The Thiruvalla East Co-operative Bank Ltd (Appellants) v. Sasidharan Pillai K.B and others

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HON'BLE THE ACTING CHIEF JUSTICE MR.C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE P.S.GOPINATHAN TUESDAY, THE 18TH OCTOBER 2011 / 26TH ASWINA 1933 WA.No. 1474 of 2011() ---------------------------- (AGAINST INTERIM ORDER IN WP(C).NO.24045/11 DATED 4.10.2011) APPELLANT(S): -------------------- 1. THE THIRUVALLA EAST CO-OPERATIVE BANK LTD NO.3260,ERAVIPEROOR,PATHANAMTHITTA DISTRICT 689542,REPRESENTED BY ITS SECRETARY/ GENERAL MANAGER. 2. THE ADMINISTRATOR, THIRUVALLA EAST CO-OPERATIVE BANK LTD NO.3260, ERAVIPEROOR,PATHANAMTHITTA DISTRICT 689 542. BY ADV. SRI.GEORGE POONTHOTTAM RESPONDENT(S): ---------------------- 1. SASIDHARAN PILLAI K.B, S/O.BHASKARAN NAIR,KOLATTIL HOUSE, ERAVIPEROOR P.O.,PATHANAMTHITTA DISTRICT 689 542 2. THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), PATHANAMTHITTA 689 645 3. THE STATE CO-OPERATIVE ELECTION COMMISSION, THIRUVANANTHAPURAM 695 001, REPRESENTED BY ITS SECRETARY. 4. GIGI MATHEW, S/O.MATHAI,KUZHIYUTHIL HOUSE, PERUMATTOM P.O.,THIRUVALLA. ADV. SRI.S.SUBHASH CHAND FOR R4 THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ALONG WITH WA. 1497 OF 2011 AND CONNECTED CASES ON 18/10/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: **'C.R'** ## **C.N.RAMACHANDRAN NAIR, Ag. CJ. & P.S.GOPINATHAN, J** ## **----------------------------------------------** ## **W.A.No. 1474, 1497, 1509 & 1520 of 2011 and W.P(C).No.24045 & 25210 of 2011** **----------------------------------------------** ## **Dated this the 18[th] day of October, 2011 JUDGMENT** ## **Ramachandran Nair, Ag.CJ** . This is the third round of litigation in this Court after two rounds in the Supreme Court pertaining to the same matter, i.e., election to the Board of Directors of the Thiruvalla East Cooperative Bank. 2. The election was first notified to be held on 24.10.2009. Even though the election so notified was postponed by the State Co-operative Election Commission and the same was published in newspapers, this Court as per an interim order directed holding of the election on the date initially fixed. However, this was done without public notice or newspaper publication. Therefore, only very few members participated in the election. 3. A Division Bench of this Court cancelled the election so held holding that the election held with participation of limited _**WA.1474/11 & CONNECTED CASES**_ 2 number of members does not serve the purpose of electing a proper representative body of the members. Special Leave Petition filed against the judgment was dismissed by the Supreme Court. In a Review Petition filed, the Division Bench substantially confirmed the judgment, but made certain modifications with regard to issuance of identification card, enrolement of fresh members etc. The review order was also challenged before the Supreme Court in Special Leave Petition, wherein the Supreme Court substantially confirmed the judgment with direction to hold the election within a time frame. It so happened that there was an amendment to the Co-operative Societies Act through Section 28AA providing for reservation from various new categories to the Board of Directors of the Co-operative Banks, which required an amendment to the Bye-law. The question then raised before this Court was whether the judgment of the Division Bench of this Court, confirmed by the Supreme Court, directing holding of election could be enforced without reference to the amended provisions of the Act based on the original notification. The Division Bench of this Court vide judgment in W.A.No.445 of 2011 held that the Bye-law has to be amended and the election to the Board of Directors of the Bank has to be held for electing the _**WA.1474/11 & CONNECTED CASES**_ 3 number of members with reservations in terms of the amended provisions. It may be noticed that under the amended provisions, the number of members of the Managing Committee had gone up to 13 as against 11 and out of 13, 7 went to the various reserved constituencies and 6 to the general constituencies. It was the specific finding of this Court that before holding the election, the Bye-laws have to be amended by holding General Body meeting to make it in tune with the amended provisions of the Act. Following the judgment, the Administrator, holding the powers of the Managing Committee, convened a General Body meeting wherein the Bye-law was amended with two-third majority and the same was registered on 17.8.2011. Necessary amendment was also carried out to the Election Sub-rules. It is thereafter that the election was notified, which is also challenged before the learned Single Judge in a fresh round of litigation, wherein the learned Single Judge stayed the election on the ground that the amendment made to the Bye-law by the General Body is not sufficient to hold a valid election to the Board of Directors of the Bank. It is against this stay order, two Writ Appeals are filed by the Bank and another two Writ Appeals by the State challenging the same order. _**WA.1474/11 & CONNECTED CASES**_ 4 4. When the Writ Appeals against the interim order were posted before us, we felt that the Single Judge has virtually interdicted holding of election ordered by the Division Bench and confirmed by the Supreme Court and therefore, we posted the Writ Petitions also along with the Writ Appeals and heard all the cases together. 5. We heard Sri.George Poonthottam, counsel appearing for the appellant-Bank, Special Government Pleader Sri.D.Somasundaram for the State and Sri.S.Subash Chand, Advocate appearing for the petitioner in W.P(C).No.25210 of 2011 and the party respondents in the Writ Appeals. The documents and Annexures referred to herein are as marked in W.A.No. 1497 of 2011 filed by the Bank and the Administrator. 6. The short question that arises for consideration is whether the alleged insufficiency in the amendment to the Bye-law by the Society pointed out by the petitioners in the Writ Petition and accepted by the learned Single Judge justify interference with the election notified. Admittedly, the very purpose of the amendment of the Bye-law was to increase the number of members of the Board of Directors to 13 as against 11 contained in the original Bye-law. Petitioners in the Writ Petitions have raised a serious _**WA.1474/11 & CONNECTED CASES**_ 5 objection about the contents of the resolution, in as much as according to them, one sentence was later interpolated in the minutes authorising amendment to the Election Sub-rules. The admitted portion of the amendment introduced to the Bye-law, which is in tune with the amended provision of the Co-operative Societies Act and the Bye-law as it stood originally before amendment are extracted hereunder for easy reference. ## **- - Bye law amendment** Existing Amendment 28. The Board of Directors shall consist of 11 Directors elected from among the members from different wards as specified in the election sub rules of which one shall be a woman and one shall be a Scheduled Caste, Scheduled Tribe member. The term of office of the Board shall be five years from the date of taking charge of the office 34. Quorum: Six directors shall form the quorum. 28. The Board of Directors shall consist of 13 Directors elected from among the members from different wards as specified in the election sub rules, of which three shall be woman, one shall be Scheduled Caste/Scheduled tribe member, one shall be member having a deposit of Ten Thousand Rupees and above and two shall be having Banking experience and professional qualification as specified in the Kerala Co-operative Societies Act and Rules. The term of office of the Board shall be 5 years from the date of taking charge of the office. 34. Quorum; Seven directors shall form the quorum. 7.The amendment to the Election Sub-rules carried out by the Administrator in exercise of powers of the Board of Directors produced as Exhibit P8 is as follows: _**WA.1474/11 & CONNECTED CASES**_ 6 ## **ELECTION SUBRULES** ## **Existing** 1. Area of operation of the Bank is decided to the following wards for the purpose of election of directors as contemplated in Bank's Bye-law No.28. 1. Eraviperoor, Kuttoor, Puramattam and Kallooppara Panchayats. 2. Mallappally, Anicadu, Kottangal and Kottanadu Panchayats. ## **Amendment** 1. Area of operation of the Bank is decided to the following wards for the purpose of election of directors as contemplated in Bank's Bye-law No.28. 1. Eraviperoor, Kuttoor, Puramattam and Kallooppara Panchayats. 2. Mallappally, Anicadu, Kottangal and Kottanadu Panchayats. - 3.Ayroor, Thottappuzhassery, Koipram 3.Ayroor, Thottappuzhassery, Koipram and Ezhumattoor Panchayats and Ezhumattoor Panchayats 2. members each shall be elected from 2. members each shall be elected from every ward Whereas woman member and every ward, whereas 3 women members scheduled caste/Scheduled Tribe member and 1 scheduled caste/scheduled tribe shall be elected from the area of operation member, 2 members with banking at large. experience in senior management level or with relevant professional qualifications and 1 member having a deposit of Rs.10,000 and above shall be elected from the area of operation at large. 8. Sri.S.Subhash Chand, counsel appearing for the petitioner in W.P(C).No.25210 of 2011 contended that the resolution as passed originally did not contain any provision for amendment of the Election Sub-rules. One sentence in the minutes authorising amendment of the Election Sub-rules is an interpolation made _**WA.1474/11 & CONNECTED CASES**_ 7 subsequently and therefore, the same should be ignored. So much so, his contention is that the validity of the election notified has to be considered with the amendment of the Bye-law without reference to the Election Sub-rules. Counsel appearing for the Bank and Administrator and also the Government Pleader opposed the contention by contending that there is no justification to doubt the genuineness of the entries in the minutes book. According to them, the allegation about interpolation is wrong and the learned Single Judge wrongly accepted it. We do not think, there is any necessity for us to consider this controversy, because, in our view, the Election Subrule is not part of the Bye-law of the Society. Section 12 of the Cooperative Societies Act and Rule 9 of the Co-operative Societies Rules only provide for making of Bye-law and amendment of the same. So far as Election Sub-rules for holding election is concerned, it is essentially a procedure prescribed by the Board of Directors in the Bank consistent with the Bye-law. The petitioners have no case that the original Election Sub-rules were framed through resolution of the annual general body and admittedly, Election Sub-rules are not part of the Bye-law. So much so, in our view, once Bye-law of the Bank is amended to make the _**WA.1474/11 & CONNECTED CASES**_ 8 membership in the Board of Directors consistent with the provisions of the Act and Rules, then the procedure for election contained in the Election Sub-Rules is to be modified by the Board of Directors and in the absence of the Board, the Administrator, exercising the powers of the Board could make sufficient alteration to the Election Sub-rules. So much so, the alleged omission pointed out in the General Body resolution amending the Bye-law, which is only non inclusion of provision for amendment of Election Sub-rules is of no consequence, because it is not for the General Body but the Administrator exercising powers of the Board of Directors to amend the Election Sub-rules. 9. The contention raised by counsel for the petitioner is that reservation provided for three women members, one for SC/ST and two members with banking experience or with professional qualifications and one member from depositors is not covered by any constituency reserved for them under the Election Sub-rules. Counsel appearing for the appellants and the Government Pleader, however, pointed out that elections to the said categories have to be made from electorate as a whole and no constituency is reserved for them. So much so, according to them, there is no defect or inadequacy in the Bye-law as introduced by the _**WA.1474/11 & CONNECTED CASES**_ 9 amendment. We are in complete agreement with this contention, because the Election Sub-rule as originally provided does not identify any constituency for the reserved category of members. In fact, under the Election Sub-rules as it existed before amendment also, two members from the reserved constituency, one from SC/ST and one female member, both were elected from the area of operation of the Bank as a whole. All what has happened under the amended provision of the Co-operative Societies Act is an increase in the number of members in the reserved category from 2 to 7, the categories of each of which are stated above. However, the method of election under the provision of the Election Sub-rules as it originally existed and even after amendment remains the same for the election to the reserved category, which is from the area of operation of the Bank as a whole. In other words, reserved category members will be elected from the electorate as a whole, i.e., from all members from the entire constituencies of the Bank. So much so, we do not find any substance in the contention of the petitioners that in the absence of identification of separate ward for reserved category, the election cannot be held under the Election Sub-rules as amended. _**WA.1474/11 & CONNECTED CASES**_ 10 10. So far as the reduction of nine members under general category to six and their allotment to constituencies are concerned, what we notice is that the bifurcation of the area of operation of the Bank into three wards with four Panchayats in each of the wards remains the same prior to the amendment and even after the amendment. The only amendment made to the Election Sub-rules is to provide election of two members from each of the three constituencies as against three members from each of the three constituencies provided under the provisions of the Election Sub-rules that existed prior to the amendment. We find that the amendment to the Election Sub-rules is only a procedural formality carried out to arrange for election consistent with the increase in number of members to the Board in accordance with the amended Bye-law, which is in tune with the amended provision of the Co-operative Societies Act. 11. Counsel appearing for the petitioners have relied on a decision of a Division Bench of this Court reported in _**Udayakaran v. Ahammedkannu**_ (2004(2) KLT 969), wherein this Court held that the Managing Committee cannot determine the constituency for the reserved candidates representing _**WA.1474/11 & CONNECTED CASES**_ 11 Scheduled Caste and Scheduled Tribes. In this case we have already noticed that no constituencies were earmarked for reserved categories even prior to the amendment and so much so, the provision remains the same even after amendment to the Election Sub-rule. In other words, the Administrator, exercising powers of the Board of Directors, has not made any amendment to the Election Sub-rules on election of Board members from the reserved category. Previously and even after amendment, the election to the reserved categories is from the entire area of operation of the Bank covering the three wards with 12 Panchayats. So much so, we do not find any substance in the challenge made against the election notification with reference to the above Rule. So far as division of wards are concerned for the election for six members in terms of amended provision of the Bye-law also, we find that no change is made except reduction from three to two representing each ward, which is the only amendment required to the Election Sub-rules made by the Administrator exercising powers of the Board of Directors. In view of the findings above, we do not find any merit in the challenge against the election notified pursuant to the Division Bench judgment, confirmed by the Supreme Court. The Writ _**WA.1474/11 & CONNECTED CASES**_ 12 Appeals are allowed vacating the interim orders and the Writ Petitions filed by the petitioners will stand dismissed. ## **C.N.RAMACHANDRAN NAIR, ACTING CHIEF JUSTICE** **P.S.GOPINATHAN, JUDGE** **vgs**