Registrar of Co-operative Societies, Thiruvananthapuram v. Ernakulam District Co-operative Bank Ltd. & Others (W.A. No. 740 of 2017)

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HONOURABLE THE CHIEF JUSTICE MR.NAVANITI PRASAD SINGH & THE HONOURABLE MR.JUSTICE ANTONY DOMINIC** **MONDAY, THE 10TH DAY OF APRIL 2017/20TH CHAITHRA, 1939** **WA.No. 740 of 2017 () IN WP(C).5933/2017 -----------------------------------------AGAINST THE JUDGMENT IN WP(C) 5933/2017 DATED 04-04-2017 ---------------** **APPELLANT(S)/1ST RESPONDENT IN W.P.(C) :-** **-------------------------------------------** **THE REGISTRAR OF CO-OPERATIVE SOCIETIES, THIRUVANANTHAPURAM - 695 001.** **BY ADVOCATE GENERAL SRI.C.P.SUDHAKARA PRASAD BY SR.GOVERNMENT PLEADER SRI.V.MANU** **RESPONDENT(S)/PETITIONERS & RESPONDENTS 2 TO 6 IN W.P.(C) :- --------------------------------------------------------------** **1. N.P.PAULOSE, NELLIKUZHY HOUSE, PULIKKAMALY P.O., PAMBRA, ERNAKULAM.** **2. K.P.BABY, KAIPARAMBATTU HOUSE, KOKKUNNU NORTH, MUKKANOOR P.O., ERNAKULAM.** **3. E.K.SETHU, EDAKKATHALATHU HOUSE, ELOOR EAST, UDYOGAMANDAL P.O., ERNAKULAM.** **4. UTHUPPAN P.P., PARACKAL HOUSE, KARUKADOM P.O., KOTHAMANGALAM, ERNAKULAM.** **5. THE ERNAKULAM DISTRICT CO-OPERATIVE BANK LTD., KAKKANAD, ERNAKULAM - 682 020, REPRESENTED BY ITS GENERAL MANAGER.** **6. THE ADMINISTRATIVE COMMITTEE, ERNAKULAM DISTRICT CO-OPERATIVE BANK LTD., KAKKANAD, ERNAKULAM - 682 020.** **7. P.R.MURALEEDHARAN, CONVENOR, ADMINISTRATIVE COMMITTEE, ERNAKULAM DISTRICT CO-OPERATIVE BANK LTD., KAKKANAD, ERNAKULAM - 682 020.** **WA.No. 740 of 2017** **8. M.C.SURENDRAN, MEMBER, ADMINISTRATIVE COMMITTEE, ERNAKULAM DISTRICT CO-OPERATIVE BANK LTD., KAKKANAD, ERNAKULAM - 682 020.** **9. K.B.ARUMUKHAN, MEMBER, ADMINISTRATIVE COMMITTEE, ERNAKULAM DISTRICT CO-OPERATIVE BANK LTD., KAKKANAD, ERNAKULAM - 682 020. R1 - R4 BY ADV. SRI.B.S.SWATHY KUMAR SMT.ANITHA RAVINDRAN SMT.T.RESHMA SRI.HARISANKAR N UNNI SMT.S.SIKKY R5 & R6 BY SMT.I.SHEELA DEVI, SC R7 - R9 BY SMT.DEEPTHI S.MENON** **THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 10-04-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **jvt** ## **C.R.** ## **NAVANITI PRASAD SINGH, CJ & ANTONY DOMINIC, J.** **------------------------------------------------------W.A. No.740 of 2017 --------------------------------------------------Dated this the 10[th] day of April 2017** ## **J U D G M E N T** ## **Navaniti Prasad Singh, CJ** The Registrar of Co-operative Societies, who was the 1[st] respondent in the writ proceedings is in appeal against the judgment dated 4.4.2017 in W.P.(C) No.5933 of 2017, by which, the learned Single Judge of this Court allowed the writ petition filed by four members of the Ernakulam District Co-operative Bank Limited, a Co-operative Society registered under the Kerala Co-operative Societies Act, 1969 (for short, 'the Act'). Ext.P1 order dated 18.2.2017 of the Registrar of Co-operative Societies was under challenge in the writ proceedings, whereby, the Registrar of Co-operative Societies, holding that by reason of resignation of nominated members and some of the elected members, the Co-operative Society, in terms of Sec.28(5) of the Act ceased to have a quorum and consequently, was superseded in terms of Sec.33(1) of the Act. The learned Single Judge set aside the said order, Ext.P1 and ## W.A. No.740 of 2017 -: 2 :- consequently reinstated the Committee. The Registrar, aggrieved by the judgment of the learned Single Judge, is in appeal. 2. We have heard learned Advocate General appearing for the Registrar of Co-operative Societies and Sri.B.S.Swathy Kumar, learned counsel appearing for the writ petitioners/ contesting respondents. 3. The facts are not in dispute. The position that obtained prior to 18.2.2017 may be noted. This Committee of the Co-operative Bank upon election became functional with effect from 13.2.2013. Thus, the present Committee was functional for almost four years and about one year was left of the five years' term. The total members of the Committee was 21, which is the maximum permissible. Out of this 21, two were nominated members as the State was a stake holder and a share holder of the Co-operative Bank. Thus, there were 19 elected members. One of the elected members lost his membership in the Primary Credit Society and as such was disqualified. Thus, there was one casual vacancy amongst the elected members. What now happened was that on 18.2.2017 W.A. No.740 of 2017 -: 3 :- both the two nominated members resigned. Simultaneously, eight out of remaining 18 elected members also resigned. Thus, out of available 20 members, 10 resigned. The membership was reduced to 10, which is less than half the total sanctioned strength of 21. Making this a ground in terms of Sec.33(1) of the Act, the Registrar ordered supersession of the Committee. But, while doing so, the Registrar surprisingly constituted an adhoc administrative committee consisting of three members, who had already resigned. Thus, the charge of the Committee was taken away from the elected members and handed over to the designated administrative committee constituted with members, who had resigned. It is these actions, that were disapproved by the learned Single Judge. 4. Learned Advocate General contends that there was no illegality in the action of the Registrar of Co-operative Societies and the learned Single Judge erred in interfering. 5. Before proceeding further, we would like to quote the relevant statutory provisions. Sec.28(5) of the Act reads thus :- “The quorum for a meeting of a committee shall be such number of members just above fifty per cent of the total number of members of that committee.” W.A. No.740 of 2017 ## -: 4 :- ## Sec.33(1) of the Act reads follows :- “ **33. Appointment of new committee or administrator on failure to constitute committee, etc.-** (1) Where the term of office of a committee has expired and a new committee has not been constituted, or where a no-confidence motion is passed by the general body against the existing committee or where the existing committee resigns enbloc or where vacancies occur in the committee either by resignation or otherwise and the number of remaining members cannot constitute the quorum for the meeting of the committee, or where the committee fails to hold its regular meeting consecutively for six months or where the Registrar is satisfied.” ## Sec.31(3) of the Act says thus :- “A person nominated to the committee of an apex or a central society under sub-section (1) shall not take part in the discussion of any no-confidence motion or vote on any such motion.” ## Rule 38(5) of the Kerala Co-operative Societies Rules, 1969 (for short, 'the Rules') reads thus :- “Casual vacancy of an elected member of the committee shall be filled up by election in the manner provided in the rules. If the term of office of the board is less than half of its original term, the casual vacancy of an elected member of the committee shall be filled up by nomination by the committee out of the same class of members. In the case of nominated members the W.A. No.740 of 2017 ## -: 5 :- vacancies **will** be filled up by fresh nomination subject to the provisions in R.37.” The above Scheme of the Act would show that the intention of the Legislature is to supersede a co-operative and replace it by an administrative committee only when all other means for its continuity fails. We may note at this juncture that co-operatives have now got a constitutional status by virtue of 97[th] Constitutional Amendment. Earlier they were mere statutory bodies. It would also be relevant to refer to Article 243ZL of the Constitution of India, which provides for supersession and suspension of the board and interim management in relation to co-operatives. We would also refer to Article 243ZT, which in terms lays down that any State Statute in conflicts with the constitutional provision would be void to that extent. A reference to Article 243ZL would show the conditions under which a co-operative body can be superseded and arrangement for interim management can be made. A reference to the Scheme contained in the said Article of the Constitution would show that emphasis is on continuance of the body unless there is a mal administration contrary to or in conflicting the statutory obligations or a complete stalemate in the board. W.A. No.740 of 2017 -: 6 :- 6. Now, if we come back to the statutory provisions under the Act and Rules, the first thing we would note is that undoubtedly the quorum for this Committee would be 11, which is so as per Clause 30 of the amended Bye-law of the Ernakulam District Co-operative Bank, also. By reason of resignation as noted above, there were only 10 elected members left. It is for this reason that the Registrar took the view that quorum was not completed and could not be completed and therefore, it was imperative upon him to supersede the co-operative in terms of Sec.33(1) of the Act. 7. Learned Advocate General says that the Registrar had no other option open to him. In our view, it is not correct. For, in view of the provisions noted above, especially, Rule 38(5) of the Rules, it is provided that in case a nominated member resigns, the vacancy will be filled up by fresh nomination subject to provisions of Rule 37. In other words, the intention of the Legislature is that if the co-operative has lived majority of its period, then intention is not to leave the vacancy of nominated members as such but to fill up by nomination immediately. 8. In our view, the use of expression “will” in this Rule will not deter from the fact that it is obligatory upon the Registrar to W.A. No.740 of 2017 -: 7 :- fill this vacancy by fresh nomination no sooner the vacancy arises. On the contrary, learned Advocate General submits that the use of expression “will” in Rule 38(5), makes the exercise of power totally discretionary. Alternatively, he argues that even if the Registrar failed to exercise his power to nominate two persons to the Committee, this default reduced the strength of the committee to below half and thus, the committee became quorum-less and the Registrar rightly superseded it. We are unable to agree to both the submissions. The reasons are simple. 9. Firstly, with regard to use of the word “will” in Rule 38 (5). The Legislature normally uses three expressions when it comes to conferment of a power to be exercised by an authority. They are commonly “shall”, “will” and “may”. Ordinarily, “shall” is imperative. “Will” is obligatory. Both leave no discretion in the authority. “May” is discretionary but even where statutes have used the expression “may” it has been interpreted as “shall” depending upon the nature of conferment of power. In this connection, we may refer to a decision of the Apex Court in the case of **L. Hirday Narain** v. **Income-Tax Officer, Bareilly** [AIR 1971 SC 33]. In that case, in terms of Sec.35 of the W.A. No.740 of 2017 -: 8 :- Income Tax Act, 1922, which is in pari materia to Sec.154 of the Income Tax Act, 1961, the assessee had made an application to the officer for rectification of an order in a concluded assessment proceedings. The Income Tax Officer holding that the Act provided that the Income Tax Officer “ **may** ” rectify any mistake apparent on the record, the power being discretionary, refused to exercise the power. A writ petition was filed in the Allahabad High Court, which was dismissed on the ground that the power being purely discretionary, no mandamus could issue and the Officer could not be faulted in refusing to exercise the discretion. On appeal, the Apex Court set aside the judgment of the High Court and this is what they held : ## “ **12.** xxx xx xxx The High Court observed that under Sec. 35 of the Indian Income-tax Act, 1922, the jurisdiction of the Income-tax Officer is discretionary. If thereby it is intended that the Income-tax Officer has discretion to exercise or not to exercise the power to rectify, that view is in our judgment erroneous. Sec. 35 enacts that the Commissioner or Appellate Assistant Commissioner or the Income-tax Officer may rectify any mistake apparent from the record. If a statute invests a public Officer with authority to do an act in a specified set of circumstances, W.A. No.740 of 2017 ## -: 9 :- it is imperative upon him to exercise his authority in a manner appropriate to the case when a party interested and having a right to apply moves in that behalf and circumstances for exercise of authority are shown to exist. Even if the words used in the statute are prima facie enabling, the Courts will readily infer a duty to exercise power which is invested in aid of enforcement of a right-public or private-of a citizen. **13.** In Julius v. Bishop of Oxford (1880) 5 AC 214 it was observed by Cairns L. C. at pp.222-223 that “the words “it shall be lawful” conferred a faculty of power, and they did not of themselves do more than confer a faculty of power. But there may be something in the nature of the thing empowered to be done, something in the object for which it is to be done, something in the conditions under which it is to be done, something in the title of the persons for whose benefit the power is to be exercised, which may couple the power with a duty, and make it the duty of the person in whom the power is reposed to exercise that power when called upon to do so.” Lord Blackburn observed in the same case at pp. 244-245 that the enabling words give a power which prima facie might be exercised or not, but if the object for which the power is conferred is for the purpose of effectuating a right there may be a duty cast upon the donee of the power to exercise it for the benefit of whose who have that right when required on their behalf. Lord Penzance and Lord Selborne made similar observations at pp. 229 and 235. **14.** xx xx xx ## W.A. No.740 of 2017 -: 10 :- **15.** The High Court was, in our judgment, in error in assuming that exercise of the power was discretionary and the Income-tax Officer could, even if the conditions for its exercise were shown to exist, decline to exercise the power.” Applying the said principle, even if the expression used in Rule 38(5) was “may”, we would have to read it as “shall” for it would be the duty to act upon circumstances being satisfied. But, we are here dealing with the expression “will”, which is quite different from “may”. It is a direction to do an act and if the circumstances are shown to exist. It becomes mandatory, non-discretionary. It would be virtually reading it as “shall”. The Registrar, would, thus have no discretion. The moment he was informed that two nominated members have resigned, for whatever reason, he had to exercise power in terms of Rule 38 (5) of the Rules and nominate two members. Seen from another prospective, as the statutory scheme is for continuance of a democratically elected body, efforts have to be made for its continuance. If, upon knowing that two nominated members have resigned, the Registrar, ought to have, instead of superseding, nominated two members, then, the quorum would W.A. No.740 of 2017 -: 11 :- be complete. The number of members of the committee would then be 12, which would be more than 11, which is the minimum required. Thus, if the Registrar had exercised his statutory power in accordance with law and the Scheme as noted above, there would be no occasion to supersede the Committee. Fresh nomination ought to have been made and then, the Committee could have nominated members to replace the resigned elected members and the Committee would have functioned accordingly for the remaining period in terms of Rule 38(5) itself as stated above. The whole intention is of continuance and not adhocism of administrative committee set up by the Registrar. Thus, we have no doubt in holding that the Registrar failed to nominate two persons as against the nominated persons who resigned and had he not failed to exercise his power, the occasion to supersede would not have arisen. 10. Now, coming to the 2[nd] limb of the argument of the learned Advocate General that even assuming that the Registrar had power to nominate or even duty bound to nominate but not having nominated, the consequence was that ## W.A. No.740 of 2017 -: 12 :- admittedly, the Committee was not left with a competent quorum and therefore, in terms of Sec.33(1) of the Act the Committee had to be superseded and it had lost its right to continue as such. To us, the answer is simple. 11. There was an obligation as held above upon the Registrar to nominate two persons. Having failed to nominate two persons, he had failed to discharge his duty. He had faulted in exercise of his power. Can he be permitted to use this default, of his own, as against the right asserted by the committee for its continuance? The answer is to be found in what was said by the then Chief Justice Chagla in the case of **All India Groundnut Syndicate Ltd., Assessee** v. **Commr. of Income Tax, Bombay City** [AIR 1954 Bombay 232] in the following words :- **“** xxxx xxxx xxxxxx But the most surprising contention is put forward by the Department that because their own officer failed to discharge his statutory duty, the assessee is deprived of his right which the law has given to him under subsection (2) of S. 24. In other words, the Department wants to benefit from and wants to take advantage of its own default. It is an elementary principle of law that no person - we take it that the Income-tax Department is W.A. No.740 of 2017 ## -: 13 :- included in that definition - can put forward his own default in defence to a right asserted by the other party. A person cannot say that the party claiming the right is deprived of that right because “I have committed a default and the right is lost because of that default.” Thus, the Registrar cannot take advantage of his own default and support his action on grounds of his inaction. Thus, we find no reason to interfere with the judgment under appeal. The appeal merits no consideration and is dismissed accordingly. **Sd/NAVANITI PRASAD SINGH CHIEF JUSTICE** **Sd/ANTONY DOMINIC JUDGE** //True copy// P.A. To Judge Jvt/11.4.2017