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2016 DIGILAW 495 (KER)

Cochin City Service Co-operative Bank LTD. v. joint Registrar of Co-operative Societies

2016-06-10

SHAJI P.CHALY

body2016
JUDGMENT : 1. This writ petition is filed by the petitioner seeking to quash Ext.P11 order passed by the 1st respondent, whereby expulsion of the 2nd respondent from the petitioner bank was found to be illegal and not in accordance with law and directing the petitioner to retain the 2nd respondent in the membership of the society. 2. Material facts for the disposal of the writ petition are thus; petitioner is a Co-operative Society registered under the provisions of the Kerala Co-operative Societies Act, which has its area of operation within Cochin Corporation except certain areas. The 2nd respondent was indulging in various activities against the interest of the society with an intention to destroy the society. That apart it is urged that 2nd respondent has been propagating that the society is going to be wound up and that it is better for the depositors to withdraw the deposits. That apart 2nd respondent acted detrimental to the interest of the society and he was in the habit of working against the progress of the society including the Onam fair by making false allegations. Thus it has become difficult to carry on the function of the society with the 2nd respondent as a member. Matters being so, a resolution has been proposed by two members of the society for expelling the 2nd respondent from the membership of the society, evident from Ext.P1. Ext.P1 was placed before the committee of the society in its meeting held on 17.10.2012. The committee has decided to send notice to the 2nd respondent based on Ext.P1 resolution, and thereupon a notice was issued on 18.10.2012 along with a copy of Ext.P1 resolution and requiring the 2nd respondent to offer his explanation, following which, the resolution would be placed for consideration of the special general body. The said notice is evident from Ext.P2. 3. In response to Ext.P2, 2nd respondent has submitted Ext.P3 denying the allegations made in the notice. Ext.P3 has been considered by the committee and being dissatisfied with the same, has decided to place the resolution for consideration of the general body and further decided to convene a special general body meeting on 25.11.2012 in order to consider the resolution seeking expulsion of the 2nd respondent. While so, against the convening of special general body, 2nd respondent has submitted Ext.P4 complaint before the 1st respondent. While so, against the convening of special general body, 2nd respondent has submitted Ext.P4 complaint before the 1st respondent. Accordingly explanation was sought for from the petitioner and petitioner has provided Ext.P5 reply and according to the petitioner, being convinced of the situation complaint filed by the 2nd respondent was dismissed. Thereupon general body was convened on 25.11.2012 and 131 members have participated. The sole agenda in the general body was consideration of Ext.P1 resolution. The resolution was placed before the general body and the same was put to discussion, thereafter it was put for voting. There were 130 members present for voting and out of 130, 127 members favoured the resolution. Three members including the 2nd respondent opposed the resolution. Resolution was thus passed in the general body with 2/3rd majority 4. Pursuant to the general body, a communication has been issued to the 2nd respondent on 3.12.2012 intimating the 2nd respondent with respect to his expulsion from the membership. Aggrieved by Ext.P6, 2nd respondent has preferred Ext.P7 appeal before the 1st respondent. Petitioner entered appearance and filed a counter statement. One of the contentions raised in the appeal is that only on the basis of an application by 1/5th members, a special general body can be convened and hence the convening of the general body by the committee is not proper. That apart it is also contended that the resolution happened to be passed in the general body by misleading the members and that the resolution was passed by participation of persons who are not vigilant in the functioning of the society. Apart from the same other contentions were raised by the 2nd respondent. However, the petitioner has filed Ext.P9 objection basically contending that as per Section 17 of the Kerala Co-operative Societies Act (hereinafter referred to as “the Act”) and Rule 18 of the Co-operative Societies Rules (hereinafter referred to as “the Rules”), any member can move for expulsion of a member. It was also contended that the provision contained in the byelaws of the society as per clause 16(4) that only on the request of 1/5th members alone a special general body for expelling a member of the society can be convened is against the provisions of Section 17 of the Act. It was also contended that the provision contained in the byelaws of the society as per clause 16(4) that only on the request of 1/5th members alone a special general body for expelling a member of the society can be convened is against the provisions of Section 17 of the Act. However, after considering the contentions put forth by the petitioner as well as the 2nd respondent, 1st respondent passed Ext.P11 order holding that the special general body meeting convened by the petitioner to expel the 2nd respondent was not in accordance with clause 16(4) of the bye-laws of the society. That apart on merits it was held that the allegations made against the 2nd respondent cannot be sustained since the acts and conduct of the 2nd respondent was only in accordance with the rights of a member of the society to question the activities of the society. Thus the 1st respondent has directed the petitioner bank to retain the 2nd respondent in the membership of the society. It is thus aggrieved by Ext.P11 order, petitioner has approached this court by filing this writ petition. 5. When writ petition was admitted, interim stay of Ext.P11 was granted by this court until further orders and the same continues even now. The 2nd respondent has filed a counter affidavit contending that the order passed by the 1st respondent is in accordance with law and no manner of interference is required. That apart it is contended by the 2nd respondent that he has not acted against the interest of the society and whatever conduct on his part was to protect the interest of the society and the members of the society at large. It is also urged that the order passed by the Joint Registrar is in accordance with rule 176 of the Rules after taking into account the rival contentions raised by the petitioner as well as the 2nd respondent. 1strespondent has also filed counter affidavit refuting the allegations and contentions raised in the writ petition and has justified the order passed by the 1st respondent in accordance with law and after considering the rival submissions made by the petitioner as well as the 2nd respondent. 6. Heard learned counsel for the petitioner, learned Government Pleader and learned counsel for the 2nd respondent. 7. 6. Heard learned counsel for the petitioner, learned Government Pleader and learned counsel for the 2nd respondent. 7. Having considered the rival submissions made across the Bar, perusing the pleadings put forth and documents on record, in my view the question to be considered is whether there is any legal infirmity, gross injustice or irrationality in Ext.P11 order passed by the 1st respondent in order to interfere by invoking the power of judicial review conferred on this court under Article 226 of the Constitution of India. Section 17 of the Co-operative Societies Act deals with expulsion of members which read thus: “17. Expulsion of members.- (1) Any member of a society, who has acted, adversely to the interests of the society or has failed to comply with the provisions of the bye-laws may be expelled upon a resolution of the general body passed at a special meeting convened for the purpose by the votes of not less than two-thirds of the total number of members present and voting at the meeting. (2) No member shall be expelled under sub-section (1) without being given an opportunity of making his representation. (3) A copy of the resolution expelling a member shall be communicated to the member within a period of fifteen days from the date of passing of the resolution. (4) The expulsion from membership may involve forfeiture of shares held by the member. (5) No member of the society who has been expelled under sub-section (1) shall be eligible for re-admission as a member of that society, for a period of one year from the date of such expulsion. 8. On a reading of Section 17, it is crystal clear that, “any member of a society” mentioned therein has to qualify the expressions following thereto. Therefore, in order to provide a meaning to a 'member of society' one will have to read the same so as to understand that any member of a society, who has acted adversely to the interest of the society or has failed to comply with the provisions of the bye-laws may be expelled upon a resolution of the general body passed at a special meeting convened for the purpose by votes of not less than two-thirds of the total number of members present and voting at the meeting. Therefore, the prime contention advanced by the petitioner that “any member” of a society contained under Section 17 means “any member” of a society can move for a resolution in order to expel a member cannot be sustained. According to the petitioner, clause 16(4) of the bye-laws is against Section 17 of the Act. Clause 16(4) of the bye-laws produced as Ext.P10 which reads thus; “MALAYALAYM” 9. On a reading of clause 16(4) what is discernible is that a special general body can be constituted at any time provided that 1/5th of the shareholders of the society makes an application to the Chairman of the Managing Committee and also on directions of the Registrar of the Co-operative Societies. According to the petitioner, the said clause of the bye-laws is violative of Section 17 of the Act, purportedly for the reason that, Section 17 enables any member of a society to request to call for a special general body. According to me, the interpretation provided by the petitioner to Section 17 to mean that any member of a society can request for convening a special general body is far fetched since no such meaning at all is discernible from Section 17 of the Act. However Rule 18 deals with procedure for expulsion of members which read thus: “18. Procedure for the expulsion of members.- A member who has acted adversely to the interest of the society or has failed to comply with the provisions of the bye-laws may be expelled from the society as per S.17, adopting the following procedure:- (a) Where any member of a society proposes to bring a resolution for expulsion of any other member he shall give a written notice thereof, to the Chairman of the Society. On receipt of such notice or when the committee itself decides to bring in such resolution, the Committee shall send a registered notice to the member concerned to furnish his explanation, if any, in the matter within 15 days from the date of receipt of the notice. The member shall also be given an opportunity for being heard in person, if he so desires. The member shall also be given an opportunity for being heard in person, if he so desires. (b) On obtaining the explanation, if any, and on being heard in person, if he so desires and on giving opportunity to the complainant, to substantiate his allegation or after taking into consideration any written representation which he might have sent to the Committee or General Body, the Committee shall decide as to the course of action to be adopted against the member concerned. If the committee decides to expel the member it shall convene a special General Body meeting after issuing due notice appending the agenda thereto and place the matter before it for decision under section 17.” 10. On a reading of clause (a) of Section 18, it can be seen that where any member of a society proposes to bring a resolution for expulsion of any other member, he shall give written notice thereof to the Chairman of the society. Therefore, interpreting Rule 18(a), counsel for the petitioner contended that, the said Rule also suggests that a member is entitled as of right to bring a resolution for expulsion of any other member. But, however, the following sentence of clause (a) would make it clearly that only a proposal for expulsion can be made by any member by giving a notice. Therefore, in my view, clause (a) does not enable any member to bring a resolution for convening a special general body. But, on the other hand, clause (a) deals with the 'proposal' of any member of a society to bring a resolution for expulsion of any other member, the member is enabled with power to give written notice thereof to the Chairman of the society. Therefore, on receipt of such notice by virtue of the duty cast upon the Chairman of the society, he shall send a registered notice to the member concerned to furnish his explanation within a period of 15 days from the date of receipt of notice and thereupon provide the said member with an opportunity of being heard in person, if he so desires. But however under clause (a), the committee is also vested with power to call for a special general body meeting. 11. But however under clause (a), the committee is also vested with power to call for a special general body meeting. 11. Clause (b) of Rule 18 suggests that after securing the explanation if any offered by the member proposed to be expelled may be heard in person if the said member desires. After giving an opportunity to the complainant and considering the attendant facts and circumstances, the committee is vested with power to decide the course of action to be adopted against the member concerned. But if the committee suo motu decides, on appreciation of such facts and circumstances to expel the member, it shall convene a special general body meeting after issuing due notice appending the agenda thereto and place the matter before it for decision under Section 17. Section 30 of the Act deals with special general body meeting which read thus: “30. Special general body meeting.- (1) The committee of a society at any time, call a special general body meeting of the society and shall call such meeting within one month after receipt of a requisition in writing from the Registrar or from such number of members or a proportion of the total number of members, as may be prescribed. (2) If a special general body meeting of a society is not called in accordance with the requisition referred to in sub-section (1), the Registrar or any person authorized by him in this behalf shall have power to call such meeting and that meeting shall be deemed to be a meeting called by the committee. (3) Notwithstanding anything contained in sub-section (1) or sub-section (2), the Registrar or any person authorized by him in this behalf may, at any time call a special general body meeting of the society in such manner and at such time and place within the area of its operation as he may direct and such meeting shall be deemed to be a meeting called by the committee. (4) Notwithstanding anything contained in the bye-laws of a society, the Registrar or any person authorized by him in this behalf may, at any time summon a meeting of the committee of the society and that meeting shall be deemed to be a meeting called in accordance with the bye-laws of the society and shall have power to transact all business which can be transacted at a meeting of the committee under the byelaws of the society and such other business as is specially mentioned in the requisition made by the Registrar or the person authorized. (5) The Registrar or any other person deputed by him shall have the right to attend the committee or general body meeting of any society convened in accordance with the provisions of this section.” In accordance with Section 30, Rule 36 is framed which reads as follows: 36. Power to call Special General Body Meeting.- (1) The Committee of a society shall call a special general body meeting thereof under sub-section (1) of S.30. (a) within one month from the date of receipt of a requisiton in writing from the Registrar or (b) within one month from the date of requisition in writing from 1/5th of the total number of members. 12. Therefore as per Section 30, three methods are provided for calling a special general body meeting of the society:- (1) The committee of a society at any time. (2) Within one month after receipt of a requisition in writing from the Registrar and (3) From such number of members or a proportion of the total number of members as may be prescribed. Here in this case, two members have 'proposed' the resolution and therefore even according to the petitioner, the 3rd alternative provided under Section 30 of the Act is the subject matter of consideration. It is thus in accordance with the power to prescribe under the said provision for the 3rd alternative, rule 36(1)(b) is engrafted under the Rules. 13. Clause (b) of sub-rule(1) of Rule 36 is the rule that is applicable in the case at hand which, indicates that, the special general body shall be called within one month from the date of receipt of the requisition in writing from 1/5th of total number of members. 13. Clause (b) of sub-rule(1) of Rule 36 is the rule that is applicable in the case at hand which, indicates that, the special general body shall be called within one month from the date of receipt of the requisition in writing from 1/5th of total number of members. On a cursory glance of clause (a) of Rule 18 and clause (b) of sub-rule (1) of Rule 36, one may have a prima facie opinion that, both the provisions are contradictory. However, in my view, Rule 18 and Rule 36 are operating under different circumstances, as contemplated under Section 30 of the Act. To put it otherwise Rule 18(a) is enabling only a member 'to propose to bring a resolution' for expulsion of any member. However, in order to constitute a special general body Rule 36 makes an imperative condition by incorporating sub-clause (b) of sub-rule (1) that the special general body shall be called within a period of one month from the date of requisition in writing from 1/5th of the total number of members. Therefore, on a harmonious reading of Section 30, Rule 18(a) and Rule 36(1)(b) of the Rules, it is categoric and clear that, in order to call a special general body proposed by a member or members, there should be a requisition in writing from 1/5th of the total number of members of the society. That apart as provided under Rule 18(a), the Managing Committee is vested with power to make enquiries with respect to the complaint made by any member of a society against any other member proposing to bring a resolution against such member. Therefore, after the enquiry made by the committee in accordance with Rule 18(a) on a proposal from a member and if it decides to constitute a special general body, then it should have a requisition in writing from 1/5th of the total number of members, as contemplated under Rule 36(1)(b) of the Rules and clause 16(4) of the bye-laws of the society. 14. The petitioner is not having a case that the requisition in writing was moved by 1/5th of the total number of members of the petitioner society. All along the case of the petitioner is that two members of the society made a requisition to call for a special general body in order to expel the 2nd respondent. This is evident from Ext.P1 complaint also. All along the case of the petitioner is that two members of the society made a requisition to call for a special general body in order to expel the 2nd respondent. This is evident from Ext.P1 complaint also. The rest of the proceedings of the petitioner bank was in accordance with Ext.P1 complaint received from two of the members. There is no document on record to suggest that 1/5th of the total number of members of the petitioner bank has moved any resolution to call special general body as contemplated under Rule 36(1)(b), and clause 16(4) of Ext.P10 bye-law of the society. So also petitioner has no case that, it was in accordance with the power vested in committee under Section 30 read with Rule 18, the special general body meeting was called. Therefore, I have no hesitation to hold that the order passed by the 1st respondent is in terms of the provisions of the Co-operative Societies Act and Rules read with Ext.P10 bye-laws of the society. 15. Taking into account the cumulative circumstances discussed above, I am of the considered opinion that Ext.P11 order passed by the 1st respondent is in accordance with law. It is true that the 1st respondent has not considered in depth the allegations against the 2nd respondent in terms of the complaint made by the members of the society. Even though the 1st respondent has explained in Ext.P11 order, the nature of the complaint, 1st respondent has only dealt with the complaint made against the 2nd respondent with respect to his conduct in the matter of holding general body meeting of the society. But there is no reason for me to interfere in the factual finding rendered by the 1st respondent, since I found that the special general body constituted is not in accordance with the provisions of the Act, Rules and the bye-law. Sequel to the above discussion is that, writ petition fails and accordingly same is dismissed.