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2017 DIGILAW 1559 (GAU)

Swagata Das v. State of Assam

2017-12-21

ACHINTYA MALLA BUJOR BARUA

body2017
JUDGMENT : Achintya Malla Bujor Barua, J. 1. Heard Mr. K.N. Choudhury, learned senior counsel for the petitioner. Also heard Dr. B. Ahmed, learned standing counsel for the Co-Operation Department and Mr., A.K. Talukdar, learned counsel for the respondent Nos. 5 to 13. The petitioner is a shareholder of the Son Beel Fisheman Cooperative Society Ltd. The Board of Director of the said Cooperative Society had assumed its Office in the month of February, 2015. As per the petitioner, since its assumption of Office, the Directors of the Board have been indulging in various financial irregularities and mismanagement of the society. 2. In the meeting of the Board of Directors held on 14.08.2016, it was notified that the Annual General Meeting (AGM) of the Sonbeel Fishermen Cooperative Society Ltd. for the year 2016-2017 would be held on 18.09.2016. 3. On 18.09.2016, the AGM of the society took place, but however, due to lack of quorum, the meeting was adjourned to 30.09.2016. On 30.09.2016 also the AGM of the Cooperative Society for the year 2016-2017 took place as per schedule in the premises of Subhash High School and the said AGM was chaired by one of the Board of Directors namely, Shri Probudh Das Choudhury. It is stated that in the said AGM which took place on 30.09.2016, certain questions were raised by the share-holders with regard to the allotment of fishing rights, discrepancies in the accounts of the societies, non-payment of revenue etc. As the Board of Directors could not provide acceptable answers, an unruly situation had taken place. As a result of such unruly situation, further proceedings of the AGM could not take place and the Govt. officials who were present had left the meeting. Accordingly, suggestions were made to hold the meeting again on a subsequent date and on the basis of such suggestion, the Chairman had ended the meeting for the day. It is stated that upon the meeting being ended, neither any subsequent date was fixed for holding the AGM, nor the Board of Directors had taken any initiative for holding the meeting thereafter. The aforesaid situation has been described by the petitioner in paragraph-5 of the writ petition that "the Annual General Meeting of Sonbeel Fisherman Cooperative Society Ltd. held on 30.09.2016 could not be fully and successfully held as the same remain inconclusive." 4. The aforesaid situation has been described by the petitioner in paragraph-5 of the writ petition that "the Annual General Meeting of Sonbeel Fisherman Cooperative Society Ltd. held on 30.09.2016 could not be fully and successfully held as the same remain inconclusive." 4. The resolution adopted in the AGM of 30.09.2016 provides that upon such questions being raised by some of the shareholders, a commotion had arisen amongst the members present in the meeting and ultimately the meeting concluded with a view that after consulting the departmental officers, the meeting could again be convened on a subsequent date. 5. In the aforesaid premises, the Asstt. Registrar of Cooperative Societies by his communication dated 28.10.2016 addressed to the Chairman of the cooperative Society had informed that due to certain objections and arguments raised by the share-holders, the AGM could not be completed on that day and also the agendas that were set forth for discussion in the AGM were also not completed. It was provided that for the said reason, the proceedings of the AGM held on 30.09.2016 were not approved under Section 45(1) of the Assam Cooperative Society Act, 2007, in short Act of 2007. The communication further provided that accordingly, the Board of Directors of Cooperative Society stood automatically dissolved under Section 39 of the Act of 2007. 6. Consequent thereof, the Zonal Joint Registrar of Cooperative Societies, Cachar, Silchar had issued an order dated 05.12.2016 wherein, it was noted that the Asstt. Registrar of Cooperative Societies, R.K. Nagar, by his letter 28.10.2016 had informed that the Board of Directors of Sonbeel Fishermen Cooperative Society Ltd. had failed to hold the AGM within the stipulated period provided in the Act of 2007 and therefore, the Board of Director of the Society stood dissolved. Accordingly, by the said order of 05.12.2016, the Zonal Joint Registrar of Cooperative Societies, Cachar, Silchar had appointed Shri T.D. Yadav, Junior Inspector/Auditor of Cooperative Societies as an One Man Committee to manage the affairs of the society and also to hold the AGM/Election within 90 days for the purpose of constituting a new Board of Directors. The said communication of 28.10.2016 and the order of 05.12.2016 were assailed by the Board of Directors before the Registrar of Cooperative Societies, Assam in an appeal under Section 92 of the Act of 2007. 7. The said communication of 28.10.2016 and the order of 05.12.2016 were assailed by the Board of Directors before the Registrar of Cooperative Societies, Assam in an appeal under Section 92 of the Act of 2007. 7. The Registrar of Cooperative Societies while considering the said appeal, in its order dated 30.12.2016, arrived at a conclusion that although 30.09.2016 was the last date within which the AGM was required to be convened, but the Govt. deputed Officer namely, Shri Bibekananda Bhattacharya, Senior Inspector of Cooperative Societies by citing certain personal difficulties had left the AGM and because of the same, the discussions in the meeting could not be concluded. Accordingly, the Registrar was of the view that the Board of Directors be allowed to continue the Office for the remaining term of three years, by providing that the special AGM would be held within 45 days in order to complete the remaining agenda fixed for the earlier scheduled meeting. 8. The aforesaid order of the Registrar of Cooperative societies has been assailed in this writ petition on the ground that the Board of Directors having automatically stood dissolved by operation of law under Section 39 of the Act of 2007, no further jurisdiction is vested on the Registrar to order for allowing the Board of Directors to continue in Office. 9. In order to appreciate the said contention of the petitioner that the Board of Directors automatically stood dissolved by operation of law under Section 39 of the Act of 2007, it would be apposite to refer to the provisions of Section 39 of the Act of 2007. Section 39 of the 2007 is as under:- "Annual General Meeting:- A general meeting to be termed as Annual General Assembly of a registered Co-operative Society shall be held at least once in every Co-operative year within a period of six months of close of the financial year to transact the business as provided in this Act. The Board shall automatically stand dissolved for not holding Annual General Meeting in accordance with the provisions of the Act and bye-laws within six months from the expiry of every Financial year." 10. The Board shall automatically stand dissolved for not holding Annual General Meeting in accordance with the provisions of the Act and bye-laws within six months from the expiry of every Financial year." 10. A bare reading of the provision of Section 39 would go to show that the Board of Directors automatically stands dissolved for not holding the AGM in accordance with the provision of the Act and the bye-laws within six months from the expiry of every financial year. In other words, the AGM for the preceding financial year, would mandatorily be required to be held in the subsequent year within six months from the expiry of the previous financial year. The consequence of not holding the AGM for the previous financial year within six months of its expiry, would be that by operation of law the Board of Directors would stand dissolved. 11. To understand the true meaning and purport of the said provision of Section 39, the other provisions of Section 39 would also have to be examined. It is noticeable that Section 39 as such, provides that an AGM of a registered cooperative society shall be held atleast once in every cooperative year within a period of six months from the closure of the previous financial year to transact the business as provided in the Act. On examination of the provisions of Section 39 of the Act, it is seen that one of the functions of the Board of Directors is to prepare the annual financial statement of accounts and accordingly it is to be understood that one of the businesses to be transacted in the AGM would be a deliberation on the annual financial statement of accounts. 12. On a reading of the entire provision of Section 39 of the Act of 2007, it is seen that the dominant purpose of Section 39 is that the AGM is mandatorily required to be held within a period of six months from the expiry of the previous financial year, for the purpose of transacting the business, which amongst others, also includes the deliberation on the annual financial statement of accounts. For the shareholders of the cooperative society, a discussion on the statement of accounts is of vital importance and any act on the part of the Board of Directors in not holding the AGM within the stipulated period of six months is to be viewed to be an act to deprive the shareholders from knowing in detail about the state of financial affairs of the society. 13. The other provision of Section 39 that in the event the AGM is not held within the period of six months from the expiry of the previous financial year, the Board of Directors stands automatically dissolved, is in the nature of a consequential purpose, which had been provided to compel the Board of Directors to hold the AGM within the stipulated period. 14. Although the consequential purpose as provided in Section 39 is that the Board of Directors would stand automatically dissolved in the event the AGM is not held, as provided, but the same is not to be construed to be a means of removing the Board of Directors. 15. In this respect, it is to be taken into consideration that the removal of the Board of Director or the election of a new Director is provided under Section 30(2)(b) of the Act of 2007, which infact is a provision providing for the matters to be dealt with in the AGM. Therefore, if in the view of shareholders or any other person, there is a requirement of removal of Board of Directors, the regular method will be to take up the issue in the AGM under Section 30(2)(b) of the Act of 2007. The consequential purpose of Section 39 of the 2007 Act providing for an automatic dissolution of Board of Directors in the event of not holding the AGM within a period of six months mom the expiry of the previous financial year, therefore, cannot be interpreted to be an enabling provision for the shareholders to remove a Board of Director. Rather Section 39 is a consequential provision, providing for the consequence of not holding the AGM within six months from the expiry of the previous financial year. In the aforesaid interpretation of Section 39 of the Act 2007, which would infact be a purposive interpretation of Section 39, the expression 'held' appearing in Section 39 would have to be understood. 16. In the aforesaid interpretation of Section 39 of the Act 2007, which would infact be a purposive interpretation of Section 39, the expression 'held' appearing in Section 39 would have to be understood. 16. Having said so, the correctness of the communication of the Registrar of Cooperative Societies dated 28.10.2016 as well as the older of the Zonal Registrar of Cooperative Societies dated 05.12.2016, would now have to be examined in the light as to whether in the facts and circumstances of this case, as alluded hereinabove, the proceeding that took place on 30.09.2016 can be construed to mean that the AGM was held on the said date. 17. The expression 'hold' has been defined in the Black's Law Dictionary to mean to direct and bring about officially or to conduct according to law. Again the word 'conduct' means to carry out or to perform. Accordingly, if an act is carried out or performed, it would have to be understood that such an act was conducted. 18. In the instant case, by referring to the aforesaid meaning of the expression 'hold', when the facts available in the present case is examined, it is noticed that the Board of Directors had carried out or performed the requirement of having a proceeding of the AGM on 30.09.2016. Although factually the said proceeding could not be completed and brought to its logical end, but the same by itself cannot lead to a conclusion that the act of having the AGM proceeding was not carried out or performed. Accordingly, as some act of carrying out or performing the act of having a proceeding of the AGM was carried out or performed on 30.09.2016, therefore, it has to be concluded that the AGM was held on 30.09.2016. 19. In view of the above, the very fact that some proceeding was conducted in respect of the AGM on 30.09.2016 would necessarily lead to a conclusion that the AGM was held on 30.09.2016. As the AGM was held on 30.09.2016, the dominant purpose of Section 39 of the Act of holding an AGM had been fulfilled. As a consequence, the consequential purpose of the Board of Directors being stood automatically dissolved for not holding an AGM is not applicable in the case at hand. As the AGM was held on 30.09.2016, the dominant purpose of Section 39 of the Act of holding an AGM had been fulfilled. As a consequence, the consequential purpose of the Board of Directors being stood automatically dissolved for not holding an AGM is not applicable in the case at hand. In such view of the matter, this Court does not find any acceptable reason to interfere with the order of the Registrar of Cooperative Societies dated 30.12.2016. Accordingly, as provided in the order dated 30.12.16 of the Registrar, the AGM which could not be concluded on 30.09.2016 be now brought to its logical end within a period of 45 days by attending to all the agendas fixed for the purpose. In terms of the above, writ petition stands disposed of.