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Bombay High CourtIndian Cases

Balwantrao B. Kadam vs District Deputy Registrar Co-Op. … on 2 December 1977

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Bombay High Court
Balwantrao B. Kadam vs District Deputy Registrar Co-Op. … on 2 December, 1977

V.S. Deshpande, J.

1. A co-operative society, under the name and style of District Central Co-operative Milk Production and Supply Society Ltd., is registered under the Maharashtra Co-operative Societies Act, 1960, hereinafter referred to as “the Act”, on 27th December, 1974. At a General Body Meeting of the society, held on 14-2-1975, nine persons were elected for the first Managing Committee. The District Deputy Registrar, Beed cancelled the said Managing Committee on the ground that bye-law 36(a) contemplates first Board to be nominated by the Registrar and not elected. He then nominated the first Board by his order dated 27-4-1976. The Board consisted of in all four persons and the petitioner was appointed the Chairman thereof. The life of this nominated Board was to last upto 26-12-1977, as per order dated 13-7-1976. On 13-9-1977 the District Deputy Registrar, Beed effected a change in this Board. He appointed in all 9 persons on the Board. It included 4 members of the earlier Board and 5 more new persons. He also appointed respondent No. 3 as the Chairman of the said Board. This Board was to continue in office for one year from 13-9-1977 i.e. upto 13-9-1978. The order also directed the members of the first Board to “hand over the charge” to the new Board. The petitioner challenges the validity of this order in this Special Civil Application under Article 226 of the Constitution.

2. Rule was made returnable by the Admission Bench on 11-10-1977. As the matter did not reach for hearing on that day Dr. Naik, learned Advocate for respondents Nos. 3 to 8, made a motion for hearing the matter immediately as the validity of election now proposed to be held by the petitioner in December 1977 itself was in dispute. We accordingly directed the matter to be placed on Board for hearing today.

3. Mr. A.V. Savant, the learned Advocate appearing for the petitioner, raised three contentions before us. He firstly contended that the Registrar has no power to nominate the Chairman. He secondly contends that nominated Board can be appointed only for three years and this period must be counted from the date of incorporation i.e. 27-12-1974. Extending the period of any nominated Board beyond three years under the impugned order is unwarranted. He thirdly contends that no person can be nominated on the Board unless he happens (1) to be a member of the society in his individual capacity or (2) a representative of any society which is a member of the society. The petitioner’s society is admittedly a federal society.

4. Dr. Naik, the learned Advocate appearing for respondents Nos. 3 to 8, raised a preliminary objection and the same was supported by Mr. C.J. Sawant, the learned Additional Government Pleader, appearing for respondents Nos. 1 and 2. According to Dr. Naik and Mr. C.J. Sawant, the Deputy Registrar has acted under the term of the bye-law 36(a) while issuing the impugned order. He cannot be said to have acted pursuant to any statutory provisions, or in discharge of any public duty. The powers under bye-law 36(1)(a) is a creature of the bye-laws itself which cannot have better status than that of a contract as held by the Supreme Court in the case of Co-operative Central Bank Ltd. v. Additional Industrial Tribunal, Andhra Pradesh, Hyderabad, . It is therefore, contended that the Deputy Registrar having acted in exercise of the contractual authority and as Persona designate is not amenable to writ jurisdiction of this Court under Article 226 of the Constitution.

5. There is no merit in the preliminary objection. Mr. A.V. Savant has not challenged the order on the ground of Deputy Registrar having exercised the power instead of the Registrar named in the bye-law and we, therefore, need not go into the question. Important point to be noted is that the Registrar is contemplated to act in his official capacity and his private capacity does not come into picture. The very fact that powers are contemplated to be exercised ex officio by any person holding the post of Registrar for the time being, has the clinching effect on this point. It is doubtful if the person appointed in his official capacity can be called persona designate in the strict sense of the term. Observations of the Supreme Court in the case of Central Talkies Ltd. v. Dwarka Prasad, run to the contrary. It will not make any difference even if he is held to be a persona designata in this case. It can only mean that he is not amenable to appellate or revisional jurisdiction to hierarchy of his superiors in terms of the provisions of the Act. This by itself will not prevent him from being amenable to with jurisdiction under Article 226 of the Constitution as long as the functions as a limb of the Government administration in his capacity as the Registrar. The ratio of the judgment of Patel, J. speaking for the Division Bench in his judgment dated 11-3-1969 in (Special Civil Application No. 378/69), will have no application. It is true that he will not be so amenable unless it is shown that he acts in discharge of his public duties. There can, therefore, be no quarrel with the proposition laid down in Praga Tools Corporation v. C.V. Imanual, . Subhjit Tewary v. Union of India, and passage at page 101, 111 paras 81 and 83 of Halsbury’s Laws of England on which reliance is placed by Dr. Naik and Mr. C.J. Sawant. However, when the officer acts in an official capacity it is very difficult to draw a line between acts done by him in discharge of his public duties and the acts done by him in discharge of the contractual duties in respect of the contractual rights of the members of the society. In this very case direction to the previous Board in the order to hand over charge to the new Board cannot be traced to any clause in the bye-laws. It can be traced to sections 79 or 106 of the Act under which Registrar can intervene in discharge of his statutory duty to enforce the obligations of the office bearers or members of the society. It is not possible to hold that Registrar’s this part of the order at any rate is not amenable to our jurisdiction under Article 226.

6. Secondly, the negative aspect of the duties of the public servant is as much relevant for jurisdiction under Article 226 as the positive aspect thereof. The registrar has a public duty to ensure that his acts do not go beyond the authority conferred under the Act. Contractual authority, carrying as it does with it the implied consent of the parties, may cause the defect of the absence of legal authority. Once it is found that his order is not in accordance with the bye-laws, he shall have to justify his acts and orders to this Court by reference to some statutory provisions. A citizen is entitled to invoke the jurisdiction of this Court under Article 226, where the Registrar without shedding his official position and character, proceeds to act either without the authority or consent reflected in the bye-laws or without any authority under the Act or the rules. Every mistake in the interpretation of the bye-law and the consequential assumption of authority for an act may not render the act invalid or authority non-existent. He, however, cannot clutch at some words here and there and pretend existence of the authority where none is found to exist. Drawing of the line in border line case may by no means be easy. It shall have to be left to the Court to determine in each case as to in which category the case under consideration falls. As will be discussed later, the impugned order cannot be justified by the bye-laws or by the Act or Rules. The order is liable to be struck down as it will be an act of the Registrar ultra vires of his powers.

7. Coming to the three main contentions raised by Mr. A.V. Savant, we must observe at the outset that the language of the bye-laws 36 and 36(a) is not happily worded and is not free from ambiguity. While bye-law 36 contemplates election of Board at the General Body Meeting, bye-laws 36(a) authorises the Registrar of Co-operative Societies to nominate the first Board for the first three years. Bye-law 36(a) consists of only one clause and the figure (1) in the bracket appears to be inappropriate when the said clause does not include more than one clause. Secondly, bye-law 36(1) contemplates 9 members as directors. It also indicates as to how 9 members are to be elected. Bye-law 36(1)(i) contemplates the President elected under bye-law 28(1) to be ex officio Chairman. This is inconsistent with sub-clause (4) of bye-law 36, which contemplates election of the Chairman and Vice Chairman from amongst the members of the Board. The Board is also referred to as the Managing Committee in sub-clauses (3) and (4) of bye-law 36. On the top of all this, there is apparent inconsistency in Rule 59 of the Rules framed under the Act and bye-law 36(a) of the bye-laws. While Rule 59 contemplates convening of the first General Meeting by the promoters, joining in the application for registration of society and constitution of provisional Managing Committee by the said meeting until regular election; bye-law 36(a) contemplates nomination of the first Board by nomination by the Registrar. We do not propose to give more thought to this beyond drawing the attention of the Registrar of Co-operative Societies to these anomalies as no question involving these points is raised in the petition or before us by Mr. A.V. Savant appearing for the petitioner.

8. Sub-clause (4) of bye-law 36 does contemplate that the Chairman and Vice-Chairman shall be elected by the Managing Committee from amongst them. Dr. Naik and Mr. C.J. Sawant contend that none of the clauses of bye-law 36 of the bye-laws can have any application to the nominated Board under bye-law 36(a). The opening words of bye-law 36(a) however, excepts only sub-clause (1) and not all the clauses of bye-law 36. When the bye-laws expressly intend to ignore sub-clause (1) only of bye-law 36, while giving overriding effect to the operation of bye-law 36(a) it will not be open for us to read differently and hold that for the nominated Board under bye-law 36(a) sub-clause (4) of bye-law 36 will not be applicable. Mr. C.J. Sawant drew our attention to the wording of sub-clauses (2) and (3) to demonstrate that in the very nature of things these clauses can have no application to the nominated Board. Now it is true that the Registrar is not required to appoint a particular number as directors on the nominated board and in the event of less than 5 members being nominated on the Board, the rule requiring 5 to be the quorum cannot be available. Similarly the question of holding election at the end of ‘every three years’ will be inappropriate in the context of nominated board. In all such cases the clauses must be deemed to be inapplicable, because of its context and not because of the non-obstante clause in bye-law 36(a), which is expressly limited to sub-clause (1) of bye-law 36. Thus sub-clause (4) of bye-law 36 will be applicable and the appointment of respondent No. 3 as the Chairman shall have to be held as unwarranted under the scheme of bye-laws 36 and 36(a) of the bye-laws.

9. Bye-law 36(a) undoubtedly requires the life of the so nominated Board to be for 3 years. The bye-law however does not indicate as to from which date the three year’s period has to commence. Mr. C.J. Sawant and Dr. Naik contend that three years period must be counted from the date on which the Board could be constituted or nominated. This is how the learned Advocates justify the impugned order of the District Deputy Registrate fixing the life of that Board for a period of one year from 13-9-1977, which happens to be beyond 3 years period from the date of incorporation i.e. 20-12-1974. If this argument were to be accepted, then the limit of 3 years will never be applicable and this very Board may claim to survive till 13-9-1980. Rule 59 expressly contemplates the appointment of provisional board to survive till the first Annual General Meeting. It will still not be open for us to take the aid of Rule 59 for construing bye-law 36(a) of the bye-laws. In the absence of any indication, the three years’ period shall have to be counted from the date of incorporation. Mere circumstance that occasions requires changes in the Board or substituting one by the other cannot enlarge the life of such nominated Board beyond three year’s from the date of its incorporation. Even when a change is made or another Boards is substituted for one already appointed the total period of such nominated Board cannot exceed three years. We need not consider the effect in this case of one nominated Board being substituted by the other during the period of first three years. The present order can be construed to merely changing the constitution and not substituting the Board entirely. The essence of all the provisions of the Co-operative Societies Act is to have an elected. Managing Committee; nominated Board is an exception to the same. It appears to have been provided to get over the initial teething trouble and ensure smooth functioning thereof. It will not be proper to place any other construction and authorise computation of 3 years period from any other date. The nominated Board, in our opinion, cannot last beyond 3 years from the date of incorporation viz. 27-12-1974 without any reference to date of its appointment. The life of the nominated Board thus must expire on 26-12-1977 without regard to the date on which it is constituted. No nominated Board can function beyond 26-12-1977. The concerned authority shall have to take action to ensure that fresh Board is elected by the said time i.e. before 26-12-1977.

10. Mr. A.V. Savant then contends that 5 members out of 9 members nominated under the order dated 13-9-1977 are not members in their individual capacity nor are they representative of any share holding society and they could not have been nominated on the Board. In the counter-affidavit filed on behalf of respondents Nos. 3 to 6 it is admitted that 4 out of the remaining 5 new members of the nominated Board are not the members of the society in their individual capacity nor they claim to be representatives of any society. It is however, asserted that respondent No. 5 is the member of the society. In the counter-reply filed on behalf of the petitioner this is not expressly disputed. The question thus remains only in regard to the validity of the appointment of respondents Nos. 3, 6, 8 and 10 on the Board. Bye-law 36(a) contemplates a nominated Board to be of “as many members as may be deemed necessary”. The word ‘members’ is relied upon by Mr. A.V. Savant to suggest that nominated board can only consist of members of the society and no stranger can be appointed thereto. Mr. C.J. Savant and Dr. Naik on the other hand, contended that the words ‘as many members as may be deemed necessary’ have reference only to the strength of the Board it has no reference to the membership of the society. However, there is one circumstances which according to us tilts the balance in favour of the construction sought to be placed by Mr. A.V. Savant. Bye-law 36 contemplated the election to the Board from amongst the members of the society. In fact, it is not disputed that is the scheme under the Act and Rules and ordinally no stranger is permitted to be on the Board of Directors. The non-obstance clause in bye-law 36(a) only indicates the mode of nomination and life of such nominated Board. The character of the constituents remains the same and not affected by the non-obstand clause Mr. C.J. Savant drew our attention to section 78(1)(a)(ii) which expressly permits administrators even if they do not happen to be the members of the society. We do not think that any inference in support of the interpretation sought to be placed by Dr. Naik and Mr. C.J. Savant can be drawn from this phraseology of section 78(1)(a)(ii) of the act. In the first place, this situation of appointing administrators is entirely different and authority to appoint stranger is express. It is difficult to see any such intention on the part of those who framed the bye-laws. It is difficult to conceive of the reasons why one should think of importing stranger on the Board. It was contended that bye-law 36(a) is aimed at securing the service of the experts at the initial stages who are not likely to be members. Apart from the fact that the respondent do not so claim, the working of bye-law 36(a) is not suspected to such interpretation. Bye-law 36(a) only contemplates stop-gap arrangement till the regular election of the Board. Government idea seems to avoid election and get promoters or some members appointed through the agency of the Registrar or the officer of his department on the spot. Looked at from this point of view, the word ‘members’ must be construed to have reference to the members of the society and not to the strength of the Board of Directors. In this view of the matter, the appointment of respondents Nos. 3, 6, 8 and 10 appears to be unwarranted. As indicated earlier, ordinally the action of the Registrar in merely appointing new members in place of old one by itself would not be amenable to correction in exercised of jurisdiction under Article 226 of the constitution. The impugned order, however, is not supportable by any bye-law and does not rest content merely with the nomination of the new Board but also directs the first Board to hand over charge to the second Board. Such direction can be traced only to his powers under the Act. The legality of such a direction naturally rests on the validity of the new Board itself.

11. Dr. Naik and Mr. C.J. Savant also contend that the petitioner cannot challenge the appointment of fresh nomination when the nomination of the petitioner as the Chairman itself is wrong on the same ground. Even if the capacity of the petitioner as the chairman is excluded, his capacity as the members of the earlier Board or his being member of the society, cannot be disputed and in that capacity he is entitled to challenge the validity of the second nomination as also the direction to hand over charge contained therein. In this view of the matter, Rule deserves to be made absolute.

12. We accordingly quash the order dated 13-9-1977 and make the Rule absolute as far as the appointment of new chairman and the appointment of respondents Nos. 3, 6, 8 and 10 are concerned.

13. There will be no order as to costs.

14. Mr. Mehare, the learned advocate appearing for respondents Nos. 3, 5, 6, 8 and 10, applies for leave to appeal to the Supreme court under Article. 133 of the constitution.

15. P.C.: Leave refused.