IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 25TH DAY OF OCTOBER 2019 BEFORE THE HON'BLE MR. JUSTICE ARAVIND KUMAR WRIT PETITION Nos.41892-41898 OF 2019(CS-RES) BETWEEN :
1. H.Veeregowda, S/o Honnegowda, Aged about 62 years.
2. Shivlingegowda, S/o Channegowda, Aged about 65 years.
Both are residents of Sagya Village, N.Halasahalli Post, Halaguru Hobli, Malavalli Taluk, Mandya District-571421.
3. Thimmaraju, S/o Kullegowda, Aged about 50 years.
4. S.D.Jayaramu, S/o Dhoomegowda, Aged about 51 years.
Petitioners No.3 & 4 are residents, of Sagya-Saraguru, N.Halasahalli Post, Halaguru Hobli, Malavalli Taluk, Mandya District-571421.
5. Venkatesh, S/o Thimmaiah, Aged about 55 years, Resident of Honnemarada Doddi, N.Halasahalli Post, Halaguru Hobli, Malavalli Taluk, Mandya District-571 421.
6. Maridevaiah, S/o Bodaraiah, Aged about 55 years, Resident of Nitturu, N.Halasahalli Post, Halaguru Hobli, Malavalli Taluk, Mandya District-571421.
7. Smt. Kempajamma, W/o Ramachandragowda, Aged about 40 years, Resident of N.Hosadoddi, N.Halasahalli Post, Halaguru Hobli, Malavalli Taluk, Mandya District-571421. ... Petitioners (By Sri. Gangadharappa A.V., Advocate) AND:
1. Deputy Registrar of Co-operative Societies, Mandya District, Mandya.
2. Assistant Registrar of Co-Operative Societies, Mandya Sub-Division, Mandya-571421.
3. Co-operative Development Officer, Malavalli Taluk, Malavalli, Mandya District And Special Officer to Primary Agricultural Credit Co-operative Society Ltd., Nitturu, N.Halasahalli Post, Halaguru Hobli, Malavalli Taluk, Mandya District-571421.
4. Primary Agricultural Credit Co-operative Society Ltd., Represented by Chief Executive Officer, Nitturu, N. Halasahalli Post, Halaguru Hobli, Malavalli Taluk, Mandya District-571 421. …Respondents (By. Smt. H.C. Kavitha, HCGP. for R1-R3: Sri.Pruthvi Wodeyar, Advocate for R4) These writ petitions are filed under Articles 226 and 227 of the Constitution of India praying to call for the records and proceedings of the case, quash the impugned order dated:14.05.2019, passed by the R-2 certified copy of which is produced as Annexure-C & quash the impugned order dated:08.08.2019 passed by the R-1 certified copy of which is produced as Annexure-F.
These writ petitions, coming on for preliminary hearing, this day, the Court made the following:
O R D E R Heard Sri A.V.Gangadharappa, learned counsel appearing for petitioners, Smt.H.C.Kavita, learned High Court Government Pleader appearing for respondent Nos. 1 to 3 and Sri Pruthvi Wodeyar, learned counsel appearing for respondent No.4. Perused the records.
2. Short point that would arise for consideration in these petitions is “Whether order dated 14.05.2019 passed by the second respondent (Annexure-C) disqualifying the petitioners in exercise of the powers vested under Section 29-C(8)(b)(c)(d) of the Karnataka Co-operative Societies Act, 1959 (for short, ‘the Act’) and its confirmation by the appellate authority by order dated 08.08.2019 (Annexure-F) is sustainable in law or not”?
3. In election held on 24.04.2016 to the Board of Directors of fourth respondent Society petitioners and three other persons came to be elected which Board consisted of 10 elected members and one representative of the Jurisdictional District Co- operative Central Bank, Mandya. Subsequently, in the elections held for electing office bearers of the fourth respondent Society one Sri K.Jayaramu was elected as the President and first petitioner was elected as a Vice-President. The term of the office was for a period of five years, i.e., the present members of the Board of the fourth respondent Society’s term is to end on April 2021.
4. The Chief Executive Officer of the fourth respondent Society by name Sri Mahadevappa attained the age of superannuation and as such he retired from service on 30.06.2015. One Mr.Kumar who was working as a Clerk from 2012 in the fourth respondent Society and had gained experience over the period, was placed in-charge as the Chief Executive of the Society by resolution dated 24.06.2015. As such, he started working in the said capacity from 01.07.2015. On account of said Kumar having discharged the duties effectively as in-charge Chief Executive Officer of fourth respondent Society, the Board of Directors of fourth respondent Society resolved to promote him as Chief Executive Officer of the said Society and a resolution came to be passed on 26.02.2019 (Annexure-A) to said affect. In fact, in the said meeting, petitioners have supported the resolution as against three persons opposing, including its President. This resolution triggered the second respondent to issue notice to the petitioners on 29.03.2019 (Annexure-B), proposing thereunder to take action against them to disqualify alleging that act of passing the resolution would attract the disqualification prescribed under Section 29-C(8)(b)(c)(d) of the Act. After considering the reply submitted by petitioners impugned order dated 14.05.2019 (Annexure-C) came to be passed. Being aggrieved by the said order, appeal came to be filed by the petitioners under Section 106 of the Act in Appeal No.3/19-20 which also came to be dismissed by order dated 08.08.2019 (Annexure-F). Hence, these two orders are under challenge in these writ petitions.
5. It is the contention of Mr.Gangadharappa, learned counsel appearing for the petitioners that Board of Directors of fourth respondent Society is empowered under Section 29-G of the Act to appoint or promote an employee as the Chief Executive of the Society and by virtue of same resolution in question came to be passed. He would also submit that Board of Directors of fourth respondent Society had passed the resolution and it is the decision of the Board and not of individual directors; he would contend, ingredients prescribed under Section 29- C(8)(b) is not attracted and even otherwise, decision taken by the Board is per majority, which cannot be found fault with by the respondents and as such, impugned orders are liable to be quashed. He would hasten to add that even otherwise, the period of five years of disqualification imposed on petitioners from contesting the election to fourth respondent Society is too harsh and there are no reasons forthcoming as to why maximum period prescribed under the Act has been imposed on them while being disqualified.
6. Per contra, learned High Court Government Pleader has supported the impugned orders and would contend, that fourth respondent Society was notified that appointment of Chief Executive Officer is to be made in accordance with Act and Rules and notice had also been issued on 05.02.2019 intimating the directors of the fourth respondent Society to appoint a Chief Executive Officer to the fourth respondent Society in accordance with Rule 17 of the Karnataka Co-operative Societies Rules (for short, ‘Rules’) which has been ignored and neglected and as such, petitioners have earned the disqualification prescribed under Section 29-C of the Act. She would also contend that fourth respondent Society is an Assisted Society falling within the definition of Section 2(a-1-1) of the Act and as such under Section 29-G(1)(i) Assisted Society is required to appoint the Chief Executive Officer in accordance with the Rules and appropriate Government being empowered to frame rules under Section 129 of the Act had framed the Rules governing such appointment under Rule 17. Under Section 2(o) formulated the rule and under Rule 17 of the Rules, qualification has been prescribed which reserves to all classes of society. She would also draw the attention of the Court to the bye-laws of the Society by referring to bye law Nos. 44 and 45 which indicate that Board of Recruitment is required to appoint the Chief Executive of the Society and specifically bye-law No.44 prescribes the minimum qualification which admittedly the promotee Sri Kumar did not possess and as such Board of Directors namely the petitioners have acted contrary to the Act and Rules made thereunder and thereby they have earned the disqualification resulting in passing of impugned order which came to be confirmed by the appellate authority and same would not call for interference. Hence she prays for dismissal of the petition.
7. Sri Pruthvi Wodeyar, learned counsel appearing for the respondent No.4 Society would also support the impugned orders.
8. Having heard the learned advocates appearing for parties and on perusal of case papers as was as original records made available by the learned High Court Government Pleader, it would emerge therefrom that no serious dispute exists with regard to the fact that fourth respondent is a credit co-operative society and would fall within the definition of Assisted Society as defined under Section 2(a-1-1) since there is loan assistance by Government as well as share of the appropriate Government being there in the said Society. However, the said issue is not being delved upon in these writ petitions for the present.
9. The show-cause notice issued to petitioners on 29.03.2019 Annexure-B would disclose that disqualification proceedings have been initiated against petitioners alleging that act of passing the resolution dated 26.02.2019 (Annexure-A) is contrary to the bye-laws, provisions of the Act and Rules made thereunder. In this background, when Section 29-C(8)(b) is read it would clearly indicate that any member of the Board during the term of his office were to act or has been acting fraudulently or with gross negligence or in contravention of the provisions of the Act, rules or bye-laws of a Co-operative Society, the Registrar may either on a report made to him or otherwise would be empowered to remove such member from the Board of such Co-operative Society apart from disqualifying such members for reasons specified in Clause (b), (c), (d) of Section 29-C(8). In the instant case, specific allegation against the petitioners is that they have acted in contravention of the provisions of the Act, rules and bye-laws of the Society. In the background of the show-cause notice issued against petitioners as well as impugned order passed when the resolution dated 26.02.2019 (Annexure-A) is perused, it would clearly indicate that one Mr.Mahadevappa who was working as Secretary on attaining the age of superannuation had retired from service on 30.06.2015. On account of said post having fallen vacant Sri Kumar who was working as a clerk in the said Society was directed to officiate as the Chief Executive of the Society and on the ground that he had rendered unblemished service for the past 3 to 4 years to the society, resolution in question came to be moved for promoting him as the Chief Executive of the fourth respondent Society. In fact, in the said meeting, the President and two other Board of Directors opposed his promotion not on the ground of his incompetence but on the ground that appointment to the post of Chief Executive is to be resorted under Rule 17 of the Rules. In fact, this has also been recorded in the meetings of the resolution dated 26.02.2019. In the light of said resolution when read along with the criteria prescribed for disqualification under Clause (b) of Section 29-C(8) it cannot be said again by petitioners that resolution passed is in consonance with the provisions of the Act. It is no doubt true that under Section 28-G of the Act Board of Directors of a Co-operative Society would be empowered to appoint Chief Executive and such other employees which are not required to be appointed by the Chief Executive. However, it is subject to the provisions of Section 29-G, which provision mandates that appointment of a Chief Executive of a Co-operative Society would be subject to the Rules prescribed in that regard. Such prescription can be traced to Rule 17 of the Rules which would clearly define the qualification to be possessed by the Chief Executive as found in the Rules viz., he should possess a Bachelor Degree from an University established by law in India; must have passed Kannada as one of the languages in SSLC or equivalent examination and must have undergone basic Computer Operations and Applications Course from an Institute recognized by the Government. In fact, under clause (2) of Rule 17 the employees working in the Society can also be promoted which would necessarily be subject to minimum qualification prescribed therein is possessed by them.
10. In the instant case, it is neither the case of the petitioners nor anybody else that person who was promoted namely Sri Kumar had possessed the minimum qualifications prescribed under Rule 17A of the Rules. That apart, a notice was issued by the competent authority way-back on 05.02.2019 to the Board of Directors of fourth respondent Society clearly indicating thereunder that post of Chief Executive Officer of Society is to be filled up by resorting to Rule 17. Despite such clear direction being there and President as well as two directors having brought to the notice of the petitioners that promotion of an employee not possessing requisite qualification is impermissible and appointment of the Chief Executive to the fourth respondent Society is to be made in accordance with Rules 17A, yet, in utter disregard to the said Circular/notice as well instructions by President of the Society petitioners on the probable assumption of “might being right” or their proposal was having the backing of majority have proceeded to pass the resolution on 26.02.2019 (Annexure-A) which is not only contrary to the Act but also the Rules and bye-laws of the Society namely bye-law No.44 which was required to be followed by the petitioners, in as much as bye-law No.44 clearly prescribes minimum qualification to be possessed by a candidate to be appointed as Chief Executive Officer namely such candidate should possess Bachelors Degree in BA, B.Com, B.Sc, M.Com, MA or a degree issued by any other University. Hence, this Court is of the considered view that disqualification proceedings initiated again the petitioners and the order of disqualification passed under the impugned order in exercise of the power vested under Section 29-C(8)(b)(c)(d) cannot be found fault with.
11. However, as rightly pointed out by Sri A.V.Gangadharappa, learned counsel appearing for the petitioners, the period of disqualification of five years which is the maximum prescribed under proviso to Section 29-C(8) has been imposed on the petitioners, which is too harsh or excessive for reasons more than one. Firstly, there is no reason assigned under the impugned order for imposing maximum period of disqualification on the petitioners. Secondly, it is not the case of the respondents that petitioners have indulged in violating the provisions of the Act or the Rules or bye-laws consistently and that too after directions having issued. Undisputedly this is the first occasion or incident where the petitioners have passed the resolution per majority obviously under the impression of providing succor to an employee who was already working in the Society and who had put in long number of years of service and had ensured that Society in question earned profits, which swayed in their mind for promoting him contrary to the provisions of the Act, Rules and bye-laws of the fourth respondent Society namely ignoring the minimum qualification prescribed for appointment of Chief Executive Officer under Rules. However, second respondent could have taken a lenient view after considering their reply, if any, offered in this regard. In the light of reply to the show- cause notice having been submitted by the petitioners on 15.04.2019 through their learned counsel, this Court is of the considered view that matter requires to be remitted back to the second respondent for the limited purpose of examining of imposing lesser period for disqualifying the petitioners from conducting election to fourth respondent Society by keeping in mind observations made hereinabove.
For reasons above stated, I proceed to pass the following:
ORDER (i) Writ petitions are allowed in part.
(ii) The order dated 14.05.2019 passed by second respondent in No.AR 39/DDS/Dispute/ Disqualification-14/2018-19 (Annexure-C) and order dated 08.08.2019 passed by the first respondent in Appeal No.DRY:DAP:03/2019-20 (Annexure-F), in so far as disqualifying the petitioners under Section 29-C(8)(b)(c)(d) stands confirmed only to the extent of disqualifying them. However, with regard to the period of five years imposed on them, is quashed and matter is remitted back to the second respondent to re-consider the prayer of petitioners for imposing lesser period by keeping in mind reply submitted by them to the show cause notice and observations made hereinabove. Said exercise shall be undertaken by the second respondent expeditiously and at any rate, within one week from today.
Registry is directed to furnish the operative portion of the order to the learned High Court Government Pleader, forthwith.
Cm/-
SD/- JUDGE