P. Thanapal v. Ajay Kumar Bhalla, I. A. S. , Home Secretary, Ministry of Home Affairs, New Delhi
2022-05-05
G.JAYACHANDRAN
body2022
DigiLaw.ai
JUDGMENT (Prayer: Sub Application has been filed under Section 151 of C.P.C., to reopen the contempt petition closed on 29.06.2021 by this Hon'ble Court based on the suppressed counter and typed set filed by the respondents in the Contempt Petition No.359 of 2021 in W.P.No.26558 of 2019.) The applicant herein is an Indian Citizen repatriated from Sri Lanka. The Repatriate Co-operative Finance and Development Bank is a Multi-State Co-operative Society, called as ‘REPCO Bank’ in short. (at the time of filing the Writ Petition and the Contempt Petition, later changed to Repatriate Co-operative Finance and Development Co-operative Society, but the petitioner alleges that the 4th respondent still retains the word ‘Bank’ in breach of the instructions given by the Central Registrar). 2. The facts leading to this Sub-application are as below:- The petitioner herein gave a representation on 10/10/2018 to the Central Registrar/3rd respondent and the Managing Director/4th respondent to amend the Bye-laws of the Society in tune with the provisions of Multi-State Co-operative Societies Act, 2002. His representation was not acted upon and the Bye-law was not amended in tune with the Act. Hence, he filed a writ petition in W.P.No.31250/2018 for issuance of Mandamus. This Court, vide order dated 24/01/2019 disposed of the writ petition with a direction to consider the representation and dispose of it within 4 weeks from the date of receipt of that order. Pursuant to the direction in that writ petition, the Central Registrar of Co-operative Societies/3rd respondent vide his letter dated 03/05/2019 issued instruction to REPCO to carry out the necessary amendment to the Bye-law in tune with the Act, since the existing Bye-laws of REPCO Bank relating to Constitution of Board of Directors is not consistent with the provisions of Section 48 of the Multi-State Co-operative Societies Act, 2002. 3.Alleging that the instruction of the 3rd respondent issued pursuant to the order passed by this Court was not complied by the 4th respondent, but proceeding to conduct the election for the Directors, the petitioner filed a writ petition in W.P.No.26558/2019 and sought for a Writ of Mandamus to direct the 4th respondent, namely the Managing Director of REPCO Bank, to conduct the Board of Directors election, after carrying out necessary amendments, as per the instructions of the 3rd respondent/Joint Secretary (Co-op.), Central Registrar of Co-operative Societies in his letter dated 03/05/2019. 4.
4. This Court, on considering the pleadings and after perusal of the records, disposed of the writ petition in W.P.No.26558/2019 on 10/09/2019 with the following observation and direction:- “11. The fourth Respondent has already given notice for the General Body Meeting and the Agenda is to discuss about the amendment of the Bye-laws. Hence, this Court finds that there is no necessity to entertain this writ petition which is filed by a non-member of the Society and whose locus standi to file this Writ petition is questionable. 12. Since, the issue has already been taken cognizance by the 3rd respondent and direction has been given to the 4th respondent to amend the Bye-laws in consonance to the provisions of the Act, it is suffice to direct the 3rd respondent to monitor the affairs of the 4th respondent and ensure compliance of his direction dated 03/05/2019 at the earliest”. 5. The petitioner herein filed a Contempt Petition in Cont.P. No.359/2021 alleging that even after lapse of more than a year, the above order has not been complied by the respondents and the said non compliance is intentional. No attempt is made to amend the Bye-laws of REPCO Bank in tune with the provisions of the Act, despite specific direction given by this Court. 6. In the said contempt petition, the respondents filed counter wherein after narrating the steps taken by them to amend the Bye-laws and the reason for delay, they brought to the notice of this Court that the amendment to the Bye-laws in consultation with the Ministry of Home Affairs and concern State Government has come into force from 15/04/2021. Further, the 4th respondent-REPCO Bank gave an assurance that as per the amended Bye-laws, the process of electing the Board of Directors will be completed within a period of 6 to 8 months. Recording the above said undertaking, the Contempt Petition was closed vide order dated 29/06/2021. 7. The present Sub Application is filed to re-open the contempt petition alleging that the 3rd and 4th have suppressed documents adverse and got the Contempt Petition closed. The draft Amendment forwarded to the 3rd respondent by the 4th respondent was not approved. Without approval, Bye-law 30 and 39 was amended in violation of Section 41 and Section 48 of the Act. 8.
The draft Amendment forwarded to the 3rd respondent by the 4th respondent was not approved. Without approval, Bye-law 30 and 39 was amended in violation of Section 41 and Section 48 of the Act. 8. The learned counsel for the petitioner made the following three-fold submissions: (i) First, the 4th respondent has suppressed the fact that statutory approval for the amendment was granted only on condition and it was not an absolute approval. By misrepresenting to this Court that the above amendment is approved and came into effect from 21/04/2021, the 4th respondent got the contempt petition closed. (ii) Second, the present amended Bye-law No.30 enables to have only a maximum 10 Board Members, while the Act permits to have a maximum of 21 members. As per the Bye law No.30, the Constitution of the Board is 6 elected Directors from the General Body from among the delegates and 3 nominated Directors. Bye-law No.39 provides for appointment of a Functional Director by the Board, who will be called as ‘Managing Director’ and he will be Ex-Officio member in the Board. The said Managing Director is vested with voting right. In addition, the Board is also authorized to co-opt 2 Directors representing the Central/ State Governments, without voting right. The amended Bye-laws like the earlier Bye-law permits to have more than 1/3rd nominated members with voting right which is inconsistent to Section 48 of the Act which specifically restricts the nominated members shall not to be more than 1/3rd of the total members. (iii) Third, the 4th respondent is still using the word ‘BANK’, in spite of the instruction by the 3rd respondent that the 4th respondent being a society, it should not use the word ‘Bank’ in its name. Instead, it should use the words ‘Co-operative society”. However, till date though they have notified the name change, not stopped using the word ‘Bank’. Further, the learned counsel appearing for the petitioner also contended that the 3rd respondent, who was directed to monitor the compliance of the order, has not entered appearance in this Sub Application to explain whether he approved the proposed amendment to the Bye-laws or not. 9. Per contra, the learned Senior Counsel appearing for the 4th respondent submitted that the petitioner has no locus standi to sustain this Sub Application.
9. Per contra, the learned Senior Counsel appearing for the 4th respondent submitted that the petitioner has no locus standi to sustain this Sub Application. Earlier, the petitioner without any locus standi filed the writ petition which was followed by the contempt petition. This Court disposed of them with certain directions and same has been strictly complied. The petitioner tries to re-agitate his contempt petition which was closed after hearing both sides. 10. According to the counsel for the 4th respondent, the petitioner a busy body person with an ulterior motive to tarnish the reputation of 4th respondent is in the habit of filing writ petitions in his name or his associates to cause disturbance to the smooth functioning of the Financial Institution started with the object to promote the welfare of Repatriates. The petitioner intention is to harm the interest of the 4th respondent society and its members. In fact as per the amended Bye-laws the new Board of Directors after election has assumed office. This petitioner and his associates made all attempt to stale the election process by filing about 14 writ petitions in different names for one reason or other just to stale the election process. Having failed in his attempts to stale the democracy process of election to the Board of Directors, by misreading and misinterpreting the provision of law qua Bye-laws try to reagitate the closed contempt petition, as if the amended Bye-laws are contrary to the provisions of Sections 41 and 48 of the Act. 11. Before proceeding further, it may be relevant to look back the history of the legislation qua the 4th respondent society, particularly in respect of the restriction on the number of nominated members as not exceeding 1/3rd of the total number of members of the board. 12. The Co-operative Societies which is a subject matter under concurrent list of the Constitution (Seventh Schedule- List II – entry 32) was predominantly functioning under the domain of the respective States. Most of the States in India have their own State Legislation to govern Co-operative Societies. On the part of the Union, Multi-Unit Cooperative Societies Act, 1942 was in force. Since, each State had different law governing Multi State Co-operative Societies, there was a lack of uniformity. The 1942 Act was therefore replaced by the Multi-State Cooperative Societies Act, 1984.
Most of the States in India have their own State Legislation to govern Co-operative Societies. On the part of the Union, Multi-Unit Cooperative Societies Act, 1942 was in force. Since, each State had different law governing Multi State Co-operative Societies, there was a lack of uniformity. The 1942 Act was therefore replaced by the Multi-State Cooperative Societies Act, 1984. This Act lived short due to inadequacies of autonomy, restrictions on the terms of office bearers and bar to transfer of assets and liability without prior approval of the Central Registrar. Hence, the Multi-State Cooperative Societies Act, 2002 was enacted to remove the above malady. This Act came into force on 19/08/2002. 13. While so, to give a new direction to the Co-operative movement, the Indian Parliament thought fit to amend the Constitution to achieve the object of removing the weaknesses in safeguarding the interests of the members and fulfillment of objects for which the institutions were organised. In the Statement of Object and Reason for the Constitution (97th Amendment) Act - 2011, it has been specifically stated that, (quote) “There have been instances where elections have been postponed indefinitely and nominated office bearers or administrators remaining in charge of these institutions for a long time. This reduces the accountability of the management of co-operative societies to their members.” ( un-quote). 14. After obtaining the assent of the President, Chapter IX B was inserted in the Constitution by virtue of the 97th Amendment of the Constitution. It was notified in the Official Gazatte of India on 13/01/2012. Multi- State Cooperative Societies Act was correspondingly amended. The Multi State Cooperative Societies were asked by the Central Registrar to amend their Bye-laws wherever it is not in consistent with the Multi State Cooperative Societies Act, 2002. 15. At this juncture, it is appropriate to note, the 4th respondent herein namely REPCO Bank failed to amend its Bye-law consistent with the Act. In furtherance to a direction by this court in W.P.No.31250/2018 (incidentally filed by this petitioner) and the instructions dated 03/05/2019 issued by the 3rd respondent to amend their Bye-laws as per Section 48 of the Multi- State Cooperative Societies Act, 2002, the 4th respondent claims to have amended their Bye-laws in tune with section 48 of the Act.
In furtherance to a direction by this court in W.P.No.31250/2018 (incidentally filed by this petitioner) and the instructions dated 03/05/2019 issued by the 3rd respondent to amend their Bye-laws as per Section 48 of the Multi- State Cooperative Societies Act, 2002, the 4th respondent claims to have amended their Bye-laws in tune with section 48 of the Act. Whether or not, the said amendment to the Bye-law is in compliance to the Act is the question for consideration in this sub-application and will be answered in the course of this order. 16. Back to the legislative history, the vires of the 97th Constitutional Amendment was challenged before the Gujarat High Court on the ground that the amendment on the subject in concurrent list not ratified by more than half of the State Assembly, which is mandatory pre-requisite under Article 368(2) of the Constitution. The Gujarat High Court entertained the petition and struck down Part IX B of the constitution holding it as ultra vires. This judgment was challenged before the Supreme Court by the Union of India. The Hon'ble Supreme Court Bench by 2:1 majority, held that the 97th Amendment is infraction of federal principle. It declared the amendment has no application in so far as the State Co-operative Societies are concern. As far as Multi state Co-operative Societies are concern, the Amendment brought in under Part IX B of the Constitution is operative. 17. As on date, without any ambiguity, the Hon'ble Supreme Court had declared that, the 97th Amendment is operative in respect of Multi State Cooperative Societies. The 4th Respondent Society being a Multi-State Co-operative Society, Part IX B of the Constitution is applicable. As a consequence, the provisions of the Multi State Cooperative Societies Act, 2002 also applicable. The 4th respondent is governed by the said Act and its Bye-laws cannot be inconsistent or in variation to the Provisions of the Constitution or and the Multi State Cooperative Societies Act. 18. Coming back to the issue in hand, to recapitulate the facts, the 4th respondent society ( REPCO ) did not amend their Bye-laws in tune with the Constitution and the Act despite request from the petitioner and direction from the 3rd respondent. The petitioner filed W.P.No.26558/2019 and sought for a Writ of Mandamus.
18. Coming back to the issue in hand, to recapitulate the facts, the 4th respondent society ( REPCO ) did not amend their Bye-laws in tune with the Constitution and the Act despite request from the petitioner and direction from the 3rd respondent. The petitioner filed W.P.No.26558/2019 and sought for a Writ of Mandamus. This court vide order dated 10/09/2019 directed the 4th respondent to comply the directions of the 3rd respondent at the earliest and instructed the 3rd respondent to monitor the affairs of the 4th respondent. Stating that this order was not complied, a contempt petition was filed and in that contempt petition this court after taking note of the actions taken by the contemnors for the past one year and the assurance given, closed the contempt petition on 29/06/2021. 19. The present sub application is filed to reopen the contempt petition on the ground that the 3rd and 4th respondents before this court in the contempt proceedings made false statements about their actions for amending the Bye-law in tune with the statute. In fact, they have not amended the Bye-law in consonance to the provisions of law. The amended Bye-law which is against the spirit of the Constitution and the provisions of the Act. 20. The 97th Amendment to the Constitution was brought with a laudable object to ensure the co-operative societies in the country function in a democratic, professional, autonomous and economically sound manner While testing the constitutional validity of this amendment, the Hon’ble Supreme Court of India by its judgment in Union of India –vs- Rajendra N.Shah and Another ( 2021 SCC OnLine SCC 474) had declared that the amendment is valid and applicable in so far as Multi-State Cooperative Societies. 21. As a result, the 4th respondent being a Multi State Cooperative Society, it is bound to amend the Bye-law in tune with the Part IX B of the Constitution dealing ‘Co-operative Societies’ and the Provisions of Multi-State Cooperative Societies Act. 22.
21. As a result, the 4th respondent being a Multi State Cooperative Society, it is bound to amend the Bye-law in tune with the Part IX B of the Constitution dealing ‘Co-operative Societies’ and the Provisions of Multi-State Cooperative Societies Act. 22. Article 243ZJ of the Constitution prescribes the number and term of members of board and its office bearers as below:- (1) The board shall consist of such number of directors as may be provided by the Legislature of a State, by law: Provided that the maximum number of directors of a co-operative society shall not exceed twenty-one: Provided further that the Legislature of a State shall, by law, provide for the reservation of one seat for the Scheduled Castes or the Scheduled Tribes and two seats for women on board of every co-operative society consisting of individuals as members and having members from such class or category of persons. (2) The term of office of elected members of the Board and its office bearers shall be five years from the date of election and the term of office bearers shall be conterminous with the term of the board: Provided that the board may fill a casual vacancy on the board by nomination out of the same class of members in respect of which the casual vacancy has arisen, if the term of office of the board is less than half of its original term. (3) The Legislature of a State shall, by law, make provisions for co-option of persons to be members of the board having experience in the field of banking, management, finance or specialization in any other field relating to the objects and activities undertaken by the co-operative society, as members of the board of such society: Provided that the number of such co-opted members shall not exceed two in addition to twenty-one directors specified in the first proviso to clause (1): Provided further that such co-opted members shall not have the right to vote in any election of the co-operative society in their capacity as such member or to be eligible to be elected as office bearers of the board: Provided also that the functional directors of a co-operative society shall also be the members of the board and such members shall be excluded for the purpose of counting the total number of directors specified in the first proviso to clause (1).
[“Refer Article 243 ZR: which reads, ‘the provisions of this Part shall apply to the Multi-State Cooperative Societies subject to the modification that any reference to “ Legislature of a State” or “State Act” or “State Government” shall be construed as a reference to “ Parliament”, “Central Act” or the “ Central Government” respectively]. 23. Thus, as per Article 243 ZJ(1) and (3), the number of total members of the Board of Directors is restricted to a maximum of 21. In addition, 2 members who are field experts can be co-opted without voting right. 24. Section 41 and 48 of the Multi-State Cooperative Societies Act are the provisions in the Act deals with Board of Directors and Nominee of Central Government and State Government on Board, respectively . ‘National co-operative Society’ which is referred in the second proviso to section 41 (3) is defined in Section 3 (r) of the Act. The combined reading of these provisions, gives a clear picture without any scope for misunderstanding or misinterpretation on the law of nomination of directors in a Multi-state Co-operative Society as under:- The first proviso to Sub-Section (3) of Section 41 restricts the number of Board of Directors of a Multi State Cooperative Society shall not exceed 21 members and the said Board may co-opt two directors in addition to 21 directors. The second proviso to Sub-Section (3) of Section 41 say the functional directors in the National Co-operative Societies shall also be the members of the board and such members shall be excluded for the purpose of counting the total number of directors specified in the first proviso. Section 3 ( r ) of the Act defines, ‘National Cooperative Society’ means a multi-state co-operative society specified in the Second Schedule of the Act.[ The name of the 4th respondent is not in the second schedule. Hence it cannot claim the privilege of National Cooperative Society ] 25. The first proviso to Section 48 (1) restricts the total number of nominated Directors to a maximum of THREE. The Central Government or the State Government which has subscribed to the share capital of a Multi-State Cooperative Society, shall have a right to nominate on the Board on the following basis:- One memberif the equity share held by it is less than 26%. Two membersif its equity share is between 26% and 51%. Three membersif its equity share is above 51%. 26.
Two membersif its equity share is between 26% and 51%. Three membersif its equity share is above 51%. 26. For reference, the relevant Sections mentioned above are extracted below:- Section 3 (r):- “national co-operative society” means a multi-State co-operative Society specified in the Second Schedule; Section 41:--Board of Directors. (1) Subject to the provisions of this Act and rules, there shall be a board of directors for every multi-State co-operative society consisting of such number of members as specified in sub-section (3). (2) The members of a multi-State co-operative society, by a resolution in a general meeting, shall elect directors who shall be members of board. (3) The board shall consist of such number of directors as may be specified in the Bye-laws: Provided that the maximum number of directors in no case shall exceed twenty-one: Provided further that the board may co-opt two directors in addition to twenty-one directors specified in the first proviso: Provided also that the functional directors in the national co-operative societies shall also be the members of the board and such members shall be excluded for the purpose of counting the total number of directors specified in the first proviso. Section 48 : Nominee of Central Government or State Government on board. (1) Where the Central Government or a State Government has subscribed to the share capital of a multi-State co-operative society, the Central Government or the State Government, as the case may be, or any person authorised by the Central Government or the State Government shall have right to nominate on the board such number of persons as its members on the following basis, namely:-- (a) where the total amount of issued equity share capital held by the Central Government or the State Government is less than twenty six per cent. of the total issued equity share capital, one member of the board; (b) where the total amount of issued equity share capital held by the Central Government or the State Government is twenty-six per cent. or more but less than fifty-one per cent. of the total issued equity share capital, two members of the board; (c) where the total amount of issued equity share capital held by the Central Government or the State Government is fifty-one per cent.
or more but less than fifty-one per cent. of the total issued equity share capital, two members of the board; (c) where the total amount of issued equity share capital held by the Central Government or the State Government is fifty-one per cent. or more of the total issued share capital, three members of the board: Provided that the number of such nominated persons shall not exceed one third of the total number of members of the board: Provided further that where the Central Government or a State Government has guaranteed the repayment of principal and payment of interest on debentures issued by a multi-State co-operative society or has guaranteed the repayment of principal and payment of interest on loans and advances to a multiState co-operative society or has given any assistance by way of grants or otherwise to a multi-State cooperative society, the Central Government or the State Government in this behalf, as the case may be, or any person authorised by the Central Government, shall have the right to nominate person on the board of such a society in the manner as may be prescribed. (2)A person nominated under this section shall hold office during the pleasure of the Government by which he has been so nominated. 27. After the direction of this court vide order dated 10/09/2019 in W.P.No.26558/2019 and Contempt Petition in Cont.P.No.359/2021, the Bye-law of the 4th respondent Society, no doubt amended. The election of the 6 Directors from the members also completed. The 4th respondent in paragraph 11 of his affidavit filed in response to the present sub-application has stated the present composition of directors of its society as below:- Para 11: “I submit that in terms of the amended Bye-law, the the maximum number of Board of Directors shall be 10 which is inclusive of 6 elected Directors from the General Body from among delegates and 3 nominated Directors and Managing Director being the Ex-officio member of the Board of Directors. The Board is authorised co-opt 2 Directors representing Central/State Governments, which is in consonance with the provisions of statute.” 28.
The Board is authorised co-opt 2 Directors representing Central/State Governments, which is in consonance with the provisions of statute.” 28. The 4th respondent has in his affidavit specifically stated that, after the resolution of the Board in its 218th Board Meeting, the election process for the 13th Representative General Body of REPCO Bank commenced on 04/01/2022 appointing a Returning Officer and the election for the new board members as per the above amended Bye-law has been conducted and concluded on 07/04/2022. It is reiterated that the election was conducted after carrying out the amendment to the Bye-law in compliance of Section 48 of the MSCS Act. The said portion of the affidavit is extracted below:- “9.I submit that subsequent to the order passed by this Hon'ble Court, this respondent had taken earnest effort to conduct the election in terms of the undertaking given before this Hon'ble Court. In spite of the re-emergence of COVID-19, the election to the Board of Directors was conducted in due compliance of the order passed by this Hon'ble Court. The dates and events of the election schedule are detailed out as follows:- S. No. Date Proceedings 1. 29.12.2021 Resolution passed by the board in the 218 th Board Meeting for conducting election for 13 th representative General Body of REPCO Bank. 2. 04.01.2022 Appointment of returning officer 3. 07.01.2022 Election notification for the election delegates 4. 09.02.2022 Election result of delegates 5. 21.02.2022 Election notification for the Election of Directors 6. 16.03.2022 Election result of directors 7. 05.04.2022 Election notification for Chairman 8. 07.04.2022 Election result of Chairman 10. I submit that, as seen above, the new board has been constituted for REPCO Bank as per the amended Bye-laws for a period of 5 years. In terms of the order passed by this Hon'ble Court, election was conducted after carrying out the amendment to the Bye-Law to be in compliance of Section 48 of MSCS Act. As a matter of fact a Repatriate is elected as the Chairman to the Board of Directors of the REPCO Bank. It is most humbly submitted that nearly 14 writ petitions were filed challenging the election process as well as the amendment carried out by the REPCO Bank and all the said writ petitions were dismissed by this Hon'ble Court, enabling the Bank to conduct the election in consonance with provisions of the MSCS Act 2002.
It is most humbly submitted that nearly 14 writ petitions were filed challenging the election process as well as the amendment carried out by the REPCO Bank and all the said writ petitions were dismissed by this Hon'ble Court, enabling the Bank to conduct the election in consonance with provisions of the MSCS Act 2002. The issues as raised in the present petition were already negatived by this Hon'ble Court in the aforesaid writ petitions filed by the respective parties, who tried to sabotage the election process. The petitioner is now trying to make out a case with regard to the amendment carried out by the bank on 15.04.2021 as though it is against the provision of Section 41 and 48 of the Act by misreading and misinterpreting the amendment carried out on 15.04.2021 to suit his convenience of subvert the entire election process.” 29. As per the amended Bye law of the 4th respondent society, Bye-law 30 says, the Board of Directors shall not be more than 10 members. Six of the Directors to be elected by the General Body from among the delegates (members representatives). Three of the Directors to be nominated by the stake holders namely States and Central Governments and a Managing Director appointed by the Board, who will be Ex-officio member of the Board of Directors . Besides, the Board is also vested with the discretion to co-opt two Directors, who are field experts. The four nominated members will have the right to vote. Two co-opted member will have no voting right. 30. Thus, admittedly out of 10 members who have the right to vote, only 6 are elected members (less than 2/3rd) and 4 are nominated members (over and above 1/3rd). As per the proviso to section 41 (3) only in case of National Co-operative Societies which are named in the Schedule to the Act, the functional directors shall be excluded for the purpose of counting the total member of directors specified in first proviso (which restricts the total number of members as maximum 21). Therefore, the Managing Director of the 4th respondent Board, who is vested with voting right, cannot get umbrage under the proviso to Section 41(3) of the Act. It is obvious that the 4th respondent society Bye-law provides for nominating more than 1/3rd of its total members.
Therefore, the Managing Director of the 4th respondent Board, who is vested with voting right, cannot get umbrage under the proviso to Section 41(3) of the Act. It is obvious that the 4th respondent society Bye-law provides for nominating more than 1/3rd of its total members. This is in violation to the second proviso of Section 48, which restricts the total number of nominated persons shall not exceed more than 1/3rd of the total number of members of the Board. 31. In so far as the two co-opt members, the constitution enables the Board of a Co-operative Society to co-opt maxiumum two members in addition to the permitted number of members. Therefore, there is no infraction of the Constitution or the MSCS Act. However, in respect of nominated members, 4 members with voting right fall foul of Section 48(1) Proviso (1), which specifically restricts the number of such nominated persons shall exceed 1/3rd of the total number of members of the Board. 32. For any institution to function democratically, the decision making body must be the collective representatives of its members and such representatives must be elected in a fair manner. The decision making body cannot be dominated by non-members. Therefore, the Legislation which was enacted to ensure democratic process in administration of the Cooperative Societies had consciously restricted the number of non-members which includes nominated as well as co-opt members. In cases where the nominated members with voting right exceeds the 1/3rd barrier, then it is ultra vires to the law in force. 33. This Court finds that as per the Bye law Nos. 30 and 39, the present composition of the Board of Directors of the 4th respondent Society is 6 elected members, 3 nominated members and one Functional Director appointed by the Board, who shall function as Managing Director and Ex-officio member of the Board of Directors. Besides these 10 members, two more members can be co-opted. However, such co-opted members shall have no voting right. Section 41(3) of the Act permits functional Directors as members of the Board, only in case of National Co-operative Society and he shall be excluded for the purpose of counting the total number of Directors specified in the first proviso.
Besides these 10 members, two more members can be co-opted. However, such co-opted members shall have no voting right. Section 41(3) of the Act permits functional Directors as members of the Board, only in case of National Co-operative Society and he shall be excluded for the purpose of counting the total number of Directors specified in the first proviso. Though there is no explicit bar for appointing a Functional Director in other Multi State Co-operative Societies, such Functional Directors so appointed cannot claim exception under Section 41(3) proviso (1) in respect of the restrictions on total members of the Board (i.e 21 members) or under Section 48(1) proviso (1), the restriction on nominated members (1/3rd of the total members). 34. Therefore, a prima facie case is made out by the petitioner that the amendment is not in tune with the law in force and the 3rd respondent has failed to monitor the function of the 4th respondent society in respect of implementing the direction of this Court. 35. In the instant case, the Bye-law of the 4th respondent society amended in such a way to defeat the spirit of the Constitution. The 3rd respondent who under the Act as well as by the order of this Court vested with the responsibility to monitor the amendment to Bye law is carried out in accordance with law, had failed in its duty. Prima facie, this Court is satisfied that the 3rd and 4th respondent had intentionally breached the order of the Court which directed them to follow the mandate of the Constitution and Law and amend their Bye-law. 36. Hence, this Sub Application No.34/2022 is allowed. The Contempt Petition No.359/2021 is reopened. This Court is prima facie satisfied that there is deliberate and wilful disobedience of the order passed by this court. Wanton violation of the statutory provision in the Bye law amended. Hence, order to Issue statutory notice to the 3rd Respondent (Shri.Vivek Agarwal, I.A.S., Joint Secretary (Co-op), Central Registrar of Co-operative Societies) and 4th Respondent (Smt.R.S.Isabella, Managing Director, REPCO BANK ). 37. List the Contempt Petition No.359/2021 on 17/06/2022 at 2.15 p.m.