Padmanabhan, P. vs Joint Registrar of Co-Operative Societies and Others

V.V. Kamat, J.—By these two petitions the problems of the Board of Directors or the Committee of the Udayanapuram Service Co-operative Bank Ltd. are brought before this Court by the Petitioner Sri P. Padmanabhan, who avers that he was the President of the said Board of Directors till January 7, 1995, because by an order (Ext. P-1)-translation Ext. P-1(a) the Joint Registrar, Kottayamin exercise of the powers u/s 33 of the Act proceeded to appoint the Assistant Registrar of Co-operative Societies, Vaikom, Unit, as its administrator for a period of six months. This impugned order is the subject matter of O.P. No. 1436/1995. This ultimate order has a little background. Apart from O.P. No. 7809/1994, which is also taken up for hearing and final decision along with the above petition by the earlier oral order of this Court, there is yet one more petition, O.P. No. 15406/1994 which would require a reference, although it is decided by a judgment of this Court dated January 4, 1995.

One Mr. Sebastian preferred O.P. 15406/1994 to challenge certain orders and notices of the Joint Registrar. Mr. Sebastian is a member of the Board of Directors of which the present Petitioner Mr. Padmanabhan was the President till January 7, 1995, as stared above. On January 17, 1993 the Board of Directors came to be elected with the office for a period of three years thereafter. The strength of the Board of Directors as per the byelaws is admittedly 11 members. It appears that Mr. Sebastian, on and from June 9, 1994, came to be appointed as the Branch Manager of the Bank, Vallakam Branch, and, that too, it is alleged, in an honorary capacity. This was by the resolution of the Board. When the said Board was in existence upto May 27, 1994, one Mr. Raju was the President of the Board. He figures as a Respondent in these petitions. The facts proceed further and tell us that this Raju lost presidentship in pursuance of a no-confidence motion and he was replaced by Sri Padmanabhan, the Petitioner in these petitions.

In both these petitions there are factual allegations and descriptions of the movements of Sri Raju as a result of his loss of presidentship in pursuance of the no-confidence motion. The averments show that Sri Raju became a busy body keeping the Joint Registrar engaged by making petitions obviously against the present Petitioner. Ultimately, the question which was the subject-matter of O.P. No. 15406/1994 was whether the disqualification of Mr. Sebastian was proper and justifiable. This Court did rot interfere with the order of the Respondent No. 1 (the Joint Registrar of Co-operative Societies, Kottayam) disqualifying Mr. Sebastian to continue to be the member of the Board of Directors. This order has received finality and Mr. Sebastian is out of the Board of Directors.

Apart therefrom, when O.P. No. 7809/1994 was filed, in C.M.P. No. 13610/1994 therein, this Court by an order dated June 13, 1994 granted stay as prayed for in the said petition. It should be stated that this order is modified by a subsequent order of this Court dated September 27, 1994. At this time this Court, it is stated, carefully examined the averments in the original petition and the averments in the counter affidavit filed by the Respondent No. 3 therein (Sri Raju) and modified stay the order making it clear that the stay regarding supersession of the Board of Directors shall continue to operate. In other words, it is under this order that the Board of Directors continued and the supersession was postponed. In the said order it is made clear that the Joint Registrar, Kottayam would be entitled to go into the objections filed by the Respondent No. 3 (Sri Raju). It is also made clear that in the event of the Joint Registrar coming to the conclusion that the meetings are not validly constituted, he should bring the same to the notice of the Court and seek further orders. It is further observed that the Joint Registrar also shall bring to the notice of this Court if he finds that any appointments are made in violation of the rules.

During the hearing of these petitions these previous orders were brought to my notice by the learned Counsel appearing for the parties while making submissions with regard to the impugned order of the appointment of the administrator. The proceedings were adjourned with a direction to the Joint Registrar, Kottayam to explain the situation as to the circumstances under which the present order (Ext. P-1) is passed by him. There is a counter accordingly.

It is necessary to reproduce certain portions from the counter of the Joint Registrar. In paragraph 4 of the counter, after referring to the earlier orders referred by me hereinbefore, it is averred as follows:

This Honourable Court my kindly consider the applicability of Section 32 and Section 33 of the Co-operative Societies Act. Section 32 deals with supersession of the Board of Directors on certain reasons. u/s 32 an administrator is appointed when the legal existence of the committee is lost due to reasons mentioned in the section.

The Joint Registrar takes recourse to the legal provision enacted u/s 32 on the one hand and in comparison with those u/s 33 relating to the appointment of the administrator

Thereafter it is specified that the order (Ext. P-1) dated January 7, 1995 is passed under the provision of Section 33 of the Kerala Co-operative Societies Act. The relevant portion in the same paragraph requires reproduction as follows:

In Ext. P-1 dated 7th January 1995 it was specifically mentioned that this order is issued u/s 33 of Kerala Co-operative Societies Act, 1969. It is to be noted that by virtue of the judgment in O.P. 15406/1994 dated 4th January 1995, the membership of M.K. Sebastian in the Board of Directors ceased to exist. So quorum of the existing Board was lost. So legal existence of the Board of Directors under the Presidentship of the Petitioner has been ceased and first Respondent has no other way except to appoint an administrator u/s 33 of Kerala Co-operative Societies Act. Therefore first Respondent has not superseded the Committee u/s 32 of the Co-operative Societies Act. So it is submitted that this Respondent has not violated the order in C.M.P. 13310/94 in O.P. No. 7809/1994 dated 27th September 1994. The appointment of administrator by Ext. P-1 was issued u/s 33 of the Co-operative Societies Act. The said proceedings was done only in good faith.

It is urged that this was done in good faith. The above portion clearly shows that the Joint Registrar was well aware of the order passed by this Court in the nature of directions that whatever steps he takes are to be placed before the Court and are to be taken under the permission of the Court. To specify it again the following portion is reproduced by way of a re-emphasis as regards what is clearly directed by this Court:

But the second Respondent is entitled to go into the objection petitions filed by the third Respondent. If he comes to the conclusion that the meetings are not validly constituted, he should bring the same to the notice of the Court and seek further orders. It is also made clear that if the Joint Registrar finds that any appointments are made in violation of the rules, then he shall bring them to the notice of the Court and seek such directions as are necessary.

The above orders are more than clear and with the judicial restraint at my command, it will have to be observed that the attitude of the Joint Registrar expressed in the affidavit of counter is not a happy situation and mere plea of good faith would be very difficult for consumption of this Court. Be that as it may, if not for the Joint Registrar in question, but for the general guidance of those who are similarly situated in the hierarchy in the Co-operative Department, it is necessary to make certain observations that if it is found that the authorities under the Act are fully aware of the orders of this Court, any attempt to act either ignoring such orders or even after knowing those orders as stated in the present counter, it would give an occasion to this Court, to tread on delicate grounds to deal with such officers. In my judgment, these observations are required to be widely circulated and they should serve the present purpose by way of the reaction of the Court.

The factual situation which proceeds on the contents of the impugned order dated January 7, 1995 spreads over the situation as follows:

Out of the ten members of the Bjard of Udayanapurani Service Co-operative Bank, four have resigned and the membership of one has been ceased as per order under reference No. 2. I am convinced that the remaining five cannot constitute quorum.

It is under this situation provisions of Section 33 of the Act are resorted to.

The learned Counsel firstly referred and relied upon the provisions of Section 28(5) of the Act to contend that five members were already there, one was co-opted and as a result thereof the said provisions are satisfied. Simple answer is that before an occasion arises to consider the question of quorum, there must be material to establish that there is a committee lawfully in existence. Reference with benefit can be made to Section 33 which refers to the occasions for the appointment of a new committee or administrator or a committee of administrators and the occasion is when there is no committee in existence, it is not necessary to reproduce the said provisions. It is elementary that before one resorts to find fault in the process of meetings, what is necessary is the existence of a committee in a legal manner. The situation as has emerged from the contents of the impugned order would show that the committee ceased to exist legally and therefore there is not really an occasion to consider the question of quorum.

The learned Counsel also placed reliance on the factual contention that one member was co-opted and therefore the number of members being six, there was no difficulty with regard to the quorum. Factually Smt. Maniyamma came to be co-opted in pursuance of the resolution dated October 19, 1994. Reference to the rules under the Act would show that there is really no provision for co-option. The learned Counsel placed reliance on the provisions of Rule 38. Reading the provisions of Rules 35, 36, 37 as well as 38, it will have to be stated by accepting the contention of the Joint Registrar that there is no provision for co-option and it is the spirit of the Act and the Rules that all those who represent membership of the Board or Committee are required necessarily to be the elected members. Even the filling in of casual vacancies is required the application of the election process. In this view of the matter also, an attempt to prop up the number required for the quorum is not possible for acceptance.

The learned Counsel referred to the provisions of Section 33 of the Act, especially certain statutory requirements that are necessary to be followed and applied before taking resort to act under the provisions of the said section. The learned Counsel referred to the provisions of Section 33 indicating a pre-requisite of notice of the proposed action. As a consequence, on absence of notice, the learned Counsel contended that the impugned order is violative of the principles of natural justice as well as being contrary to the statutory requirements.

The main aspect is as to whether the Board of Directors or a Committee legally exist and the obvious answer would be ''no'' and if this is the obvious answer, it will have to be held that acting u/s 33 of the Act would have to be treated as an inevitable situation for the Joint Registrar.

Apart therefrom, reading of the two petitions would give an impression that the entire situation is a presentation of activities and attempts of these two persons-Sri Raju and Sri Padmanabhan who have taken itself as an unending battle of writs, rendering the very existence of the Board of Directors or Committee as non est factually. The facts and circumstances placed on record are of such a nature that the Joint Registrar has been kept busy one way or the other. Factually also the appointment of an administrator would have to be considered as an inevitable and a necessary evil although the democratic process and its continuance is the essence of the co-operative field. Factually it is made clear in the said order that the appointment would be for a period of six months. Seeing the provisions of the Act in connection with the factual matrix represented in these petitions, this Court can only express a hope that the society is not run by the administrator beyond a period which is really necessary. The parties who are dramatis personae figuring in these proceedings also should look at the Bank as a field for the experiment of the democratic process. For the time being, for the reasons stated above, it is not possible to exercise extraordinary powers to find any fault for interference in the impugned order,

O.P. No. 1436/1995 therefore stands dismissed and the impugned order (Ext. P-1) stands confirmed. As a result of this, in fact O.P. No. 7809/1994 need not be considered because perusal of the prayers of the said petition clearly show that the prayers are a process of duplication, having been completely covered by the prayers in O.P. No. 1436/1995. Once a decision is reached that the Board of Directors or the Committee is not legally constituted, other questions regarding the meeting, resolutions and decisions taken by such Board would get the consequential labels. It is already held that the impugned order dated January 7, 1995 appointing an administrator requires to be confirmed and it is already stamped by me earlier. In view of the above, for the above reasons, O.P. No. 7809/1994 also gets disposed of.

In the result both O.P. No. 7809/1994 as well as O.P. No. 1436/1995 stand dismissed as a result of the Order (Ext. P-1) of appointment of the administrator having been confirmed. The Joint Registrar may proceed with the further step in pursuance of the order confirmed.