Societies [2009 (4) KLT 105] to contend that even if the membership granted to a member is illegal, he would continue to be a member until he is removed by following the procedure stipulated by Sub Rules 3 and 4 of the Rule 16. It is therefore contended that, the impugned order Exhibit P3 is liable to be set aside for non compliance with the mandatory stipulations in Sub Rules 3 and 4 of Rule 16. 14. According to the learned Special Government Pleader on the other hand, this Court has repeatedly held that bulk enrollment of members without following the statutory procedure for admitting them to membership, with an eye on a forthcoming election is unsustainable and only to be deprecated. In such situations, the Registrar is not powerless. He is not expected to remain a mute spectator with folded hands. The procedure stipulated by Sub Rules 3 and 4 of Rule 16 to remove the persons from membership after giving them individual notices and an opportunity of being heard is not the only course open to the Registrar in such circumstances. Such an interpretation, if accepted, would leave them free to function as members though they are ineligible to do so. The same would only be counter productive, it is contended. It was taking into account the extraordinary circumstances that were revealed that Exhibit P3 was issued. 15. Rule 176 confers power on the Registrar to rescind a resolution. The said provision is extracted hereunder for convenience of reference. 176.
The same would only be counter productive, it is contended. It was taking into account the extraordinary circumstances that were revealed that Exhibit P3 was issued. 15. Rule 176 confers power on the Registrar to rescind a resolution. The said provision is extracted hereunder for convenience of reference. 176. Registrar's power to rescind resolution.-- Notwithstanding anything contained in the bye laws of a registered society, it shall be competent for the Registrar to rescind any resolution of any meeting of any society or the committee of any society, if it appears to him that such resolution is ultra vires of the objects of the society, or is against the provisions of the Act, Rules, Bye laws or of any direction or instructions issued by the Department, or calculated to disturb the peaceful and orderly working of the society or is contrary to the better interest of the society. It is true that the provision opens with the words 'notwithstanding anything contained in the bye laws of a registered society', it shall be competent for the Registrar to rescind any resolution. However, it is necessary to take note of the grounds on which the Registrar is conferred the power to rescind a resolution. As per the above provision, a resolution can be rescinded 1. If it appears to him that such resolution is ultra vires of the objects of the society or 2. is against the provisions of the Act, Rules, Bye-laws or of any direction or instruction issued by the Department or 3. Calculated to disturb the peaceful and orderly working of the society or 4. is contrary to the better interests of the society. Therefore, the power of the Registrar extends, notwithstanding the bye laws of the society, to rescind a resolution, where it appears to him that such resolution is ultra vires the objects of the society or is against the provisions of the Act, Rules or Bye-laws or any directions or instructions issued by the Department. The resultant position is that, wherever a particular resolution is found to be against the provisions of the Act, Rules or Bye-laws or any direction or instruction issued by the Department, such a resolution can be rescinded. In view of the above, it has to be examined whether in the present case, the resolution in question, Exhibit P1 is against the provisions of the Act, Rules, Bye-laws etc. 16.
In view of the above, it has to be examined whether in the present case, the resolution in question, Exhibit P1 is against the provisions of the Act, Rules, Bye-laws etc. 16. In the present case, as already noticed above, 485 persons have been admitted to the membership of the petitioner society as per the resolution. It is true that, only 255 persons have paid the share money and have actually become members. However, it is not disputed that the said 255 persons were also admitted as per the resolution against which complaints have been made. There is also no explanation as to why out of 485 persons who were resolved to be admitted to the membership of the society, only 255 persons had paid the share money. The above circumstance only supports the allegation made against the resolution that bulk applications were submitted without the knowledge of the actual persons and accepted without any verification. The fact that nearly 50% of the persons admitted by the resolution had not become members is a very serious circumstance that cannot be ignored. In order to ascertain whether the resolution is in violation of any of the provisions of the Act or Rules, it is necessary to examine the provisions relating to the membership of a society. 17. Section 2 (l) defines the expression 'member' as follows:- (l)"member" means a person joining in the application for the registration of a Co-operative society or a person admitted to membership after such registration in accordance with this Act, the rules and the bye-laws and includes a nominal or associate member.(Emphasis supplied) According to the above definition, member means a person "admitted to membership after such registration in accordance with this Act", the Rules and bye-laws. Therefore, in order to be a member of a society, coming within the above definition, a person has to be admitted 'in accordance with this Act', the Rules and bye-laws. Section 16 specifies the persons who are entitled to be admitted as members of the Society. As per Section 16, a person has to attain 18 years of age. He should not be of unsound mind. He should be a resident within or in occupation of land within the area of operation of the society. A member could be any other society, local self government or the Government or any body of persons also.
As per Section 16, a person has to attain 18 years of age. He should not be of unsound mind. He should be a resident within or in occupation of land within the area of operation of the society. A member could be any other society, local self government or the Government or any body of persons also. The provision opens with the words 'no person shall be admitted as member of a society except the following'. Therefore, it is clear that a person who does not satisfy the requirements stipulated by the said provision is not entitled to be admitted to the membership of a society. Rule 16 contains the conditions to be complied with for admission to membership. 18. Sub Rules 1 and 2 of Rule 16 are extracted hereunder: 16. Conditions to be complied with for admission for membership (1) No person shall be admitted as a member of a society unless-- (a) he has applied in writing in the form if any laid down by the society; (b) his application is approved by the committee of the society; (c) he has fulfilled all other conditions laid down in the Act, Rules and Bye-laws; (d) in the case of other societies or a body of persons, whether incorporated or not, and any statutory or non-statutory Board approved by the Government, Committee or Corporation constituted for the development of any industry the application membership shall be accompanied by a resolution authorising it to apply for such membership.
(2) No person shall be eligible for admission as a member of a Society, if he,- (a) has not attained the age of 18 years; (b) is not a resident of or does not own or posses land within area of operation of the society, provided that this Clause shall not apply in the case of a society formed exclusively for the students of any School or College; (c) has applied to be adjudicated as an insolvent or is an undischarged insolvent: (d) has been sentenced for any offence, other than an offence political character or an offence not involving mortal turpitude and a period of five years has not elapsed from the date of expiry of the sentence; or (e) is a paid employee of the Society or of its financing Bank or any society for which it is the financing Bank, provided that restriction shall not apply to Cooperative Motor Transport Societies, Co-operative Workshops, Societies for the employees of Financing Banks, and Societies formed for benefit of actual workers; or (f) has been surcharged under S.68 and a period of 3 years has elapsed since the payment of money or restoration of property directed in the said order of surcharge. The above provisions stipulate that a person should have applied in writing in the prescribed form, that his application should be approved by the Committee of the Society and that he should fulfill all other conditions laid down in the Act, Rules and Bye-laws. Sub Rule 2 further enumerates the conditions that are necessary to be satisfied. The above provisions show that, a person who does not satisfy the conditions stipulated by the above legal provisions is not entitled to be admitted to the membership of a society. It is also to be noticed that the resolution approving the membership of a person is only one of the steps in the process of admitting a person to the membership of a society. It cannot be said that he has been admitted to the membership of a society unless he satisfies the other conditions in Rule 16(1) also. That is the reason why though 485 persons were resolved to be admitted as per the resolution dated 17.04.2014, only 255 persons are stated to have actually become members by paying the share value.
It cannot be said that he has been admitted to the membership of a society unless he satisfies the other conditions in Rule 16(1) also. That is the reason why though 485 persons were resolved to be admitted as per the resolution dated 17.04.2014, only 255 persons are stated to have actually become members by paying the share value. The others have ceased to be members, even according to the petitioner, despite the resolution, though sub rules 3 and 4 of Rule 16 have not been invoked. Therefore merely because the Managing Committee has adopted a resolution, it cannot be said that a person has been 'admitted to the membership of a society'. 19. Sub Rules 3 of Rule 16 lays down the procedure to be followed where a person already admitted to membership is found to have been ineligible for membership at the time he was so admitted. Sub Rule 4 deals with the situation where a member of the society becomes ineligible to continue as such, which is an ineligibility that occurs after he has been admitted to the membership of the society. Sub Rules 3 and 4 of Rule 16 read as follows: (3) Where a person already admitted to membership is seen to have been ineligible for membership at the time he was so admitted as a member or if subsequently becomes ineligible for membership the Committee of the Society may remove the person from membership after giving him an opportunity for making his representation if any, and the person concerned shall thereupon cease to be member of the society. (4) Where a member of a society becomes ineligible to continue as such the Registrar may of his own motion or on a representation made to him by member of the society or by the financing Bank, by an order in writing declare that the he has ceased to be a member of the society from the date of his order. The Registrar shall give such person an opportunity to state his objection, if any, to the proposed action and if the person wishes to be heard, he shall be given an opportunity to be heard before passing an order as aforesaid. 20. The procedure that is stipulated for removing a person who has been admitted to the membership of a society is contained in the above provisions.
20. The procedure that is stipulated for removing a person who has been admitted to the membership of a society is contained in the above provisions. This Court has considered the question as to whether a person who has been admitted to the membership of a society could be removed treating the membership to be non est. It has been held in Porinchu v. Joint Registrar of Co-operative Societies [2009 (4) KLT 105] (supra) that, even if a person has been admitted illegally to the membership of a society, he could be removed only by following the procedure stipulated by Sub Rules 3 and 4 of Rule 16. At the same time, the question as to whether the power to enroll members could be exercised without any application of mind by admitting members en bloc has been considered by this Court in Gopalan v. Joint Registrar of Co-operative Societies [ 1985 KLT 446 ]. In the said case, it was the Administrator in office, who had enrolled the members. It has been held by this Court that, in the statutory scheme in relation to the enrollment of members, the power is vested in the Managing Committee of the society. However, the Managing Committee is not competent to enroll members in bulk, without any application of mind or considering their eligibility or capacity to become members of the society. There is absolutely no material or evidence in this case disclosing the circumstances under which, as many as 485 persons were decided to be admitted to the membership of the society, at a time. At the same time, according to the first respondent, the inspection and enquiry conducted have revealed that many of the applications were received only on the previous day on which the resolution was adopted. It is also necessary to bear in mind that, the term of the Managing Committee in office was expiring. At the crucial point of time, enrollment of as many as 485 members without properly considering the applications, cannot be justified. Section 16 mandates that, no person shall be admitted as a member of the society except when he satisfies the requirements of the said provision. One of the requirements is that, he should be a resident within or in occupation of land within the area of operation of the society.
Section 16 mandates that, no person shall be admitted as a member of the society except when he satisfies the requirements of the said provision. One of the requirements is that, he should be a resident within or in occupation of land within the area of operation of the society. The petitioner was dutybound to examine the above aspect and to satisfy itself whether the persons whose applications were being considered were eligible to be admitted as members of the society. That does not appear to have been done. Rule 16(1) stipulates that, no member shall be admitted as a member of the society, unless he has fulfilled inter alia, 'all other conditions laid down in the Act, Rules and Bye-laws. Whether the persons who had applied had been adjudicated as an insolvent or an discharged insolvent, whether he had been sentenced to any offence, whether he was a paid employee of the society or its financing bank or whether he had been surcharged under Section 68 of the Act, these are all relevant considerations that ought to have engaged the attention of the Managing Committee before a resolution to admit a person to the membership of the society was adopted. None of the above aspects have been considered in Exhibit P1. Therefore, this is a case in which there is absolutely no material or evidence to justify a conclusion that the 485 persons whose applications were resolved to be accepted by Exhibit P1 were admitted to the membership of the bank, in accordance with the act and the Rules. The further fact that about 50% of the persons so resolved to be admitted had not cared to complete the other formalities of becoming members only strengthens the above finding. 21. As already noticed above, the definition of 'member' contained in Section 2(l) of the Act means either a person joining in the application for the registration of a cooperative society or a person 'admitted to membership' after such registration, in accordance with the Act, the Rules and Bye-laws. Therefore, a person would come within the definition of a member only upon being admitted to the membership of the society. Rule 16 of the Rules sets out the conditions to be complied with for admission to the membership.
Therefore, a person would come within the definition of a member only upon being admitted to the membership of the society. Rule 16 of the Rules sets out the conditions to be complied with for admission to the membership. Therefore, the expression 'admitted to membership' of a society has a definite connotation and meaning, supplied by the provisions of the Act and the Rules. The expression would require a person to be admitted to the membership of a society in compliance with the stipulations contained in Rules 16 of the Rules. Such stipulations include the application for membership in the prescribed form to the society, approval of the application by the society and fulfillment of all other conditions laid down by the Act, Rules and the bye-laws. The question as to whether a person claiming to be a member of the society has been duly admitted to the membership of the society would have to depend on the facts and circumstances of each case. It is only a person who has been properly admitted to the membership of a society, in compliance with the provisions of the Act, the Rules and the Byelaws of the society, who is entitled to claim the protection of the procedure contemplated by Sub Rules 3 and 4 of Rule 16 in the matter of removal from membership. In the case of persons who have not been so admitted to the membership of a society, the provisions have no application for the reason that, such persons are not members who are entitled to claim rights that are available only to the members of a society. 22. A reading of Sub Rules 3 and 4 of Rules 16 clearly shows that, only a person who has been properly admitted to the membership of a society is entitled to claim the benefits thereof. The definition of a member contained Section 2(l) also supports the above conclusion. Therefore, unless a person has been 'admitted to the membership of the society in accordance with the Act and the Rules', he cannot claim the benefit of the protection that is provided by Sub Rules 3 and 4 of Rule 16. 23. As per Exhibit P1, the petitioner has not considered the eligibility of the persons who had applied or considered whether there was any ineligibility in any of them.
23. As per Exhibit P1, the petitioner has not considered the eligibility of the persons who had applied or considered whether there was any ineligibility in any of them. Without application of mind, admission of members in bulk, in a mechanical manner has been detected on the basis of materials collected by the first respondent by conducting an enquiry through the Assistant Registrar and thereafter through an inspection in exercise of the power under Rule 66(2) of the Rules. The conclusions drawn on the basis of such materials are not controverted. Therefore, it is clear that there has been no valid admission of any persons to the membership of the society by Exhibit P1. The mere act of passing a resolution, without following the other mandatory requirements of the Act and the Rules cannot be held to confer any right on the persons whose applications have been so considered by the Managing Committee. It is also pertinent to note that, at the time of inspection of the society under Section 66(2) of the Act, notices had been issued to the persons who were alleged to have been admitted to the membership of the society. However, none of them turned up. It is also significant that, none of them have questioned Exhibit P3, till date. The present writ petition is filed by the society. The society is therefore lamenting about the denial of natural justice to the persons who were alleged to have been admitted to the membership of the society by Exhibit P1. The same is a circumstance that militates against the very bonafides of the present proceedings. Therefore, this is not a case in which persons have been validly admitted to the membership of the society in accordance with the provisions of the Act and Rules. Only persons who have been validly admitted to the membership of a society in compliance with the provisions of the Act and Rules, are entitled to the benefit of the provisions contained in Sub Rules 3 and 4 of Rule 16. 24. Therefore, the decisions relied upon by the counsel for the petitioner have no application to the facts of the present case. Such exercises as in the present case, undertaken with an eye on a forthcoming election, to enroll members in bulk are only to be deprecated. Such resolutions are not in accordance with the provisions of the Act and the Rules.
Such exercises as in the present case, undertaken with an eye on a forthcoming election, to enroll members in bulk are only to be deprecated. Such resolutions are not in accordance with the provisions of the Act and the Rules. Therefore, the power under Rule 176 of the Rules is available to the Registrar and the Joint Registrar to set aside such resolutions. In the above view of the matter, I do not find any grounds to interfere with Exhibit P3 or to grant any of the reliefs sought for in this writ petition. For the above reasons, this writ petition fails and is accordingly dismissed. No costs.