Ali Ahmed vs State of West Bengal

Paritosh K. Mukherjee, J.—The present writ petition, was moved by Ali Ahmed and others before this Court on December 11, 1981, challenging, inter alia, two dispute cases, being dispute case No. 15 of 1981-82 and dispute case No. 17 of 1981-82.

The facts relating to the dispute in both the cases are almost identical and dispute case No. 15 of 1981-82 was withdrawn by the party concerned, viz., by Panchanan Ghosh, and only one dispute, being dispute case No. 17 of 1981-82 is surviving, which is the subject-matter of the present writ petition.

At the time of the issuance of the Rule, Sabyasachi Mukharji, J. (as His lordship then was) on December 11, 1981, having issued the Rule, granted the interim orders and thereby stayed the operation, of the order dated November 27, 1981, passed by the learned Arbitrator, subject to this that, if in the mean time, the Managing Director of the said Society and the election of the Office Bearer also need not take place initially up to January 12, 1982, but should be held within 7 days thereafter.

This writ petition ultimately came up for final hearing before me, initially on August 1, 1985, and the hearing was fixed and it was heard in part on August 23, 1985, and ultimately the hearing was concluded today, i.e. April 2, 1991, and judgment is being delivered today.

This writ petition is directed against an interlocutory order dated November 27, 1981, passed by Shri N. Goswami, the learned Arbitrator.

Earlier, a dispute was raised at the instance of the State of West Bengal and, on an application for interlocutory order in terms of Sub-section (3) of Section 87 of the West Bengal Co-operative Societies Act, 1973 (hereinafter referred to as the said Act), was filed by the State of West Bengal, inter alia, for the following prayers:

As State of West Bengal is a share-holder of the West Bengal State Cooperative Marketing Federation Limited and owns share worth Rs. 5,86,21 lakhs, out of the total paid up share capital of Rs. 394.98 lakhs of the said Cooperative Society and a member of the said Society, the Plaintiff prays for an interlocutory order in terms of Section 87(3) of the West Bengal Cooperative Societies Act, 1973, restraining the Defendants Nos. 1, 2, 3, 4 from giving any effect/further effect to the impugned election held on 29.10.81 in the interest of and for the preservation of the properties of the West Bengal State Co-operative Marketing Federation Limited.

The Plaintiff further prays that the aforesaid interlocutory order is all the more necessary as the State of West Bengal had sufficient stake in the said Society and is keen on protecting the interest of the State.

On the basis of the said application for interlocutory order, the following interlocutory orders were passed by Shri N. Goswami, the learned Arbitrator, which is set out hereinbelow:

In processing the said application Shri S.K. Roy Chowdhury in his verified petition as well as in oral submission states that the annual general meeting of the Defendant No. 1 was held on October 29, 1981, in pursuance to the order of the Supreme Court of India passed on August 28, 1981. In the said order, the Hon''ble Court appointed the Registrar, Original Side of the High Court at Calcutta to convene the meeting and to conduct and supervise the election of the Directors of the Defendant No. 1. The Registrar has accepted the nomination papers of the Defendants Nos. 2 to 4, who have incurred disqualification to be re-elected in view of the fact that they have held office of the Director of the Defendant No. 1 for more than 3 years or three terms, in violation of the Section 23 of the W.B.C.S. Act, which provides that a person cannot seek re-election if he has held such office continuously for more than 3 years or three terms whichever is earlier. There has been flagrant violation of the Section 23 of the W.B.C.S. Act in acceptance of the nomination papers of the Defendants Nos. 2 to 4. This was done in spite of the objection raised by the parties at the time of scrutiny of the same and the election of the Defendants Nos. 2 to 4 of the Directors was held illegally on October 29, 1981.

Considered the application along with the main petition and heard the parties. I find there is a strong prima facie case for issuing an interlocutory order in the interest of and for the preservation of the properties of the Defendant No. 1 of which the Petitioner is major share-holder, in terms of para 2 of the application.

It is, therefore, ordered that the Defendants are hereby restrained from giving any effect or further effect to the election of the Directors of the Defendant No. 1 held on October 29, 1981, till disposal of the instant dispute case or any order as may be passed, on the basis of the objection of the opposite parties. The Defendants are given liberty to file the objection if any to the application within 7 days from the date of receipt of this order it is further ordered that the main petition along with the objection, if any, will be heard on December 21, 1981, at 12 noon. The Plaintiff is directed to take steps for service of summons.

Mr. A.P. Sircar, learned Advocate appearing on the final hearing, in support of the writ petition moved on behalf of Ali Ahmed and others, has made the following submissions, for consideration of this Court.

He submitted in the first place that the dispute case being dispute case No. 17 of 1981 having been raised by the State of West Bengal, who was a party to an ''agreed order'' passed by the Hon''ble Supreme Court on August 27, 1981, was incompetent, as the State of West Bengal was bound by the said ''agreed order'' passed by the Hon''ble Suprem''e Court, which runs as follows:

Learned Counsel for the parties are agreed that Managing Committee of the West Bengal State Cooperative Marketing Federation Ltd. may be elected as a whole afresh in view of the order of dissolution of the earlier Managing Committee passed by the Government. They are also agreed that the Registrar functioning on the Original Side of the High Court of Calcutta may be deputed to supervise the conduct of the election which shall be held in a general meeting of the said Federation to be convened by him in accordance with the provisions of the West Bengal Cooperative Societies Act, 1973, and the rules framed thereunder.

We order accordingly in spite of the fact that the period of one year mentioned in Clause (c) of the Section 26A of the West Bengal Cooperative Societies Act, 1973, has expired, which factor in our opinion does not mean that no election can take place after such expiry. This order shall be communicated to the said Registrar immediately. He shall commence the election work with all expedition and bring it to a close as soon as possible but in any case not later than 31.10.1981. He shall be paid a remuneration of Rs. 3,500 from the funds of the said Federation.

Status quo to continue until the new Managing Committee takes over.

In the next place, he submitted that the State Government not being competent to raise the dispute, the interlocutory order passed by the learned Arbitrator u/s 87(3) of the said Act was unwarranted and, as such, both the dispute cases and the, interlocutory orders are liable to be quashed.

Lastly, he contended as Section 87(3) of the said Act provides for passing of an order for preservation of the property and in the facts of the instant case there is no scope for passing any order for alleged preservation of the property, and as such the impugned interlocutory order passed by the learned Arbitrator is liable to be quashed.

It appears that the dispute case No. 17 of 1981-82 which has been instituted at the instance of the State of West Bengal and the ground of challenge are the election of the Managing Committee of the West Bengal State Cooperative Marketing Federation Ltd. (hereinafter called BENFED), which has already been held by the Registrar, Original Side of this Court, as Special Officer, appointed by the Hon''ble Court, and from giving any effect or further effect to the election of the Directors of the said Society held on October 29, 1981, till the disposal of the dispute cases.

As according to the application in the dispute cases, the persons concerned being Defendants Nos. 2 and 3 (being writ Petitioners herein) are disqualified, u/s 23(2) of the said Act, which is set out below:

No person, who has been or but for voluntary resignation could have been a member of a Managing Committee of a Co-operative Society for consecutive three times or three years whichever is less shall be eligible for being a member of the Managing Committee of the said Society through re-election or by appointment or co-option within a period of two years from the date of his retirement or voluntary resignation as the case may be:

provided that nothing in this Sub-section shall apply in the case of a nominee of the State Government or an, additional Director appointed by the State Government or in the case of a Railwaymen''s Cooperative Society, the ex-officio Director or office bearers appointed by the Railway administration on the Managing Committee of a co-operative society.

Thus, according to the writ Petitioners, the alleged ban imposed u/s 23(2) of the said Act is only to operate, where a person to seek re-election of a co-operative society, after his retirement or resignation as is clear from the language of Section 23(2) of the said Act. The said meaning will further appear from the language of Rules 32(1) and 32(2) of the said Rules, alongwith Section 23(2) of the said Act. Rules 32(1) and 32(2) of the said Rules are as follows:

32(1) At every annual general meeting of an apex society, a general society or a primary non-agricultural credit society, one-third of the Directors elected by the members shall retire from office and shall subject to the provision of Section 23 be eligible for re-election.

32(2). The vacancies caused by the retirement of Directors under Sub-rule (1) shall be filled up by election at the general meeting at which they retire.

Thus, further according to the writ Petitioners from a combined reading of the provision of Section 23(2) and Rules 32(1) and 32(2) of the said Rules, it is made clear that the provisions of Section 23(2) would only apply, in case where a Director has to retire by virtue of 1/3 retirement of the members and this ban would apply, where he has to seek for ''re-election''.

He added that in the instant case, under the ''agreed orders'' of the Supreme Court dated August 27, 1981, it is made clear by the Supreme Court that the election of the Managing Committee should take place, as a whole and afresh and, as such, in the instant case there is no scope for re-election caused by 1/3 retirement, as has been directed by the Supreme Court.

After the passing of the agreed order of the Supreme Court on August 27, 1981, ''the Petitioner No. 1 made an application praying for clarification of the order of the Hon''ble Supreme Court dated August 27, 1981, whereupon the Hon''ble Supreme Court passed the following orders:

The compromise is fully operative and effective. Our order dated 27.8.81 is already explicit that the election has to take place in accordance with the Act and the Rules. If Section 23 creates any embargo, it will have effect. If not then, of course, the petition will be different. No other direction is called for.

Thus, according to the writ Petitioner, the Hon''ble Supreme Court not having expressed any opinion whether Section 23 of the said Act and/or the ban created thereunder is applicable in the case of the election of the Managing Committee of the said Society, which is to be held in accordance with the ''compromise order'' of the Supreme Court, as such, the election is to be held afresh and in respect of the whole body of Directors.

On behalf of the Petitioners, it was also submitted that the Supreme Court left it to the discretion and judgment of the Registrar, Original Side, Calcutta High Court, to decide whether the ban u/s 23 of the said Act would create any embargo and the Registrar, ''Original Side, Calcutta High Court, having held that the ban u/s 23(2) of the said Act would not apply in case of an election, which is held afresh and of the whole body of members, and the said Registrar was further of the view that the Supreme Court ordered the election of the whole body of the Managing Committee of the said Society, on the ground that the earlier Managing Committee was dissolved by the Government, there was no scope, on the part of the State Government to raise any dispute, relating to the election of the Office Bearers.

In fact, the earlier order of dissolution was passed by the Government on October 18, 1977, and therefore, the Managing Committee continued in office under interim order passed by the Hon''ble High Court, accordingly more than 2 years lapsed before the election of the entire body, took place on October 29, 1981. Therefore, according to the Petitioners, even if there exists any disability the same would not operate, as a ban u/s 23(2) of the said Act.

The Registrar, Original Side of this Court, on the basis of the aforesaid legal position had accepted nomination of the Petitioners.

It was further submitted on behalf of the Petitioners that after the nomination of the Petitioners were accepted, the Petitioners were elected as the members of the Managing Committee of the said Society by a substantial margin of votes and, after the said election was over, a petition was filed before the Hon''ble Supreme Court by the State of West Bengal and others and the said petition was verified by Shri Satyendra Nath Mondal, who described himself as the Dy. Secretary of the State of West Bengal, Department of Co-operation, on November 4, 1981,- inter alia, for a declaration of the election of the Petitioners are void, on the ground that those persons are not eligible to seek election of the Managing Committee of the said Society, in view of the ban imposed u/s 23(2) of the said Act. At that time, the Petitioner No. 1 also filed a petition before the Hon''ble Supreme Court for a direction on the Registrar, Original Side, Calcutta High Court to hold (he election of the Office Bearers.

On November 12, 1981, the Hon''ble Supreme Court dismissed both the petitions and passed the following orders:

Election disputes are covered by Section 86 of West Bengal Cooperative Societies Act, 1973. The provisions for election of Office Bearers also exist in, Rules 28 and 29 in case no such election is held within 30 days of the election of the Managing Committee. Therefore, both the petitions are dismissed.

It was, therefore, submitted on behalf of the Petitioners that the Registrar, Cooperative Society, as well as the Secretary, Department of Co-operation, Government of West Bengal, were most keen to have the election of the Petitioners, set aside, on the alleged ground that they were not entitled to file nomination papers having regard to Section 23(2) of the said Act. Thus, no fair adjudication of the dispute is possible, in the hands of the Registrar and/or his subordinates, where the question to be decided is the same, namely, whether the Petitioners are eligible to contest this election of the Managing Committee of the said Society, or not.

Mr. Milan Chandra Bhattacharya, learned Advocate appearing on behalf of State of West Bengal, opposes the writ petition by filing an affidavit, which was affirmed by Ashok Ranjan Guha Roy, the Assistant Secretary to the Government of West Bengal, Cooperation Department, on November 19, 1990.

In para 2 and sub-paragraphs of the affidavit, the following relevant facts have been stated, which is set out below:

The West Bengal State Co-operative Marketing Federation Ltd. (hereinafter referred to as BENFED for short) is an apex co-operative society within the meaning of West Bengal Co-operative Societies Act, 1973, since repealed and substituted by the West Bengal Co-operative Societies Act, 1983. The Stale of West Bengal has invested Rs. 11 crores approximately in the share capital of the said BENFED which constitutes about 99% of the subscribed share capital of the said society. In addition the State Government had advanced more than Rs. 20 crores for various identifiable purposes as loans to the said apex society for carrying out its business in the State of West Bengal.

The last Annual General Meeting of BENFED was admittedly held on December 22, 1976. A series of writ petitions and appeals from judgments and orders were filed by the present writ Petitioner Sri Ali Ahmed since February 1979 challenging inter alia Section 26(A) of West Bengal Co-operative Societies Act, 1973, whereby all the members of the Board ceased to be Directors, on expiry of three years from the holding of last Annual General Meeting on December 22, 1976, and they continued in terms of interim orders passed from time to time in various writ petitions filed by this writ Petitioner.

The said litigations culminated in the SLP filed against the judgment and order of Mr. Justice M.M. Dutta and Mr. Justice Sarkar, JJ. dated August 5, 1981, in FMAT No. 843 of 1981 in the Supreme Court and Supreme Court finally disposed of the said SLP by an order to which the parties appeared to have agreed directing that the entire body of the Managing Committee must be elected and that the Registrar of the Original Side of the Hon''ble High Court, Calcutta, would supervise the elections. The Supreme Court directed status quo to continue till the Managing Committee elected under the supervision of the Registrar, Original Side of High Court, Calcutta, took over,

By virtue of order passed by the Hon''ble Supreme Court the Registrar, Original Side, Calcutta High Court, issued the notice on September 18, 1981, inviting the members of the Societies affiliated to BENFED to attend the General. Meeting on. October 29, 1981, to elect the Managing Committee.

The writ Petitioner No. 1 filed an application before Hon''ble Supreme Court for clarification of Supreme Court''s orders mentioned above, but the Supreme Court refused to add anything to its previous order dated August 27, 1981.

Accordingly, under the supervision of Registrar, Original Side, High Court at Calcutta, the Managing Committee was elected on October 29, 1981, in which the writ Petitioner No. 1 as well as others, who had incurred disqualification u/s 23(2) of the said Act were elected. They were allowed by the Registrar, Original Side, Calcutta High Court, to contest the election, in spite of objection raised showing ex facie disqualification of the writ Petitioner No. 1 and others, to the effect that they were ineligible to seek election. The Registrar, Original Side did not hold the election of Office Bearers, without further order by the Supreme Court.

After the said decision by the Registrar, Original Side, to allow the Petitioner No. 1 to contest the election, there were two petitions filed before the Hon''ble Supreme Court, one for holding of Office Bearers election by the writ Petitioner No. 1 and the other by the Respondents challenging the election of the writ Petitioners and others, as members of the Managing Committee because they had incurred clear disqualification and order dated November 12, 1981, the Hon''ble Supreme Court dismissed both the petitions by observing as follows:

Election disputes are covered by Section 86 of the West Bengal Co-operative Societies Act, 1973. The provision for election of Office Bearers also exists in Rules 28-29, in case no such election is held within 30 days of election of the Managing Committee. Therefore, both the petitions are dismissed.

The State Government, which is a member shareholder of BENFED had genuine reason to apprehend that the writ Petitioners and others who had been elected in the Board of Directors (Managing Committee) in spite of acquiring disqualification u/s 23(2) of the said Act and who had been continuing in the Managing Committee of BENFED since 1976 showing scant regard towards legislative intent as reflected in the statute over the years and had been responsible for various irregularities in the past and had even failed to maintain proper accounts to cause regular audits of its accounts, and had caused financial losses entering into various transactions, could not be entrusted with the management of the BENFED as the funds and properties of the said BENFED were not safe in their hands.

Being aggrieved by the election of the writ Petitioners and others in violation of the statute the State of West Bengal in keeping with the directions of the Hon''ble Supreme Court filed the dispute case No. 17 of 1981-82 u/s 86 of the said Act. The said dispute was referred to the Co-operative Development Officer, for arbitration and on application for interlocutory order u/s 87(3) of the said Act, the learned Arbitrator was pleased to pass an interlocutory order on November 27, 1981, to ensure preservation of the properties of the BENFED being prima facie satisfied that the funds and properties of the BENFED were not safe in the hands of the writ Petitioners, who had been elected ex facie in violation of the statutory provisions.

The writ Petitioners thereafter filed the writ petition on December 11, 1981, which has come up for disposal.

According to Mr. Bhattacharya, apart from the ineligibility of the writ Petitioner, u/s 23(2) of the said Act, the writ Petitioner was recalled as a delegate by Murarai Thana Large Sized Agricultural Co-operative Marketing Society Ltd., the affiliated member of BENFED, which had previously sent him as the, delegate/representative prior to his election as Director in 1976 by a resolution dated August 28, 1976. The writ Petitioner had challenged the said action of the Society in C.R. No. 5829(W) of 1978, which has since been disposed of by judgment and order dated June 5, 1989 of Hon''ble Mr. Justice Susanta Chatterjee of this High Court whereby the Rule was disposed of and the interim orders were vacated as the learned Judge have gone through the materials on record and did not find anything done by the Respondents which are otherwise unwarranted in law.

Thus, according to Mr. Bhattacharya, the writ Petitioner having been ceased to be the Director and/or Chairman on and from June 5, 1989, in terms of the said judgment even though the deponent did not admit that the election was proper.

In reply to the aforesaid submission by Mr. Bhattacharya, Mr. Ganguly appearing for the writ Petitioners submitted that by a subsequent resolution dated July 22, 1990 adopted by the Murarai Thana L.S.A. Co-operative Society Ltd., earlier resolution dated August 28, 1978, passed by the Chief Executive Officer was withdrawn and/or super ceded and, as such, the subsequent writ petition moved before this Court being C.R. No. 2829 (W) of 1978 which was disposed of by His lordship was further taken up for hearing by His lordship on February 12, 1991, wherein His lordship had recorded that disposal of the writ petition could not affect the hearing of the pending matters and the order of dismissal of the Rule would not prejudice the pending matters to be heard according to law.

To avoid confusion in the mind of the Court he also submitted that election of the Office Bearers had already been held in the presence of Sri S.P. Mukherjee, Deputy Registrar, Co-operative Societies on January 18, 1982, and the writ Petitioner No. 1 was unanimously elected Chairman of the Society.

On the basis of the aforesaid submissions of both the parties, in the first place, this Court is to decide as to whether the election of the writ Petitioners, as Board of Directors, held by the Registrar, Original Side, and the subsequent election of the Office Bearers held on June 18, 1982, was valid or not in terms of the alleged acquiring disqualification u/s 23(2) of the said Act, as according to the Respondents, the writ Petitioners had been continuing as members of the Managing Committee for more than 3 years.

In the second place, this Court has to decide as to whether in view of the clear directions of the Hon''ble Supreme Court by the agreed order dated August 27, 1981, the election afresh being directed to be held, the provisions of Section 23(2) of the said Act stands in the way of the Petitioners for being elected afresh.

In the third place, this Court has to decide as to whether the State Government, having been a party to the ''agreed order'' before the Hon''ble Supreme Court and the election of the Directors having been held by the Registrar, Original Side, and the Petitioners having been elected pursuant to the said election, the State Government is competent to raise a dispute, in terms of the provisions of Section 86 of the West Bengal Co-operative Societies Act, 1973, and the Co-operative Development Officer being the Arbitrator appointed, being subordinate to the Secretary, Department of Cooperation, and the Registrar, Cooperative Society, the subordinate body, being Arbitrator is entitled to pass any such interlocutory order in terms of provisions of Section 87(3) of the said Act under the garb of preservation of property.

Lastly, the judgment delivered by Susanta Chatterjee, J. on June 5, 1989, in C.R. No. 5829 (W) of 1978 can have any effect, on the result of the election, of the Office Bearer, which has been held in terms of the directions of the Hon''ble Supreme Court.

Let us now take up the aforesaid points for adjudication.

In my view, the Hon''ble Supreme Court not having clarified in their ''agreed order'' dated August 27, 1981, whereby the Supreme Court directed election of the Federation to be held as a whole afresh, and the earlier order of dissolution of the Managing Committee, passed by the State Government, the Registrar, Original Side of this Court, had rightly allowed the present writ Petitioners to contest the election, as in my view, the provisions of Section 23(2) of the said Act does not stand, in the way of the present writ Petitioners, to seek for ''election afresh'', as it is undoubtedly not a ''re-election'' after retirement of 1/3 of members.

Secondly, in my view, on the basis of the agreed order passed by the Supreme Court dated August 27, 1981, the provisions of Section 23(2) of the said Act cannot stand as a bar, in respect of the writ Petitioners, for standing as a candidate in ''an election'', which is being held ''afresh''.

In my view, the State of West Bengal, being party to the ''agreed order'', is not competent to raise ''any dispute'' under the provision of Section 86 of the said Act, challenging the election of the writ Petitioners, as Director of the BENFED, although on November 12, 1981, the Hon''ble Supreme Court observed that Election Disputes are covered by the provisions of Section 86 of the said Act, but did not grant any express liberty to the State Government to raise such dispute in view of the fact that the State of West Bengal was party to the ''agreed order''.

In such circumstances, in my view, the State Government being incompetent to raise a dispute, the interlocutory order passed by the learned Arbitrator was also passed without jurisdiction and invalid in the eye of law.

Further, in my view, there is nothing to be preserved by the said interlocutory orders, pending disposal of dispute case, in terms of the provisions of Section 87(3) of the said Act.

In my view, the scheme of the Bengal Co-operative Societies Act, 1940 (being a pre-constitutional Act), and the West Bengal Co-operative Societies Act, 1973, and the West Bengal Co-operative Societies Act, 1983, are almost similar, relating to the matter of raising a dispute, before the Arbitrator to be appointed by the Registrar of Co-operative Societies and such Arbitrators, being appointed from the officers of the Department of Co-operation, and unless particulars of malice and mala fide is alleged against the Arbitrator, the writ Petitioner''s normally are not entitled to challenge the verdict of the said Arbitrator.

More so, since there is provision for appeal and/or revision against the final award to be passed by the Arbitrator, before the Superior Authorities, and as such the orders passed by the appellate authority and the revisional authority are also amenable for judicial review, in the Constitutional Writ Jurisdiction of this Court, and accordingly in my view, solely on the ground that the Arbitrator, being a subordinate authority, could not be the ground for challenging any interlocutory order, or the award, as the case may be, and such contention cannot be accepted, as a proposition of law and, accordingly, I reject the submission of the writ Petitioner in this regard.

Further, in my view, the subsequent judgment delivered by Susanta Chatterjee, J. on June 5, 1989, in C.R. No. 5829(W) of 1978 cannot alter the position of the writ Petitioner, as the election of the writ Petitioner has been held afresh, in terms of the judgment of the Supreme Court, and further, the said learned Judge having clarified His lordship''s order by a subsequent order dated February 12, 1991, that the disposal of the said Rule before His lordship would not prejudice the pending matters before this Hon''ble Court which is to be heard according to law as quoted hereinabove.

In conclusion, in my view, the State Government is not competent to raise any dispute, being party to the ''agreed order'' before the Hon''ble Supreme Court on August 27, 1981. In spite of the observation that election disputes are covered by the provisions of Section 86 of the Act, and in particular, in view of the fact, the writ Petitioner''s election afresh, in the Board of Directors of the BENFED having been held, as is not hit by the provisions of Section 23(2) of the said Act and the impugned interlocutory order, passed by Sri N. Goswami, learned Arbitrator, on November 27, 1981, is liable to be set aside.

Since the election of the Office Bearers has already been held on June 18, 1982, and the writ Petitioner No. 1 has been elected as Chairman, the writ Petitioners will be entitled to assume charge forthwith and in accordance with law.

The Rule is made absolute to the extent indicated above.

There will be no order as to costs.

Let a plain copy of the operative portion of this judgment and order counter-signed by the Assistant Registrar (Court) be given to the learned Advocates for both the parties.

Rule made absolute.