Research › Search › Judgment

Karnataka High Court · body

2014 DIGILAW 831 (KAR)

C S RAMANATH v. STATE OF KARNATAKA REP BY THE SECRETARY/ MINISTER FOR COOPERATION, DEPARMENT OF COOPERATION

2014-09-19

B.S.PATIL

body2014
ORDER 1. Petitioners are the retired employees of State Bank of Mysore. They were members of the State Bank of Mysore Employees Credit Cooperative Society – 3rd respondent herein. In these writ petitions, they are aggrieved by the order dated 4.11.2011 passed by the Registrar of Cooperative Societies according approval to the amendment of byelaw No.9(b), confirmed in appeal vide order dated 31.12.2013 passed by the 1st respondent while dismissing the appeal filed under Section 106 of the Karnataka Cooperative Societies Act (for short ‘the Act’). 2. 3rd respondent – Society has been established for the purpose of extending to its members facilities for investment in savings from their income, affording credit facilities to the members and for carrying on such other objectives as are calculated to improve the economic condition and social welfare of the members. Byelaw No.4 (1)(c) provides that a candidate for membership must be a person employed in the State Bank of Mysore. The member is required to compulsorily subscribe for savings fund as decided by the Committee of Management from time to time. Such contribution will cease in case of members retiring from service and the contribution shall be paid interest at the rate decided by the Committee. Interest will not be paid after three months of retirement for those retiring from the service of the State Bank. Contribution shall be repaid on cessation of membership within three months of application in the prescribed form. This is evident from byelaw 4(1)(d). 3. Byelaw 8 provides for cessation of members. It states as under: “8. Membership shall cease by; a) Retirement from or termination of service in the State Bank of Mysore. b) Voluntary withdrawal from the society. c) Removal by Committee of Management. d) Death of the member.” 4. Byelaw 9(a) & (b) provide as under: “a) Any member ceasing to be the member in terms of Clause 8, will be refunded with the amount due to him within three months of his/her claim in the prescribed format after appropriating his direct and indirect liability. The indirect liability could be the amount due to the Society by any borrower to whom the member has stood as guarantor. b) The employees who are retiring on superannuation and on voluntary retirement can be allowed to retain the membership on such terms and conditions decided by the Committee of Management.” 5. The indirect liability could be the amount due to the Society by any borrower to whom the member has stood as guarantor. b) The employees who are retiring on superannuation and on voluntary retirement can be allowed to retain the membership on such terms and conditions decided by the Committee of Management.” 5. It is thus clear from a conjoint reading of byelaw 8(a) and 9(b) that membership of the society shall cease upon retirement of the employee from the State Bank of Mysore. However, the employees who are retiring on superannuation or on voluntary retirement can be allowed to retain the membership on such terms and conditions as decided by the Committee of Management. It is, therefore, clear that a retired employee cannot as of right continue as a member because he ceases to be a member. If at all, he could be continued, it would be only by the decision of the Committee and that too on such terms and conditions that the Committee may decide to impose. 6. The 3rd respondent – Society found that it was not necessary to continue byelaw 9(b) as one of the byelaws of the Society as the same was against the express provision contained in byelaw 8(a) and therefore, it had to be amended by deleting the same and in its place including byelaw No.9(c) to the effect that retired employees can be continued as associate members. A resolution was unanimously passed in the General Body meeting convened on 19.09.2010 resolving to delete byelaw 9(b) and to insert byelaw 9(c). Petitioner No.1, who was present in the proceedings, did not object for the same, whereas, petitioner No.2 was not present in the meeting. 7. The resolution was forwarded to the Registrar of Cooperative Societies for approval. The Registrar, in exercise of his powers under Section 12(2) of the Act, accorded approval for deletion of byelaw No.9 (b). He refused to grant approval for inclusion of byelaw 9(c) exercising powers under Section 12(4) of the Act. Aggrieved by the order according approval for the deletion of byelaw 9(b), present petitioners filed an appeal before the 1st respondent. The 1st respondent has dismissed the appeal. In the circumstances, these writ petitions are filed. 8. He refused to grant approval for inclusion of byelaw 9(c) exercising powers under Section 12(4) of the Act. Aggrieved by the order according approval for the deletion of byelaw 9(b), present petitioners filed an appeal before the 1st respondent. The 1st respondent has dismissed the appeal. In the circumstances, these writ petitions are filed. 8. I have heard Sri Srinivasa Murthy, learned counsel for the petitioners, Smt. S.Susheela, learned Additional Government Advocate representing respondents 1 & 2 and Sri G.Chandrashekariah, learned counsel for the Caveator respondent No.3. 9. It is contended by the counsel for the petitioners that the amendment as approved by the Registrar is against the express provisions contained under Section 18A of the Act. According to him, retirement is not prescribed as one of the modes of cessation of membership under the provisions of the Act, therefore, deletion of byelaw 9(b) as approved by the Registrar is illegal being contrary to Section 18A. It is next contended by him that petitioners have not been heard in the matter although they had filed a representation bringing to the notice of the Registrar the illegality in the resolution passed. 10. Learned counsel for the respondent – Society contends, taking me through the statement of objections that the society has decided to amend the byelaw, particularly byelaw 9(b) as the same was contrary to byelaw 8(a). It is his submission that the society has been established to provide credit facility to the members who are employed in State Bank of Mysore. Extension of such credit facility even when the members were no longer the employees of the Bank would defeat the very purpose of the society for which it was formed. 11. He further contends that even otherwise the members who had retired from State Bank of Mysore though allowed to continue as members of the society could not avail facility extended to other members for various reasons, therefore, it would not serve any purpose, if they were continued as members. 12. It is also pointed out by him that petitioners are individual members, one of whom, though participated in the General Body, had not raised any objection regarding the amendment and the other did not choose to participate in the proceedings, hence, they are not entitled to challenge the amendment which has been brought into existence by following due procedure. 12. It is also pointed out by him that petitioners are individual members, one of whom, though participated in the General Body, had not raised any objection regarding the amendment and the other did not choose to participate in the proceedings, hence, they are not entitled to challenge the amendment which has been brought into existence by following due procedure. He also points out that the byelaw is not in any manner inconsistent with the provisions contained under Section 18A of the Act. 13. Learned Additional Government Advocate brings to the notice of the Court Rule 6 of the Karnataka Cooperative Societies Rules, 1960 and points out that what is required to carry out the amendment is support of 2/3rd majority of the members present at the meeting. She urges that once the members participated and deliberated in the meeting and the amendment has been carried through by 2/3rd majority, a single member or group of members cannot challenge the same merely because the amendment carried out was against their desire or intention. 14. Having heard the learned counsel for the parties, the question that requires to be answered is whether the order passed by the Registrar as affirmed by the Appellate Authority according approval to the resolution runs counter to the provisions contained under Section 18A of the Act? Section 18A of the Act provides for cessation of membership. It reads as under: “A person shall cease to be a member of a cooperative society: (a) in the case of an individual, on his or her; (i) death; (ii) resignation; (iii) disqualification and cessation; (iv) transfer of whole of his or her share or interest in the cooperative society to another member; (b) in the case of a firm, company, cooperative society or Corporate body, (i) on dissolution of the firm or a corporate body; (ii) on winding up of a company or a cooperative society.” 15. A person will cease to be a member even upon his retirement. Cessation of membership is brought about upon the retirement of the employee. The Society is formed by the employees of the Bank. The purpose and object behind formation of the Society is to extend certain facilities to the employees who would become the members of the society. A person will cease to be a member even upon his retirement. Cessation of membership is brought about upon the retirement of the employee. The Society is formed by the employees of the Bank. The purpose and object behind formation of the Society is to extend certain facilities to the employees who would become the members of the society. If the byelaw of the Society provides that upon the members retiring from the Bank, they cease to be the members of the society, it cannot be said that the said provision in the byelaw runs counter to Section 18A of the Act. Section 18A of the Act provides for cessation of membership of the Cooperative Society by using the expression ‘in the case of an individual, on his or her, disqualification and cessation’. The word ‘cessation’ used in its general term includes cessation brought about even on account of the employee ceasing to be the employee of the Bank. The dictionary meaning of the term ‘cease’ means ‘coming to an end’. Therefore, cessation means coming to an end. 16. It is, in fact, not necessary to examine this aspect because the petitioners are not aggrieved by byelaw 8(a). Byelaw 8(a) specifically states that membership of a member shall cease by retirement from or termination of service in the State Bank of Mysore. This byelaw has been there and continues to be there since from the beginning. What was incorporated by the amendment earlier was byelaw 9(b) which made an exception to byelaw 8(a). Power was conferred on the Committee of Management to continue the employees as members of the society even after their retirement on certain terms and conditions as decided by the Committee of Management. It is this byelaw No.9(b) that has been now removed by deleting it. Therefore, it is not open for the petitioners to contend that there is any conflict between the action taken deleting byelaw 9(b) from the byelaws of the Society and Section 18A of the Act. In fact, deletion of byelaw 9(b) is consistent with what has been stated in byelaw 8(a). Therefore, this contention is misconceived. 17. So far as opportunity of hearing to be given to the petitioners by the authorities, it has to be stated that the authority is required to apply his mind to the nature of amendment proposed. Whether it is consistent with the provisions of the Act? Therefore, this contention is misconceived. 17. So far as opportunity of hearing to be given to the petitioners by the authorities, it has to be stated that the authority is required to apply his mind to the nature of amendment proposed. Whether it is consistent with the provisions of the Act? Whether the procedure required to be followed for carrying out the amendment has been duly followed? An individual member who has not participated in the General Body meeting leading to the amendment or who has participated, but has not raised any objection cannot as of right claim that they have to be given personal hearing before the amendment was approved by the Registrar. Such an opportunity is not conceived under the provisions of the Act. As already stated above, 1st petitioner has indeed not raised any objection although he participated in the General Body meeting and the 2nd petitioner has not chosen to participate in the General Body meeting. In such circumstance, they cannot be now heard to say that there was no opportunity of being heard given to them by the Registrar. Hence, the said contention is also misconceived. 18. Reliance was placed by the counsel for the petitioners on the judgment in the case of B.B.BANNAD VS. THE BETGERI URBAN COOPERATIVE BANK LTD. & OTHERS 1972 (2) Mys.L.J. 397 to contend that when a member is expelled from a Society, he is required to be given an opportunity of being heard and even if the byelaw does not provide for such opportunity, the same has to be given otherwise the byelaws will be ultra virus. Hence, he submits that petitioners were entitled for being heard. 19. This is not a case where members have been expelled from the Society. It is a case where two members are challenging the resolution passed by the society as approved by the Registrar regarding amendment of the byelaw. Therefore, the aforesaid decision is not applicable to the case on hand. Hence, I do not find any merit in any of the contentions urged by the petitioners. 20. For the reasons stated above, the writ petitions are dismissed.