Hassan vs The Joint Regisrar of Co-operative Societies and Others

K.K. Usha, J.—The question referred for consideration of Full Bench is whether the view expressed by a Division Bench of this Court in George v. Joint Registrar 1985 KLT 836 on the powers of the Registrar of Co-operative Society to enrol new members to the Society, have been impliedly overruled by the Supreme Court in K. Shantharaj and another Vs. M.L. Nagaraja and others, .

We heard learned Counsel appearing on behalf of the Petitioners in these original petitions, learned Advocate General and counsel for party Respondents. We also heard learned Counsel Sri George Poonthottam and Sri Somasundaram who are appearing for Petitioners in other original petitions where similar points are raised, but are not posted before us. We heard learned Counsel Sri K. Radhakrishnan who is appearing on behalf of the Respondents in O.P. 7311/98, which is not posted before us, but where similar contentions are raised by the Petitioners.

The issue to be considered is the scope of the power of an administrator appointed u/s 32 of the Kerala Co-operative Societies Act, 1969 in supersession of a committee of a Society to enrol new members to the Society. Section 32 of the Kerala Co-operative Societies Act, 1969 (hereinafter referred to as ''the Act'') reads as follows :

Supersession of Commit lee.-(1) If the Registrar is satisfied that the committee of any society persistently makes default or is negligent in the performance of the duties imposed on it by this Act or the rules or bye-laws or commits any act which is prejudicial to the interests of the Society or wilfully disobeys or wilfully fails to comply with any lawful order or direction issued under this Act or the rules, the Registrar may, after giving the committee an opportunity to state its objections, if any, by order in writing remove the committee and-

(a) appoint a new committee consisting of not more than three members of the society in its place; or

(b) appoint one or more administrator or Administrators who need not be a member or members of the society, to manage the affairs of the society for a period not exceeding one year as may be specified in the order, which period may, at the discretion of the Registrar, be extended from time to time, so however that the aggregate period does not exceed two years.

(2) The Registrar shall consult the financing bank and Circle Co-operative Union or State Co-operative Union as the case may be before passing an order under Sub-section (1).

(3) Notwithstanding anything contained in Sub-section (1) or Sub-section (2) it shall not be necessary to give an opportunity to the committee to state its objections and to consult the Unions and financing banks, in cases where the Registrar is of the opinion that it is not reasonably practicable to do so, subject however to the condition that in such cases the period of supersession shall generally be for six months and in case a new committee, cannot be constituted or enter upon office in accordance with the bye-laws of the society within the period of supersession the period may be extended for a further period not exceeding six months.

(a) in the case of a co-operative society only after consulting the circle co-operative union concerned; and

(b) in the case of an Apex Society or a Central Society only after consulting the State Co-operative Union.

(4) 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 all such action as may be required in the interests of the society.

(5) The committee or Administrator or Administrators shall, before the expiry of its or his or their term of office, arrange for the constitution of a new committee in accordance with the bye-laws of the society.

(6) Every order made by the Registrar under subjection (1) shall be communicated to the circle co-operative union.

According to the Petitioners, the power given to the Administrator under Sub-section (4) of Section 32 would not take in the power to enrol new members to the Society. Registrar is only expected to carry on the day to day functions of the Society and see that election is conducted and a new committee in accordance with the bye-laws of the Society be constituted. They would submit that a contra-view taken by a Division Bench of this Court in 1985 KLT 836 supra is no longer good law in the light of the decision of the Supreme Court in J.T. 1997 (5) S.C. 680 supra.

On the other hand learned Advocate General would submit that the view expressed by the Supreme Court has to be understood in the nature of the provisions contained under Sections 30 and 30A of the Karnataka Co-operative Societies Act, 1959 and the above decision cannot have any application to the Kerala Act. It was pointed out that even in the judgment of the Karnataka High Court, it is noted that Sub-section (2) of Section 33 of the Kerala Act is differently worded. Since the decision of the Karnataka High Court was affirmed by the Supreme Court, according to learned Advocate General, it has to be taken that the Supreme Court has concurred with the view of the Karnataka High Court that the wording of the Kerala Act is different. It is further contended by the learned Advocate General that the decision of the Supreme Court has to be taken as the one affirming the view of the Division Bench in 1985 KLT 836. A copy of the judgment of the Division Bench of the Karnataka High Court, which was affirmed by the Supreme Court in K. Shantharaj and another Vs. M.L. Nagaraja and others, was made available by the learned Advocate General.

In 1985 KLT 836, the Division Bench had to consider the case of an Administrator appointed u/s 33 of the Act. Sub-section (2) of Section 33 reads as follows :

(2) The committee or administrator or Administrators appointed under Sub-sections (1) and (1A) 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 society and take all such action as may be required in the interest of the society.

The Division Bench took the view that ''the Administrator functions as the managing committee of the socitey, in its absence. The Administrator is the dejure committee in power when there is no elected committee. He has thus all the powers of the committee. It is admitted that the committee was entitled to enrol new members. If so, Section 33(2) statutorily clarifies that the Administrator also has the same powers, The Bench affirmed the view taken by Bhaskaran, J. as His Lordship then was, in Sudhakaran v. Dy. Registrar of Co-operative Societies 1980 KLT 658 as follows :

On a careful consideration of the scheme of the Act and the Rules, it could be found that admitting members to the rolls of the society, which in the normal course, is the routine function of the committee, is not anything extraordinary in character so as to take it out of the purview of what is described in Section 33(2) of the Act as day to day administration of the society.

The Bench disagreed with the view taken by Sukumaran, J. in Gopalan v. Joint Registrar of Co-operative Societies 1985 KLT 446 where the learned Judge had observed as follows:

The power of enrolment of a member is provided in Section 16 of the Co-operative Societies Act, which occurs in Chapter III having its heading: ''Members of Co-operative Societies and their rights and liabilities.'' The statutory scheme is such that the membership in a Society is a matter of crucial importance. That is why qualifications for membership are statutorily provided.

A denial of membership is to be intimated to the applicant with reasons therefor. Expulsion of members is to done only by the general body. These provisions do indicate that membership of a society is something more important and more fundamental than a matter relating to the routine management of a society. The importance pertaining to membership is reflected in the rules providing for the procedure for admitting a person as a member of the society. Under Rule 16, a person has to make an application in writing in the form if any, laid down by the society. His application must be approved by the committee of the society. He must have fulfilled all the conditions laid down in the Act or bye-laws. These are matters which are properly left to such a committee, which, due to its intimacy with men and matters of the locality would be well-equipped to assess the qualifications and disqualifications of an applicant. It is not to be treated as a routine act. In any event, it is not to be treated as a matter of management. If it is not a matter of management, the Administrator, who is after all only a passing phase and a stop-gap arrangement, cannot, tinker with the constitution and membership of the society.

As mentioned earlier, the Division Bench took the view that Adminstrator of the Society appointed to manage the Society has necessary power to admit new members. In Gangadharan v. Administrator K.L.T 624, U.L. Bhat, J. as His Lordship then was and in John v. Joint Registrar 1992 (1) KLT 669, Viswanatha Iyer, J. disagreed with the view taken by Sukumaran, J. in 1985 KLT 446 and followed the Bench decision in 1985 KLT 836.

Before we go into the question whether the view taken by the Division Bench in 1985 KLT 836 has been impliedly overruled by the Supreme Court in K. Shantharaj and another Vs. M.L. Nagaraja and others, , we will first examine in detail, the judgment of the Karnataka High Court which was affirmed by the Supreme Court. One of the questions considered by the Division Bench of the Karnataka High Court was whether Administrator appointed u/s 30 of the Karnataka Co-operative Societies Act has power to enrol new members to the Society while he is in management of the same. It was noted that at the time of Administrator''s appiontment, there were 234 members in the Society and the Administrator admitted new membership to the extent of 222 members between 5th March 1992 and 23rd October 1993 during the pendency of the writ petition. Following are the provisions of law under the Karnataka Co-operative Societies Act enabling appointment of Administrator and Special Officer:

Supersession of Committee.-(1) If, in the opinion of the Registrar-

(a) the committee of a Co-operative society persistently makes default or is negligent in the performance of the duties imposed on it by this Act or the rules or the bye-laws or commits any Act which is prejudicial to the interest of the society or its .members, or is otherwise not functioning properly; or

(b) a Co-operative society is not functioning in accordance with the provisions of this Act, the rules or bye-laws or any order or direction issued by the State Government or the Registrar, the Registrar may, after giving the committee an opportunity to stale its objections, if any, order in writing remove the said committee, and appoint an Administrator to manage the affairs of the society for such period, not exceeding one year, as may be spceified by the Registrar.

(2) The Administrator so appointed shall subject to the control of the Registrar and such instructions as 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.

(3) The Administrator shall, before the expiry of his term of office arrange for the constitution of a new committee after holding the election in accordance with this Act, the Rules and the bye-laws of the Co-operative society:

Provided that in such an election no member of the committee removed under Sub-section (1) shall, notwithstanding anything contained in this Act, the rules or the bye-laws, be eligible for being elected as a member of the committee, for a period of four years from the date of supersession of the committee under the said Sub-section:

Provided further that if the committee elected in accordance with this Sub-section is also superseded within a period of one year from the date of its election, such supersession may extend to a period not exceeding three years.

30A. Appointment of special Officer.-(1) Where the State Government on a report made to it by the Registrar or otherwise, is satisfied that any Co-operative society is not functioning in accordance with the provisions of this Act or the Rules made thereunder or its bye-laws or any order, direction, circular issued by the State Government or the Registrar, it may, notwithstanding anything contained in this Act, by order, appoint a Special Officer for such Co-operative society for such period not exceeding two years :

Provided that the State Government may, if it considers it necessary extend the said period of two years by such further period not exceeding one year.

The Special Officer 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-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.

It was observed by the Division Bench that Special Officer appointed u/s 30A has wider powers and functions than the administrator appointed u/s 30. It was observed that while the Administrator has to perform only the ''functions'' of the committee, the Special Officer is entitled to perform all the ''powers'' and also do the ''functions'' of the committee. So also, the Administrator is appointed only for managing the affairs of the Society whereas a Special Officer is appointed for a Co-operative society.

Section 28A of the Karnataka Acts provides that the management of a Co-operative society shall vest in a committee constituted in accordance with the Act. Rules and bye-laws of such society. It further provides:

The committee shall exercise such powers, discharge such duties and perform such functions as may be conferred or imposed upon it by this Act, the rules and the bye-laws.

The Division Bench observed that out of the three categories of authorities vested in the committee, the Administrator can only perform the ''functions'' of the committee, but cannot exercise the ''powers'' vested in the committee. The Division Bench then proceeded to consider whether admission of new members to the society is a power or function of the committee. It found that bye-law 15 of the bye-law of the society gives the authority to the committee to consider the applications for membership and the committee was entitled to either allow the application and admit members or reject the same. In such circumstances, admission of members is not a mere ''function'' of the committee, but it is the ''power'' of the committee to admit members or not. By the exercise of that authority, the legal relationship of the applicant vis-a-vis of the society is changed and accordingly, is a ''power'' and not a mere ''function''. Reference was then made to Salmond on Jurisprudence-12th Edition, Page 229 where it was stated as follows :

A power may be difined as ability conferred upon a person by the law to alter, by his own will directed to that end the rights, duties, liabilities or other legal relations, either of himself or of other persons.

Definition of the words ''power'' and ''function'' in Black Law Dictionary, were referred and quoted as follows:

Power-The right, ability, authority, or faculty of doing something. A power is an ability on the part of a person to produce a change in a given legal relation by doing or not doing a given act.

Function-''Function'' means to perform, execute, administer.

The Division Bench then proceeded to hold as follows :

On a reading of Section 30 of the Act, it is clear that an Administrator is entitled to only perform function of the committe and to manage its affiairs and he is not vested with the power of the committee as is the case of a Special Officer appointed u/s 30A of the Act.

If that be so, admission of new members by the Administrator was clearly without authority and the learned Judge was right in excluding them from taking part in that election

Reference was made to the judgment of this Court in 1985 KLT 836 and it was held that the dictum laid down therein cannot have any application while considering the authority of the Administrator and Special Officer under Sections 30 and 30A of the Karnataka Act. The reason given for distinguishing the Kerala decision was as follows :

But, it has to be noted that the wording of Section 33(2) of the Kerala Co-operative Societies Act is slightly different from the wording of Section 30 of the Act. In the Kerala Act, the Administrator has power to exercise all or any of the functions of the committee, whereas, in the Karnataka Act, the Administrator can only exercise all or any of the functions of the committee. Moreover, as stated earlier, the difference in the authority vested in an Administrator and a Special Officer, as is made in the Karnataka Act is not considered in the Kerala decision. The difference in the authority vested in an Administrator and a Special Officer in the Karnataka Act, is very significant which is absent in the Kerala Act.

The Division Bench of this Court, which referred the matter for consideration of a Full Bench had observed that it could not find any difference between the wording of the two provisions under the Karnataka Act as well as Kerala Act. For a comparative consideration, those provisions were quoted side by side as follows:

Section 32(4) of the Kerala Section 30(2) of the Co-operative Societies Act reads as Karnataka Co-operative Societies follows : Act reads as follows:

The Committee or Administ- The Administrator so rator or Administrators so appointed shall subject to the appointed shall, subject to the control of the Registrar and control of the Registrar and to such instructions as he may give such instructions as he may be from time to time, exercise all from time to time give, have power or any of the functions of the. to exercise all or any of the functions committee or of any officer of the of the committee or of any officer Co-operative society and take the society and take such action as such action as he may consider may be required in the interests of necessary in the interest of the the society. society.

We are in full agreement with the view expressed in the reference order. The Division Bench of the Karnataka High Court, while holding that the Administrator has no power to enrol new members, considered the difference between the concept of the terms ''power'' and ''function4. It came to the conclusion that enrolment of new members is in exercise of a power and not a mere function of the committee. If we apply the same principles to the wording of Sub-section (4) of Section 32 or Sub-section (2) of Section 33,it can be seen that the power that has been given to the Administrator was only to exercise all or any of the functions of the committee and not the powers of the committee. If that be so, we have no hesitation to hold that there is no difference in the scope of the two provisions under the Karnataka Act and the Kerala Act. But, if we refer to Section 30A of the Karnataka Act, it can be seen that the Special Officer was empowered to perform all the powers and functions of the committee. Of course, the Division Bench of the Karnataka High Court has noted that this aspect has not been considered in 1985 KLT 836.

Now, we will come to the decision of the Supreme Court in K. Shantharaj and another Vs. M.L. Nagaraja and others, which affirmed the Karnataka decision. After quoting Sections 30 and 30A of the Karnataka Act, the apex Court observed as follows:

It would be clear from the language of these provisions that the Administrator or Special Officer, subject to control of any of the functions of the society, and in the interest of the society take such action as is necessary for proper functioning of the society as per law. He should conduct elections as is enjoined thereunder. In other words, he is to conduct election with the members as on the roles and by necessary implication, he is not vested with power to enroll new members of the Society.

If there is any doubt, it has been further clarified in paragraph 8 of the judgment as follows:

Shri Santhosh Hedge, learned senior Counsel, contends that since the Administrator has power to conduct elections, by necessary implication, he has power to update the electoral lists by either enrolling the new members of substituting the legal representatives of the members in accordance with the bye-laws; therefore, he has power to enroll the members. 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 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.

Learned Advocate General and counsel appearing on behalf of the Respondents could not bring to our notice any provision under the Act, Rules or the Bye-laws of the society which gives specific power to the Administrator to enrol new members to the Society. If no such specific power is given, it can be brought only under his general authority given under the provisions of Section 32 or u/s 33 of the Act. If we apply the dictum laid down by the Supreme Court in J.T. 1997 (5) S.C. 680, the provisions under Sections 32 and 33 would not be sufficient to give him the power to enrol new members.

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 paragraphs 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 posed the question regarding the power 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-section (2) of Section 33 would take in the power to enrol new members is impliedly overruled by K. Shantharaj and another Vs. M.L. Nagaraja and others, .

In the cases referred before us, it is submitted that the administrator was appointed u/s 32 of the Act. Since the wording of Sub-section (4) of Section 32 and Sub-section (2) of Section 33 are similar, the dictum laid down by the Supreme Court in K. Shantharaj and another Vs. M.L. Nagaraja and others, would be applicable in these cases also.

The question referred is answered as above. It is submitted by counsel appearing on both sides that apart from the question referred, there are other individual issues involved in these writ petitions. We therefore remit these Original Petitions for being heard by appropriate Benches on merits.