Chalakudy Urban Co-operative Bank Ltd. v. Prakashkumar K.K. and others

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE ANTONY DOMINIC & THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN WEDNESDAY, THE 12TH DAY OF MARCH 2014/21ST PHALGUNA, 1935 WA.No. 1824 of 2013 () IN WP(C).26698/2013 -------------------------------------------AGAINST THE JUDGMENT IN WP(C) 26698/2013 of HIGH COURT OF KERALA DATED 11-11-2013 APPELLANT(S)/APPELLANTS/RESPONDENTS 4, 5, 6, 7:-: ---------------------------------------------------------------------------------- 1. CHALAKUDY URBAN CO-OPERATIVE BANK LTD.NO.R-1087, CHALAKUDY P.O., THRISSUR, PIN - 680 307 REPRESENTED BY ITS SECRETARY. 2. THE ADMINISTRATIVE COMMITTEE, CHALAKUDY URBAN CO-OPERATIVE BANK LTD.NO.R-1087 CHALAKUDY P.O., THRISSUR, PIN - 680 307 REPRESENTED BY ITS CONVENER. 3. I.L.ANTO, S/O.LONA, ILLICKAL VEEDU, SOUTH CHALAKUDY. 4. K.V.PAUL, S/O.VARGHESE, KALLINGAL VEEDU, WEST CHALAKUDY. BY ADV. SRI.GEORGE POONTHOTTAM RESPONDENT(S)/RESPONDENTS/PETITIONERS AND RESPONDENTS 1 TO 3 AND 8:-: -------------------------------------------------------------------------------------------------------------------------- 1. PRAKASHKUMAR K.K., KODUNGAMATTOM, SOUTH CHALAKUDY, THRISSUR. 2. STATE CO-OPERATIVE ELECTION COMMISSION, CO-BANK TOWERS, VIKAS BHAVAN THIRUVANANTHAPURAM - 695 033 REPRESENTED BY ITS SECRETARY. 3. THE ELECTORAL OFFICER, CHALAKUDY URBAN CO-OPERATIVE BANK LTD.NO.R-1087 CHALAKUDY P.O., THRISSUR ASSISTANT REGISTRAR (GENERAL), MUKUNDAPURAM, THRISSUR PIN - 680 121. 4. THE RETURNING OFFICER, CHALAKUDY URBAN CO-OPERATIVE BANK LTD.NO.R-1087 CHALAKUDY P.O., THRISSUR, SPECIAL SALE OFFICER IRINJALAKUDA TOWN CO-OPERATIVE BANK, IRINJALAKUDA PIN - 680 121. WA.1824/13 5. VALSALA P.S., PALLIYIL VEEDU, KUNDUKUZHIPADAM, KUTTICHIRA P.O. CHALAKKUDY. R1 BY ADV. SRI.B.S.SWATHY KUMAR R1 BY ADV. SRI.REMYA MURALI R1 BY ADV. SRI.ASHISH MOHAN R2-R4 BY SPL. GOVT. PLEADER SRI.D.SOMASUNDARAM THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 12-03-2014, ALONG WITH WA. 1857/2013, WA. 1852/13, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ## APPENDIX IN W.A.1824/13 ## APPELLANTS' EXHIBITS: ANNEXURE A1: TRUE COPY OF THE ORDER NO.CRB.7061/2006 DATED 16.11.2007. ANNEXURE A2: TRUE COPY OF THE MINUTES OF THE COMMITTEE HELD ON 29.5.2006. ANNEXURE A3: TRUE COPY OF THE COUNTER AFFIDAVIT FILED IN WPC.26225/13. /TRUE COPY/ PS TO JUDGE ANTONY DOMINIC & ANIL K.NARENDRAN, JJ. ----------------------------------W.A.Nos.1824, 1852 & 1857 of 2013 ----------------------------------Dated this the 12[th] day of March, 2014 ## JUDGMENT ## Antony Dominic, J. - 1.These appeals are filed against the common judgment of the learned single Judge in W.P(C).26698/13, 26652/13 and 26225/13. - 2.The issue raised in W.P(C).26698/13 was the legality of the action of the Administrator of the Chalakkudy Urban Co-operative Bank Ltd. in enrolling about 600 members into rolls of the Bank. In W.p(C).26652/13, acceptance of the nominations submitted by 9 persons among the aforesaid 600 members, as candidates in the election to the Board of Directors of the society, was challenged. In so far as W.P(C).26225/13 is concerned, the refusal of the Electoral Officer in removing the 600 persons enrolled by the Administrator from the voters' list of the society, was the issue raised. - 3.By the common judgment under appeal, learned single Judge held that the Administrators did not have the WA.1824/13 & con. cases 2 power to enrol members and that therefore, the membership granted to about 600 persons was illegal. On that basis, learned Judge held that the aforesaid members are liable to be removed from the voters' list and that acceptance of the nominations of 9 among them, is illegal. It is challenging this common judgment, these appeals are filed. - 4.We heard the learned counsel for the appellants, learned special Government Pleader and the respective counsel appearing for the other respondents. - 5.The basic issue that arises and argued for our consideration was that the learned single Judge erred in concluding that the Administrators did not have the power to enrol members in the society. Learned counsel for the appellants mainly relied on the provisions of section 32(4) of the Kerala Cooperative Societies Act, 1969 (hereinafter referred to as the 'Act', for short) as amended by Act 1 of 2000. Relying on the said provision and also the judgment of the Apex Court in K.Shantharaj and another v. M.L.Nagaraja and others [AIR 1997 SC 2925] WA.1824/13 & con. cases 3 and the Full Bench decision of this Court in Hassan v. Joint Registrar of Co-operative Societies [1998 (2) KLT 746], counsel contended that enrolment of members being one of the powers of the committee of a society, it was open to the Administrators to exercise that power and enrol members in a society. Counsel also made reference to the judgments of this Court in Aomanathan v. Dy. Director, Dairy Development Society [2004 (2) KLT 887] and Shaji v. - State Co operative Elections [2004 (2) KLT 1084], where, the enrolment of members by the Administrator appointed in similar circumstances, according to them, were upheld. 6. We have considered the submissions made. Section 32 (4) of the Act, prior to its amendment by Act 1 of 2000, read as follows: “32(4) Powers of the administrator - The Committee or administrator or administrators so appointed shall, subject to the control of the Registrar and to such instructions as he may from time to time give, have power to exercise all or any of the functions of the committee or of any officer of the society and take WA.1824/13 & con. cases 4 such action as may be required in the interests of the society.” 7.While the section stood as above, the power of the administrator to enrol members in a society came up for consideration of the Apex Court in the context of the provisions contained in the Karnataka Cooperative Societies Act in the judgment in Shantharaj (supra). Section 30(2) of the Karanataka Act provided that the administrator appointed under section 30 shall subject to the control of the Registrar and such instructions he may give from time to time “exercise all or any of the functions of the committee or of any officer of the co-operative society” and take such action as he may consider necessary in the interest of the society. In its judgment, the Apex Court also made reference to section 30A of the Karnataka Act which provided for the appointment of Special Officers and in subsection (3), it was provided that the Special Officer shall subject to the control of the State Government and the Registrar, “exercise and perform all the powers and functions of the committee of the co- 5 WA.1824/13 & con. cases operative society” or any officer of the co-operative society and take all such actions as may be required in the interest of the co-operative society. - 8.This judgment shows that after referring to these statutory provisions and also noticing the difference between the language of section 33(2) of the Kerala Co-operative Societies Act and the wording in section 30A of the Karnataka Act, the Karnataka High Court held that the Administrator did not have the power to enrol members in the society. This judgment was upheld by the Division Bench of the High Court and in the appeal filed, the apex Court upheld the High Court judgment, holding thus: “........... We find that there is no force in the contention. The power of Administrator given under the statute to conduct elections should be confined within the parameters set under the relevant provisions of the Act, Rules and Bye-laws. The Division Bench has minutely and carefully gone into all the questions and agreed with the learned single Judge that the Administrator has no power to enroll new members; but he has the power to organise election process in accordance with the provisions of WA.1824/13 & con. cases 6 the Act, the Rules and the Bye-laws of the Society. In that view of the matter, we think that the High Court has not committed any error of law warranting interference.” - 9.Subsequently, the issue came up for consideration of this Court in Hassan's case (supra), where, extensive reference was made to the aforesaid judgment of the Apex Court and finally, a Full Bench of this Court re-iterated the position that the Administrators did not have power to enrol members by holding thus: “13. We find no merit in the contention that since the decision of the Karnataka High Court, where 1985 KLT 836 has been distinguished, is affirmed by the Supreme Court, it has to be taken that the Supreme Court approved the decision in 1985 KLT 836. A reading of the judgment of the Supreme Court would not give such a meaning at all. Merely because the particular paragraph of the judgment of Karnataka High Court where a finding is entered that the administrator is not entitled to enrol new members, which also contained a reference to the Kerala decision has been quoted by the Supreme Court, it does not mean that the Supreme Court had approved the judgment of this Court in 1985 KLT 836. On the other hand, we find that the apex Court had specifically posted the question regarding the power WA.1824/13 & con. cases 7 to enrol new members in paragraph 8 of the judgment and held that the administrator has no power to enrol new members since such a power is not specifically given under the Act, Rules and Bye-laws and that such a power cannot be spelt out from the authority given to conduct the election. Therefore, the view taken by this Court in 1985 KLT 836 that the power given to the administrator to exercise all or any of the functions of the committee under sub-s.(2) of S.33 would take in the power to enrol new members is impliedly over-ruled by JT 1997 (5) SC 680. 14. In the case referred before us, it is submitted that the administrator was appointed under S.32 of the Act. Since the wording of sub-s.(4) of S.32 and sub-s.(2) of S.33 are similar, the dictum laid down by the Supreme Court in JT 1997 (5) SC 680 would be applicable in these cases also.” 10.It was subsequently that with effect from 1.1.2000, by Act 1 of 2000, section 32(4) was amended and the amended section reads thus: “32(4) Powers of the administrator - The Committee or administrator or administrators so appointed shall, subject to the control of the Registrar and to such instructions as he may from time to time give, have power to exercise all or any of the powers and functions of the committee or of any officer of the WA.1824/13 & con. cases 8 society and take such action as may be required in the interests of the society.” - 11.Relying on the amended provision, the contention now raised is that by virtue of the amended Act, since the Administrator has been conferred the power to exercise all or any of the powers and functions of the committee, he is entitled to enrol members also. This, according to the counsel, was not the situation when Hassan's case was decided by the Full Bench of this Court. - 12.However, we are unable to accept the contention for - - the reason that in Jt. Registrar of Co operative Societies, Kerala v. T.A.Kuttappan and others [AIR 2000 SC 2378], while considering the appeals against Hassan's case, the Apex Court was informed about the amendment that was brought to the statute and it was held thus: - “7.If we carefully analyse the provisions of the Act, it would be clear that the administrator or a Committee appointed while the Committee of Management of the Society is under supersession WA.1824/13 & con. cases 9 cannot have the power to enrol new members and such a question ought not to be decided merely by indulging in an exercise on semantics in ascertaining the meaning of the expression have "power to exercise all or any of the function...". Whether an authority is discharging a function or exercising a power will have to be ascertained with reference to the nature of the function or the power discharged or exercised in the background of the enactment. Often we do express that functions are discharged or powers exercised or vice versa depending upon the context of the duty or power enjoined under the law if the two expressions are inter-changeable. What is necessary to bear in mind is that nature of function or power exercised and not the manner in which it is done. Indeed this Court, while considering the provisions of Section 30-A of the Karnataka Act, which enabled a Special Officer appointed to exercise and perform all the powers and functions of the Committee of Management or any officer of the Co-operative Society (and not merely functions), to the view that the administrator or a special officer can exercise powers and functions only as may be required to the interests of the Co-operative Society. In that context, it was stated that he should conduct elections as enjoined under law, that is, he is to conduct elections with the members as on the rolls and by necessary implication, he is not vested with power to enrol new members of the society. We may add that a Co-operative Society is expected to function in a democratic manner through an elected Committee of Management and that Committee of WA.1824/13 & con. cases 10 Management is empowered to enrol new members. Enrolment of new members would involve alteration of the composition of the society itself and such a power should be exercised by an elected Committee rather than by an administrator or a Committee appointed by the Registrar while the Committee of Management is under supersession. This Court has taken the view, it did, bearing in mind these aspects, though not spelt out in the course of the judgment. Even where the language of Section 30-A of the Karnataka Act empowered a special officer to exercise and perform all the powers and functions of Committee of Management of a Co-operative Society fell for consideration, this Court having expressed that view, we do not think, there is any need to explore the difference in the meaning of the expressions "have power to exercise all or any of the functions of the Committee" in the Act and "exercise all or any of the functions of the Committee" in the Karnataka Act as they are not different and are in substance one and the same and difference in language will assume no importance. What is of significance is that when the Committee of Management of the Co-operative Society commits any default or is negligent in the performance of the duties imposed under the Acts, rules and the bye-laws, which is prejudicial to the interest of the society, the same is superseded and an administrator or a Committee is imposed thereon. The duty of such a Committee or an administrator is to set right to default, if any, and to enable the society to carry on its functions as enjoined by law. Thus, the role of an administrator or a Committee WA.1824/13 & con. cases 11 appointed by the Registrar while the Committee of Management is under supersession, is, as pointed out by this Court, only to bring on an even keel a ship which was in doldrums. If that is the objective and is borne in mind, the interpretation of these provisions will not be difficult. 8. Thus, we are of the view that this Court in K. Shantharaj's case (1997 AIR SCW 2938 : AIR 1997 SC 2925) (supra) took the view that an administrator or a special officer in the Karnataka Act is not vested with the power to enrol new members of the Cooperative Society in this context. While reiterating that view in regard to the Kerala Act, we afford further reasons to support the said view and dismiss these appeals, though for reasons different from those expressed by the High Court. However, in the circumstances of the case, there shall be no orders as to costs.” 13.Reading of the above shows that while examining the scope of the power exercised or the functions discharged by the Administrator, the court is required to bear in mind the purpose for which an Administrator is appointed, which, according to the Apex Court, is to bring on an even keel a ship which was in doldrums, by discharging the day-to-day functions and ensuring early elections. Therefore, if the purpose of appointment of the Administrator WA.1824/13 & con. cases 12 and the powers and functions discharged by the Administrator are understood in the manner held by the Apex Court, there is no room for any doubt that inspite of the amendment to section 32(4) of the Act, the Administrator cannot exercise the power of enrolment of members in a society. Therefore, we hold that even inspite of the amendment to section 32 (4), lack of power of the administrator to enrol members to the society continues as before and the contention to the contrary now canvassed is only to be rejected. - 14.As far as the single bench judgments in Aomanathan v. Dy. Director, Dairy Development Society [2004 (2) KLT 887] and Shaji v. State Co-operative Elections [2004 (2) KLT 1084] relied on by the appellants are concerned, in the light of the authoritative pronouncement of the Apex Court binding on this Court, we are not persuaded to follow the dictum laid in the judgments mentioned above. WA.1824/13 & con. cases 13 - 15.Once we hold that the administrator did not have the power to enrol members of the society, necessarily the judgment in W.P(C).26698/13 has to be upheld. - 16.The second question that is raised at the hearing was that the Administrator had enrolled about 600 members out of the 905 in the final voters' list and that decision of the Administrator was ratified by the General Body. Therefore, according to the appellants, the membership should be held valid. According to us, even if the General Body has ratified the aforesaid action of the Administrator, since the very enrolment of members by the Administrator is without any power and is without jurisdiction, such an act could not have been legitimized by a process of ratification. Therefore, the fact that the General Body has allegedly ratified the decision of the Administrator is of no consequence. - 17.In the aforesaid circumstances, W.A.1824/13, impugning the judgment of the learned single Judge in W.P(C).26698/13 deserves to be dismissed. Once WA.1824/13 & con. cases 14 W.A.1824/13 is dismissed and the direction of the learned single Judge to remove the members enrolled by the Administrator is upheld, the judgment allowing W.p(C).Nos.26225/13 and 26652/13 also will also have to be upheld and we do so. Consequently, the writ appeals are dismissed. Since the writ appeals are dismissed, we direct the Returning Officer to declare the results of the eligible candidates based on the votes polled by the eligible members and excluding the votes of the ineligible members who were illegally enrolled by the Administrator. Sd/ANTONY DOMINIC, Judge. Sd/ANIL K.NARENDRAN, Judge. kkb.