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Judgment
G.K. Govinda Bhat, J.—The petitioners are seven of the Primary and Apex Weavers Cooperative Societies, who are ''A'' Class members of the Karnatak Co-operative Textile Mills Ltd., (Respondent-1). Respondent-1 has four classes of members, and its Bye-law 26(A) provides for separate representation for the different classes of members.
The Petitioners have challenged, in this writ petition the approval and registration of the amended Bye-laws 26(A) and 26(c) as certified by respondent-2 the Registrar of Co-Operative societies in his certificate No. F2/1480/8587/64-65 dated 3rd March, 1965, on the following three grounds:
I. That the amendment was not passed with the requisite majority prescribed by Rule 6 of the Mysore Go-Operative Societies Rules 1960, hereinafter called the Rules''.
II. That the respondent-2 has violated the Rules of Natural Justice while granting the approval and registration of the amendment.
III. That the amendments are contrary to and violative of the provisions of Section 12(2) of the Mysore Co-Operative Societies Act, 1959, hereinafter called the Act.
Bye-laws 26(A) and 26(c) as they stood prior to the amendment and after the amendment read thus:
Prior to amendment: After amendment:
26(A). The Board of Management shall consist. of 21 Directors as under:- The Board of Directors shall consist of 9 Directors as under:-
(a) 8 Directors elected by the ?A? Class members. (a) 2 Directors elected by the ''A'' Class members.
(b) 5 Directors elected by the ''B'' Class members. (b) 2 Directors elected by the ''B'' Class members.
(c) 4 Directors elected by the ''C'' Class members. (c) 1 Director elected by the ''C'' Class members.
(d) 3 Directors to be nominated by the Government. (d) 3 Directors to be nominated by the State Government.
(e) 1 Director shall be nominated by the Cooperative Central Financing Agency lying within the area of operation of the Society and financing it. (e) I Director shall be nominated by the Central Financing Agency lying within the area of operation of the Society and financing it.
16(C). Nine members shall form a quorum. The Board......in addition. Five members shall form a quorum. The Board... in addition
It will be seen from the above that there is a substantial reduction in the representation of the ''A'' Class members in the Board of Management consequent on the amendment. On the 21st September 1964, a special general meeting of respondent-1 was called to consider the aforesaid amendments. At the said meeting, 139 members were present; 85 members voted for and 19 voted against the amendment; 35 members abstained from voting. The Chairman of the meeting declared the resolution passed by a two-thirds majority of the members present and voting. A copy of the resolution with a certificate signed by the Chairman of the meeting to the effect that the resolution was passed by two-thirds majority of the members present at the meeting, was submitted with the application for registration of the amendment or the Bye-laws to respondent 2. The petitioners filed their objections contending, inter alia, that the said resolution had not been passed by the requisite two-thirds majority. The petitioners have alleged that respondent-2 did not afford them an opportunity to be heard and that he granted a certificate of registration of the amendment of Bye-laws on 3rd March, 1965, which reads:
No. F2/1480/8587/64-65.
Office of the Registrar of Co-Operative Societies in Mysore, Bangalore, dated 3rd March 1965. CERTIFICATE
In accordance with the resolution passed in the Special Body Meeting of the Karantak Cooperative Textiles Mills Ltd., Hubli, held on 21-9-1965, the Registrar of Co-Operative Societies in Mysore, Bangalore is pleased to approve and register u/s 12(2) of the Mysore Co-Operative Societies Act, 1959 the following amendments to be Bye-laws of the above mill.
Bye-law No. Revised Test
26(A) and (C) Approved and registered as per the copy attached
The Certificate should be attached to the Bye-laws in the possession of the Society.
Sd/- Registrar of Co-Operative Societies.
The petitioners preferred the above writ petition in which they sought an interim order restraining respondent-1 from holding the elections on the basis of the amended Bye-laws. This Court admitted the Writ Petition on 22-3-1965 and issued emergent notice to show cause as to why the relief prayed for should not be granted. After hearing the respondents, this court made the following order on 25-3-1965.
The election was published in the Calendar ........of events may go on, subject to the condition that until further orders from this court, the successful candidates shall not get into office. The Returning Officer shall give such publicity to this order, as may be practicable. This order may be communicated to the Returning officer, namely, the Tahsildar, Hubli (as stated by Mr. Ullal), by wire at petitioners'' cost".
Sri H.B. Datar, the learned counsel for Respondent-1, has raised two preliminary objections, viz., that the persons elected at the general meeting held on 29-3-1965 on the basis of the amended Bye-laws are necessary parties and that the petitioners have an alternate remedy of raising a dispute for reference to Arbitration u/s 71 of the Act. We have set out the order made by this court on 25-3-1965 on the interim relief prayed for by the petitioners. The new Directors elected on the basis of the amended Bye-laws have not assumed office. In the face of the order made by this court, it is not open to respondent-1 to contend that the newly elected Directors are necessary parties. The second objection raised by Sri. Datar that the dispute concerning the validity of the amendment can be raised and decided under Sections 70 and 71 of the Act, in our opinion, is devoid of any substance. The petitioners are aggrieved by the certificate of registration approving the amendment granted by respondent-2. The dispute is between the petitioners who are members of Respondent-1 and the Registrar of Cooperative Societies, with regard to the power of the Registrar to register the amendment u/s 12 read with Rule 6. Section 70 read with S 71 does not contemplate a reference to arbitration when there is a dispute between a member of a Co-operative Society and the Registrar.
In order to appreciate the contentions urged by Sri Ullal, the learned Counsel for the petitioners, it is necessary to set out Section 12 and Rule 6. Section 12 reads:
Amendment of Bye-laws of a Cooperative Society:
(1) No amendment of any bye-law of a Cooperative Society shall be valid unless such amendment has been registered under this Act.
(2) Every proposal for such amendment shall be forwarded to the Registrar and if the Registrar is satisfied that the proposed amendment:
(i) Is not contrary to the provisions of this Act and the rules;
(ii) does not conflict with Co-Operative principles;
(iii) satisfies the requirements of sound business;
(iv) will promote the economic interests of the members of the Society, and
(v) is not inconsistent with the principles of social justice; he may register the amendment
(3) The Registrar shall forward to the Society a copy of the registered amendment together with a certificate signed by him, and such certificate shall be conclusive evidence that the amendment has been duly registered.
(4) Where the Registrar refuses to register an amendment of the bye-laws of a Co-operative society, he shall communicate the order of refusal, together with the reasons therefor, to the Society
Rule 6 reads:
6 Procedure regarding amendment of Bye-laws:
(1) Where a co-operative society proposes to amend its bye-laws, no such amendments shall be made save by a resolution passed by a two-thirds majority of the members present and voting, at general meeting of the Society;''
(2) No such resolution shall be valid unless notice of the proposed amendment has been given to the members of the society in accordance with the bye-laws;
(3) In every case in which a society proposes to amend its bye-laws, an application snail be made to the Registrar together with:
(a) a copy of the resolution referred to in sub-rule (1);
(b) such number of copies of the proposed amendment as may be specified by the Registrar in this behalf.
(c) a certificate signed by the Presiding Authority of the meeting that the procedure specified in sub-rule (1) and sub-rule (2) and in the bye-laws has been followed; and
(d) any other particulars that may be required by the Registrar in this behalf.
(4) Every such application shall be made within thirty days from the date of the general meeting at which such amendment was passed: Provided that the Registrar may condone the delay, if any, for sufficient cause.
(5) When the Registrar registers an amendment of the bye-laws of a Co-Operative society he shall send a copy thereof to the financing bank, if any, to which the Co-Operative society is affiliated. (Underlining here into '' '' ours).
It is within the jurisdiction of this court to determine, whether the Registrar, in issuing the Certificate which the petitioners impugned, acted within the limits of the powers conferred on him by the Act and the Rules. There is no. doubt that if the Registrar did act in good faith within the limits of the authority conferred by the Act and the Rules, his act is fully protected and no court has any power to interfere. The question for determination is, whether the Registrar in issuing the certificate acted within the limits of the powers conferred on him by the Act and the Rules.
An amendment of the Bye-laws of a Co-Operative Society becomes valid and Operative only when it has been registered under the Act. Every proposal for such amendment has to be forwarded to the Registrar and if the Registrar is satisfied that the proposed amendment is not contrary to the provisions of the Act and the Rules, and that it does not conflict with the co-operative principles, he may register the said amendment. On registration, the Registrar shall forward to the Society a copy of the registered amendment together with the certificate signed by him, and such certificate is conclusive evidence that the amendment has been registered.
Rule 6 provides for the procedure regarding amendment of Bye-laws. Every proposal to amend Bye-laws of the Society can be made only by resolution passed by a two-thirds majority of the members present and voting at the general meeting of the Society. Such a resolution is a condition precedent to the exercise of the powers of granting registration u/s 12 by the Registrar.
We have perused the application for amendment with the connected papers submitted to the Registrar for amendment of the Bye-laws. It is disclosed therefrom that at the general meeting of the Society held on 21-9-1964, 139 members were present, of whom 85 voted in favour and 19 against the resolution; 35 members abstained from voting. According to the contention of Sri Ullal, 92 votes in favour of the resolution were necessary for carrying the resolution by a two-thirds majority when 139 members were present at the general meeting. According to the contention of the learned counsel for the respondents, when out of 139 members 35 had abstained from voting and that only 104 members had voted, 85 members having voted in favour of the resolution, the resolution is passed by a two-thirds majority. It was not disputed by the learned counsel for the respondents that the resolution did not have the support of a two-thirds of the members present at the general meeting. According to them, it is sufficient if it is passed by a two-thirds majority of the members voting for and against the resolution. On examination of the papers connected with the application for amendment, it was seen that the office of the Registrar had put up a note that the resolution was not passed by a two-thirds majority of the members present. The Registrar, however, was persuaded to accept the contention of respondent-1 that it is sufficient if the resolution is passed by a two-thirds majority of the members voting.
It was not contended by the learned counsel for the respondents, that if there was no resolution passed by a two-thirds majority of the members present and voting at the general meeting of the society, the action of the Registrar in granting the registration certificate could be supported. The question, therefore, is what is the meaning of the clause ''resolution passed by a two-thirds majority of the members present and voting, at general meeting of the Society'' in Rule-6. If all the members who attended the general meeting, vote for or against the resolution, there is no difficulty.
The fallacy in the argument of the respondents will become obvious from the following illustration: Let us suppose that of the 139 members present at the general meeting, 130 had abstained from voting and 7 members voted for and 2 against the resolution. If the contention of the respondents is correct, 7 members having voted for the resolution, it is carried by the requisite two-thirds majority of the members present and voting.
The Act does not permit exercise of vote by proxy and only members present at the meeting are entitled to exercise their votes. The expression ''passed by a two-thirds majority of the members present and voting'' is found in Article 368 of the Constitution of India, which provides for the procedure for amendment of the Constitution. According to the said Article, a Bill for amendment of the Constitution is passed when it is passed by a majority of not less than two-thirds of the members or each House present and voting. In the Constitution of the United States of America, clause 2 of para 7 of Article 1 of the Constitution provides that in case a Bill passed by Congress is vetoed by the President, he shall return it, with his objections, to that House in which it shall have originated, who shall enter the objections at large on their journal and proceed to reconsider it and if after such reconsideration, two thirds of that House shall agree to pass the Bill, it shall be sent, together with the objections to the other House, by which it shall be likewise reconsidered, and If approved by two-thirds of that House, it shall become a law. The above provision gave scope for the contention that a Bill, when vetoed by the President and returned to the House for reconsideration, if it is to be passed it shall be done by a two-thirds of the total number of members constituting each House of the Congress, and it is not sufficient if the Bill is carried by two-thirds voting of the members present, there being a quorum. An Act of Congress known as the Webb-Kenyon Law was challenged as void on the ground that it had never been enacted by the approval of two-thirds of the total membership of the Senate in Missouri Pacific Railway Company v. State of Kansas, (1918) 63 Law Ed. 239. What constitutes a House'' was the subject matter for interpretation; a quorum of the membership, a majority, one half and one more, is all that is necessary to constitute a House to do all the business that comes before the House, was the opinion ex pressed by the Supreme Court of United States of America. Vote of two-thirds of the House was interpreted to mean that the Bill should be passed by two-thirds vote of the members present, there being a quorum.
A Co-Operative Society is a corporate body and the members, who constitute that corporate body, at general meeting, are competent to perform any corporate act, provided there is a quorum. Where the resolution concerns an important matter like the amendment of the Bye-laws, and the law provides that such a resolution should be passed by two-thirds of the majority of the members present and voting, it means that the resolution to be passed requires a two-thirds vote of the members present, there being a quorum. Respondent-2 has misconstrued Rule 6 to mean that a resolution is passed when it secures a two-thirds majority of the members voting for and against the resolution, and he has ignored the significance of the word ''present'' in the said Rule. If Rule 6 were to be construed in the manner understood by Respondent-2 then the word ''present'' in the Rule would be superfluous. The significance of the expression ''present and voting'' in Rule 6, in our judgment, is that in order that a resolution should be regarded as validly passed, it should be passed by the votes of two-thirds majority of the members present at the general meeting.
In the above view of the law, the resolution proposing the impugned amendments was not passed by two-thirds majority of the members present and voting at the general meeting of the Society held on 21-9-1964 and there being no valid resolution, which is a condition precedent to the exercise of jurisdiction of the Registrar u/s 12 read with Rule 6, the registration granted by respondent-2 is clearly illegal and ultra vires.
Sri Datar, the learned counsel for respondent-1, contended that sub-rule (1) of Rule 6 is ultra vires of Section 129 of the Act. His argument was, that clause (d) of sub-section (2) of Section 129 empowers the State Government to make Rules to provide for the procedure to be followed for the amendment of the Bye-laws by a Co-operative Society, and that the provision for a resolution being passed by two-thirds majority of the members present and voting at general meeting of the Society is not a matter relating to procedure to be followed for amendment of Bye-laws. We are wholly unable to accept the contention of the learned counsel.
Since, in our judgment, the petitioners are entitled to succeed on the first ground, it is not necessary for us to consider the rest of the grounds urged by Shri Ullal, on which we express no opinion.
For the above reasons, we quash the certificate of registration issued by Respondent-2 in No. F2/1480/8587/64-65 dated 3rd March 1965 u/s 12 (2) of the Act, approving the amendment of Bye-laws 26(A) and 26 (C) of the Bye-laws of Respondent-1. Respondent-1 will pay the costs of the petitioners. Advocate''s fee Rs. 100.