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2017 DIGILAW 1201 (GAU)

Abu Hussain v. State of Assam

2017-08-30

ACHINTYA MALLA BUJOR BARUA

body2017
JUDGMENT & ORDER : 1. Heard Mr. K.A. Mazumdar, learned counsel for the petitioners, Dr. B. Ahmed, learned Standing Counsel for Co-operation Department and Mr. M. Khan, learned counsel appearing for the respondent Nos. 7 to 12. 2. The petitioners herein were elected to the Board of Directors of the Guriadhap Co-operative Society in the Annual General Meeting held on 29.09.2016. The term of election of the Board of Directors was for a period of five years. The first meeting of the Board of Directors was held on 17.10.2016 and in the said meeting all the members had taken their oath and elected Nur Islam Mondal and Siraj Ali as the President and Vice President, respectively, of the Board. The election of the Vice President and the President, as well as the election of the Board of Directors, were duly approved by the Assistant Registrar of Co-operative Societies on 18.10.2016. Upon assuming its office, three subsequent Board meetings were held on 05.11.2016, 04.12.2016 and 05.02.2017. 3. On 21.12.2016, a complaint was lodged by about 166 share holders, which was addressed to the Assistant Registrar of Co-operative Societies, Goalpara inter-alia stating that the election of the petitioners to the Board of Directors be declared illegal and new Board of Director be elected in their place. The allegation was that the petitioners before being elected did not attend the Annual General Meeting for the previous five years and as such, they were ineligible to be Directors. 4. By a letter dated 27.12.2016, the Assistant Registrar of Co-operative Societies had requested the present petitioners to remain present in a hearing to be held on 31.12.2016. Accordingly, the petitioners appeared and sought for some time to file their reply and thereafter filed their reply by the letter dated 12.01.2017. By the said letter dated 12.01.2017, the petitioners stated before the Assistant Registrar of Co-operative Societies that the complainants against them were baseless and were made only to harass them and that the complainants have not furnished any documents in support of their allegations. A further stand was taken that three of the petitioners got the membership of the Co-operative Society by way of inheritance from their father’s share and as such, the question of attending the Annual General Meeting for the last five years does not arise. A further stand was taken that three of the petitioners got the membership of the Co-operative Society by way of inheritance from their father’s share and as such, the question of attending the Annual General Meeting for the last five years does not arise. In other words, the petitioners intend to say that as their predecessor-in-interest had attended the meeting, so therefore it has to be construed that upon their inheritance of their shares, the present petitioners are deemed to have attended the meetings. 5. In view of the aforesaid stand, the writ petitioners expected that the Assistant Registrar of Co-operative Societies would give a favourable consideration and pass appropriate orders on their stand that they had acquired the share by inheritance and therefore, the presence of their predecessor-in-interest were also to be counted towards their presence in the earlier Annual General Meetings. But, however, by an order dated 07.02.2017, the Assistant Registrar of Co-operative Societies without giving due consideration to the said aspect had passed an order for removal of the petitioners as Directors of the Board. 6. Against the said order dated 07.02.2017, the petitioners had preferred an appeal before the Registrar of Co-operative Societies and the Registrar by its order dated 22.02.2017 had kept the order of the Assistant Registrar of Co-operative Societies dated 07.02.2017 in abeyance. But, subsequently by another order dated 11.04.2017, the Registrar of Co-operative Societies had dismissed the appeal of the petitioners. In the order of dismissal dated 11.04.2017, the Registrar of Co-Operative Societies relied upon an opinion of the Senior Government Advocate, which provided that Section 40(2) of the Assam Co-Operative Societies Act, 2007 (in short Act of 2007), provides that a Member of a Co-Operative Society shall be eligible for being chosen as Director if he had attended at least two Annual General Meetings in the previous five years and secondly, as per Clause-23 of the bye-laws of the Society, such Director, who had not attended three consecutive meetings of the Board, shall be dismissed as a Member from the fourth meeting. By accepting the aforesaid opinion of the learned Senior Government Advocate, the Registrar of Co-Operative Societies had passed the order, by which the removal of the petitioners as Director by the Assistant Registrar of Co-Operative Societies in its order dated 07.02.2017 was upheld. By accepting the aforesaid opinion of the learned Senior Government Advocate, the Registrar of Co-Operative Societies had passed the order, by which the removal of the petitioners as Director by the Assistant Registrar of Co-Operative Societies in its order dated 07.02.2017 was upheld. Being aggrieved by the orders dated 07.02.2017 of the Assistant Registrar of Co-operative Societies and the order dated 11.04.2017 of the Registrar of Co-Operative Societies, the present writ petition has been preferred. 7. On a consideration of the orders dated 07.02.2017 and 11.04.2017, one of the issues for determination would be as to whether the Assistant Registrar of Co-operative Societies had the jurisdiction and authority under the Act of 2007 to remove an elected Director of the Board of Directors and also as suggested by Dr. B. Ahmed, learned Standing Counsel for Co-operation Department, whether the Assistant Registrar had the jurisdiction to entertain a complaint for such removal. The other issue would be as to whether in doing so, the Assistant Registrar of Co-operative Societies had followed the correct procedure of law and also whether he had appreciated the complaint made against the Directors in its proper perspective. A further issue would be as to whether the Registrar of Co-operative Societies was correct in dismissing the appeal of the petitioners by accepting that u/s 40(2) of the Act of 2007, a Member shall be ineligible for chosen as Director if he had not attended at least two Annual General Meetings in the previous five years and that clause-23 of the bye-laws of the Society provides that a Director, who has not attended three consecutive meeting of the Board shall be dismissed as a Member from the fourth meeting. 8. It has been brought to the notice of this Court that by a Notification dated 23.05.2012 of the Secretary to the Government of Assam, Co-Operation Department, certain powers were delegated to the Assistant Registrar of Co-Operative Societies, which includes the powers under Section 8, 10, 11, 12, 45(1), 72(1)(a), 92, 93(1), 102(1), 102(2)(b), 112, 113, 114(1) of the Act of 2007. 9. It is also noticed that one of the powers delegated is the power u/s 45(1), which provides that the proceeding of every general meeting is to be approved by the Assistant Registrar of Co-Operative Societies within 15 days of the receipt of the proceeding. 9. It is also noticed that one of the powers delegated is the power u/s 45(1), which provides that the proceeding of every general meeting is to be approved by the Assistant Registrar of Co-Operative Societies within 15 days of the receipt of the proceeding. The other powers mentioned in Section 8, 10, 11, 12, 72(1)(a), 92, 93(1), 102(1), 102(2)(b), 112, 113, 114(1) of the Act of 2007, does not in any manner indicates that it confers a power on the Assistant Registrar of Co-Operative Societies to remove an elected Board of Directors and nor does it indicates that such power has been vested on the Assistant Registrar to entertain any complaint by any of the share holders for removal of an elected Board of Director. 10. In view of the aforesaid provisions of the Act of 2007, this Court is of the considered view that the Assistant Registrar of Co-Operative Societies does not have the authority and jurisdiction under the law either to entertain a complaint for removal of an elected Board of Director, nor the Assistant Registrar has any such power of his own to remove an elected Director. 11. The said conclusion is further fortified in view of the provisions of Section 30(2)(b) of the Act of 2007. The said provision provides that removal of Director and election of new Director is one of the matters, which are to be dealt in an Annual General Meeting. Therefore, the statute having specifically provided for a procedure for removal of an elected board of Director and no other procedure can be adopted for removal of such Director. In such view of the matter also, it can be conclusively stated that the Assistant Registrar of Co-Operative Societies, on his own, does not have any authority under the law to remove an elected Board of Director. 12. In such view of the matter also, it can be conclusively stated that the Assistant Registrar of Co-Operative Societies, on his own, does not have any authority under the law to remove an elected Board of Director. 12. As regards the other issue as to whether the Assistant Registrar of Co-Operative Societies had followed the correct procedure in arriving at a conclusion that the petitioners are required to be removed as a Member of the Board of Director, it is noticed that the writ petitioners had taken a specific stand in their reply to the complaint that they had inherited the concerned share from their fathers and therefore, it could not have been possible for them alone to remain present in any of the two earlier meetings of the Annual General Meeting held during the last five years. Any presence by the predecessor-in-interest of the present petitioners in any such meeting shall also have to be construed to be the presence of the present petitioners inasmuch as they had inherited their right from their predecessor-in-interest and it is not that they themselves were members of the society for the last five years and nor it is that they are newly admitted members. It is noticed that the aforesaid stand of the writ petitioners had not been given a due consideration by the Assistant Registrar of Co-Operative Societies in his order dated 07.02.2017. 13. In such view of the matter also this Court is of the view that the Assistant Registrar of Co-Operative Societies while arriving at a conclusion that the petitioners are to be removed from the Board of Directors have not followed the required procedure and have also not given due consideration to the issue that was raised before him. 14. 13. In such view of the matter also this Court is of the view that the Assistant Registrar of Co-Operative Societies while arriving at a conclusion that the petitioners are to be removed from the Board of Directors have not followed the required procedure and have also not given due consideration to the issue that was raised before him. 14. As regards the further issue as to whether the Registrar of Co-Operative Societies had rightly rejected the appeal of the petitioner by accepting the opinion of the learned Senior Government Advocate to the effect that u/s 40(2) of the Act of 2007 and Clause 23 of the bye-laws, a Member shall be ineligible for being chosen as a Director if he had not attended at least two Annual General Meetings in the previous five years, it is noticed that, the said factual dispute raised by the writ petitioners by taking a stand that as they had inherited their share from their fathers and therefore, the presence of their predecessor in interest was sufficient compliance of the requirement was also not decided at all. The Registrar of Co-operative Societies could not have dismissed the appeal of the petitioners merely by stating the provisions of the law without there being any further factual determination as to whether on the given facts, the said provisions of law is applicable or not. 15. Further, the Registrar of Co-Operative Societies in order to arrive at its conclusion, had also relied upon Clause-23 of the bye-laws of the Society, which provides that any such Director, who had not attended three consecutive meetings of the Board, shall be dismissed from the fourth meeting. It is noticed that there is no any such allegations that the writ petitioners as Directors had not attended any three consecutive meetings of the Board. In such view of the matter, the reliance on the provisions of Clause-23 of the Bye-laws of the Society is also not relevant for the purpose in order to enable the Registrar of Co-Operative Societies to arrive at a conclusion that the appeal of the petitioners is to be dismissed. 16. In such view of the matter, the reliance on the provisions of Clause-23 of the Bye-laws of the Society is also not relevant for the purpose in order to enable the Registrar of Co-Operative Societies to arrive at a conclusion that the appeal of the petitioners is to be dismissed. 16. In any view of the matter, as the Assistant Registrar of Co-operative Societies did not have the authority and jurisdiction under the law, either to entertain a complaint for removal of a Director, nor has any such power of his own to remove an elected Director, and further, as the Assistant Registrar of Co-operative Societies had not followed the required procedure, the Registrar of Co-operative Societies in exercise of his appellate jurisdiction, could not have upheld the order of removal passed by the Assistant Registrar of Co-operative Societies. 17. In the above view of the matter, this Court is of the view that both the order of the Assistant Registrar of Co-Operative Societies dated 07.02.2017 as well as the appellate order of the Registrar of Co-Operative Societies dated 11.04.2017 are not sustainable under the law as well as on the facts of the present case. 18. Mr. M. Khan, learned counsel for the respondent Nos. 7 to 12 on the other hand also raises an issue that in the meantime, a Special Annual General Meeting was called for by about 957 Members of the Co-Operative Society and accordingly a meeting was held on 12.02.2017. The learned counsel for the respondent Nos. 7 to 12 seeks to justify that in the meantime as the appropriate procedure of law of removal of a Director had been followed, therefore, this Court ought not to interfere with the orders of the Assistant Registrar of Co-Operative Societies as well as the Registrar of Co-Operative Societies. It is stated that the resolution of the Board had also been approved by the Assistant Registrar of Co-Operative Societies by his order dated 13.02.2017. 19. On the other hand, the Board of Directors of Guriadhap Co-operative Society had also taken a resolution for removal of the President and Vice President of the Society, pursuant to their removal as Directors in the Special General Meeting dated 12.02.2017. 20. 19. On the other hand, the Board of Directors of Guriadhap Co-operative Society had also taken a resolution for removal of the President and Vice President of the Society, pursuant to their removal as Directors in the Special General Meeting dated 12.02.2017. 20. In the writ petition, the resolutions of the Special General Meeting and the Board of Directors, both dated 12.02.2017, as well as the subsequent approval of the Assistant Registrar of Co-Operative Societies dated 13.02.2017 had been assailed. In order to arrive at a conclusion as to whether the said resolution of the Special General Meeting held on 12.02.2017 is sustainable or not, it is deemed appropriate that the facts and circumstances on which the said resolution was undertaken be also examined. 21. It is stated that the requisition for a Special General Meeting was signed by about 957 shareholders in its requisition dated 02.02.2017. From the said requisition, it is seen that the shareholders desired the removal of the writ petitioners as the Directors on the ground that the said four Directors were not present in the Annual General Meeting in the last five years prior to the Annual General Meeting of 2016 and that the petitioner No.4 had fraudulently put his signature in two different meetings. It is also stated that the petitioner Nos. 1, 2 and 3 are new shareholders, who had enrolled just one month prior to the election of the Society. From the aforesaid requisition also, it is noticeable that one of the reasons made out by the shareholders for removing the petitioners is that they had not attended the Annual General Meetings for the last five years. But on the other hand, it is also an admitted position that they were enrolled as shareholders just one month prior to the election of the Society. 22. On a perusal of the resolution of the Special General Meeting dated 12.02.2017, it is noticed that the said meeting was held as per the letter No.CGGI/2010-11/409 dated 07.02.2017 of the Assistant Registrar of Co-operative Societies, Goalpara. By the said resolution, the four Directors being the petitioners herein were unanimously resolved to have been removed from the Board of Directors of the Society. 23. By the said resolution, the four Directors being the petitioners herein were unanimously resolved to have been removed from the Board of Directors of the Society. 23. Accordingly, it is noticed that although there may have been a requisition signed by about 957 shareholders requesting for a Special General Meeting, but in fact, the Special General Meeting had been held as per the order of the Assistant Registrar of Co Operative Societies dated 07.02.2017. 24. Section 33 of the Act of 2007, inter-alia, provides that the Board may call a Special General Meeting within 45 days of the receipt of a written requisition, signed by not less than 25% of the members having right to vote or from the Registrar. 25. Therefore, the statutory procedure for holding a Special General Meeting is that firstly, it must be called by the Board of Directors on a requisition of not less than 25% of the shareholders or by the Registrar. But in the instant case, it is noticed that the said Special General Meeting was called as per the order of the Assistant Registrar of Co-operative Societies, Goalpara dated 07.02.2017. It prima-facie, therefore, appears that the said meeting was not held as per the procedure laid down in Section 33 of the Act of 2007. Further, as no materials have been produced, it is not known as to whether 957 shareholders constitutes 25% of the total number of shareholders or not. Be that as it may, even if, 957 shareholders do constitute 25% of the shareholders, the required procedure is that the said requisition shall be placed before the Board of Directors by stating the reason as to why the meeting is sought to be called for. The Board of Directors upon considering the said requisition shall call for the Special General Meeting. 26. Accordingly, it is found that in the instant case, the required procedure prescribed u/s 33 of the Act of 2007 had not been followed in calling the Special General Meeting on 12.02.2017. 27. Hence, the resolution dated 12.02.2017 of the Special General Meeting cannot be a basis to justify the order dated 07.02.2017 of the Assistant Registrar of Co-operative Societies and the order dated 11.04.2017 of the Registrar of Co-operative Societies for removal of the petitioners as Directors from the Board of Directors, as sought to be contended by Mr. M. Khan, learned counsel for the respondent Nos. M. Khan, learned counsel for the respondent Nos. 7 to 12. 28. Again Section 38 of the Act of 2007 nevertheless empowers the Board of Directors to remove the President or Vice President in accordance with Section 36(4). 29. Section 36(4) provides that the Board may, by a resolution passed by three-fourth majority of the Directors present and voting in a meeting, remove the President or Vice-President. 30. But in order to invoke the power to remove the President or the Vice President u/s 36 (4) of the Act of 2007, it is incumbent that notices are issued to all the Directors of the Board of Directors to enable them to remain present in the meeting and participate in the voting for such removal. The said notice takes a mandatory form in view of the fact that u/s 35(2) of the Act of 2007, the Board shall consist of 15 number of Directors. Therefore, in order to meet the requirement of a resolution to be passed by 3/4th majority of the Directors, it is incumbent that all the available Directors are notified about the meeting and also the voting that is to take place. The same assumes further importance as Section 36(4) of the Act of 2007 requires a resolution to be passed by 3/4th majority of the Directors present and voting in a meeting. It is more so, in view of the fact that at least the Director, who is sought to be removed either as the President or the Vice President has a legal right to seek the support of the other Directors against his removal, so that the voting takes place in a free and transparent manner. 31. In the instant case, it is also noticed that the resolution dated 12.02.2017 had been signed by as many as 09(nine) Directors. As 09(nine) of the Directors out of 15(fifteen) Directors clearly does not constitute 3/4th majority, therefore, it is necessary that the record of the proceeding be verified as to whether notices were issued to the other 06(six) Directors informing them that a meeting for voting for the removal of the President or the Vice President would take place. As 09(nine) of the Directors out of 15(fifteen) Directors clearly does not constitute 3/4th majority, therefore, it is necessary that the record of the proceeding be verified as to whether notices were issued to the other 06(six) Directors informing them that a meeting for voting for the removal of the President or the Vice President would take place. Mathematical calculation reveals that even if four of the Board of Directors are against the removal of the President and the Vice President, still they constitute a little over 1/4th of the total number of Directors meaning thereby that the other remaining 11(eleven) Directors on their own do not constitute the 3/4th majority. 32. Consequently, this Court is of the view that as the Special General Meeting was not called by following the prescribed statutory procedure and further as the said meeting was called as per the order of the Assistant Registrar of Co-operative Societies dated 07.02.2017, which again is unauthorized under the law, this Court is of the view that the resolution passed in the Special General Meeting of 12.02.2017 be ordered to be recalled. 33. Apart from the aspect that the resolution of the Board of Directors dated 12.02.2017 may not have been passed by a 3/4th majority, but as the resolution dated 12.02.2017 of the Special General Meeting is held to have been taken without following the due procedure of law, the consequential resolution of the Board of Directors again dated 12.02.2017 removing the President and the Vice President are also found to be unsustainable. 34. In the above premises, this writ petition is disposed of by providing that the authorities, including the shareholders of the Guriadhap Co-operative Society may hold the Special General Meeting afresh for removal of the petitioners as Board of Directors by following the due procedure of law, if so advised. 35. Accordingly, the resolution dated 12.02.2017 of the Special General Meeting, removing the petitioners as Directors of the Guriadhap Co-operative Society and also the resolution dated 12.02.2017 of the Board of Directors, removing the President and the Vice President, are declared to be unsustainable, by giving liberty to the respondent authorities and the shareholders to hold the meeting afresh, if so advised. In terms of the above, the writ petition stands disposed of.