Election to Co-operative Societies, whether it should be conducted or not, is the issue on which many questions of law are raised before this Court under the Kerala Co-operative Societies Act, 1969 [for short “the Act]. That is the bone of contention here too; manifested in a different manner.
2. The Managing Committee of the Cheranalloor Service Co-operative Bank Ltd. [hereinafter referred to as the “respondent-Bank”] had eleven members in the Managing Committee, one for each ward; the area of operation being divided into such wards as per the bye-laws. The present Managing Committee's term is coming to a close and the out-going Committee was concerned with the amendments brought to Section 28A of the Act, which, by Act 7/2010, mandated reservation of three of the total seats for women members and by the very same Amendment Act brought in sub-section (1C) to Section 28, reserving one seat to the members having a deposit of Rupees ten thousand and above. The present Managing Committee already had reserved one seat for women. To comply with the statutory mandate, two additional seats were required for accommodating the reserved seat of additional woman members, making the total strength of the Managing Committee to 13. The Depositor's constituency was adjusted from the constituencies already existing.
3. To enable such additional seats to be provided for, in the Managing Committee, the Committee constituted a special general body meeting on 23.03.2014, in which meeting the resolution to increase the wards to 13 was passed. On such resolution being passed to amend the bye-laws, changing the demarcation of the wards, it required registration under the Act, by Section 12, which was granted on 11.06.2014. While so, on 27.09.2014, a resolution was taken by the Managing Committee of the Bank to conduct the election to the society on 30.11.2014. At that juncture, one member, who was presumably aggrieved with the manner in which the special general body meeting was convened, approached this Court with W.P.(C).No.9156 of 2014, wherein a representation filed, produced as Exhibit P2 therein, was sought to be disposed of. The Certificate of Registration granted by the Registrar on 10.06.2014 and the order by which the representation at Exhibit P2 was rejected were also assailed. Relief was also sought to declare the special general body meeting convened on 23.03.2014 as illegal and violative of Sections 13A, 29(1)(cd) and 30 of the Act. The said writ petition was filed on 27.03.2014. In fact, subsequent to approaching this Court, the petitioner therein had also filed an appeal before the Government under Section 83(1)(j) of the Act.
4. On 01.10.2014, in the appeal filed under Section 83 (1)(j), a stay was granted. The Bank then approached this Court with W.P.(C).No.26410 of 2014, producing the resolution at Exhibit P1 and the stay order at Exhibit P5; assailing the interim order and challenging the maintainability of the appeal itself. The Managing Committee also, took another resolution on 14.10.2014 to conduct the election on 30.11.2014 itself, produced at Exhibit P7 as per the un-amended bye-laws; to 11 constituencies. Considering the stay order of the Government, the Bank decided to include the two additional women nominations and depositor's nomination in the general wards. No action was taken on the same by the Election Commission. Some members moved two separate writ petitions, numbered as W.P.(C).Nos.27493 of 2014 and 27765 of 2014, seeking immediate action by the Election Commission on the second resolution. Hence, while W.P.(C).Nos.26410 of 2014, 27493 of 2014 and 27765 of 2014 support the amendments and also seek for expeditious conduct of elections, the petitioner in W.P.(C).No.9156 of 2014 seeks interdiction of elections till a decision is arrived at in the appeal filed under Section 83(1)(j) of the Act.
5. The reference to the petitioners shall be, the Bank and the persons who seek conduct of elections; and the party respondents would be, the petitioner in W.P.(C).No.9156 of 2014, who is impleaded in W.P.(C).No.26410 of 2014 as the 5th respondent and the other respondents.
6. I have heard Sri.P.N.Mohanan, Sri.B.S.Swathi Kumar, Smt.Anu Sivaraman, learned counsel, in support of the petitioners; Sri.M.M.Monaye appearing for the President of the Board of Directors and Sri.P.P.Jacob and Sri.R.Sudhish, learned counsel appearing for the contesting party respondents. The learned Special Government Pleader Sri.D.Somasundaram sought to sustain the action of the Election Commission, which were deprecated as mala fide by the petitioners. Sri.D.Somasundaram also assisted this Court in resolving the issue.
7. The petitioners primarily contend that an appeal is not maintainable under Section 83(1)(j) of the Act against the registering of the amendment to the bye-laws and that the appeal filed, in any event, is delayed. The contentions are raised on the ground that Section 83(1)(b) specifically provides for an appeal from an order refusing to register an amendment and the legislature having not thought it fit to include a registration specifically, the general/residuary clause cannot take in such instance of a registration. The remedy, according to the learned counsel for the petitioners, against the registration of the bye-law would only be under Section 69 of the Act, before the Arbitration Court. The learned counsel would place three decisions to support this contention - J.K.C.S.&W.Mills v. State of U.P. [AIR 1961 SC 1170], CTO v. Binani Cements Ltd. [(2014) 8 SCC 319
and Kutty Haji v. State of Kerala [2008 (3) KLT 1004]. To buttress the contention, that no appeal lies, the petitioners rely on Lakshmanan v. V.C.I.Co- op. Society [1981 KLT 779]. On the question of delay, since sub-section (2) of Section 83 provides only sixty days and no specific power has been conferred on the appellate authority to condone delay, the appeal filed outside the period of limitation is argued to be not maintainable. Reliance is placed on Prasad v. State of Kerala [1992 (2) KLT 531] and Calicut City Service Co- op. Bank v. State of Kerala [2008(3) KHC 917]. Section 28A being a non- obstante clause, it is argued that it was expedient on the general body to have complied with the reservation, to which end the ward demarcation was altered in the bye-laws. Gopinathan Nair v. Senior Inspector of Co- op. Societies [1986 KLT 1269] is placed in support of the said contention. The resolution passed does not in any manner prejudice the party respondents and hence, the appeal would be of no consequence, is the contention raised based on the principle in Rajendra Singh v. State of M.P. [AIR 1996 SC 2736].
8. The learned counsel for the party respondents, however, would take a contention that the entire case built up by the petitioners is on the premise that the appeal is from the registration, of the bye-law, by the Joint Registrar. That, according to the learned counsel, is a wrong understanding of facts, since one of the party respondents had filed an application before the Registrar to rescind the resolution under Rule 176 of the Kerala Co-operative Societies Rules [for brevity “the Rules”], referred to in W.P.(C).No.9156 of 2014 and the same was rejected by an order dated 13.06.2014. The appeal was from that order of 13.06.2014 and it would definitely come within the ambit of clause (j) of sub-section (1) of Section 83, is the contention. In the appeal and the writ petition, the challenge against the resolution to make amendment to the bye-laws is on the ground that the party respondents who had convened the meeting had in fact taken an objection to the convening of a special general body meeting, for the purpose of passing such a resolution. According to the counsel, such a resolution can be taken only in a general body meeting and no special general body meeting can be convened and if convened, such a decision cannot be taken.
9. The learned counsel appearing for the petitioners then would put across the decision of the Hon'ble Supreme Court in State of T.N. v. K.Shyam Sunder [(2011) 8 SCC 737] to contend that what cannot be done directly cannot be done indirectly and when a registration of a resolution is appealable only under Section 69 of the Act, none can move for rescinding of a resolution and then take up an appeal from that order; challenging in effect the registration made in an appeal under Section 83.
10. There can be no controversy as to from which order the appeal is from. Exhibit P4 produced in W.P.(C).No.26410 of 2014 shows that the appeal is from the order dated 13.06.2014. The question of prejudice caused or lack of it, cannot be urged successfully, since any member could challenge the resolution, made in any meeting of the society appropriately, if the same is illegal, de hors any prejudice caused personally to him.
11. The aspect of delay is also not significant, since the order assailed in appeal is dated 13.06.2014. The appeal is seen dated 14.08.2014. The appellants in the memorandum itself states that they received the impugned order by ordinary post on 21.06.2014. The period provided for filing an appeal is sixty days as per Section 83(2). No ground can be successfully urged on the ground of delay. Hence, what is to be considered first is, the question of maintainability of the appeal.
12. Section 83(1)(b) reads as under:
“83. Appeals to other authorities:- (1) An appeal shall lie under this section against, xxx xxx xxx (b) an order of the Registrar made under sub-section (4) and (6) of Sec.12 refusing to register an amendment of the bye-laws of a society;
xxx xxx xxx”
Sub-section (6) of Section 12 is no more in the statute book, nor is it relevant in the above case. Sub-section (4) of Section 12 speaks of refusal to register an amendment by the Registrar, which order has to be communicated, together with reasons thereof. Sub-section (3) of Section 12 deals with a situation where the Registrar has to forward, to the society, a copy of the registered amendment with a certificate of registration. Hence, when the legislature has taken note of the refusal alone under sub-section (4) and provided an appeal for the same under Section 83(1); quite conscious of the power to grant registration under sub-section (3), but omitting to include it, it should be deemed that such registration was sought to be excluded from the purview of Section 83. Sub-clause (j) of sub-section (1) of Section 83 cannot be said to take in, what was specifically excluded, by the legislature, in the earlier part.
13. In this context, Section 69 of the Act has to be looked at. Section 69, again a non- obstante clause, speaks of resolution of disputes inter alia between a member and the society and non-monetary disputes are to be specifically taken up before the Co-operative Arbitration Court under Section 70A and the monetary disputes before the Registrar. “Dispute” is defined under Section 2(i) as, any matter touching upon the business, constitution, establishment or management of a society capable of being a subject of litigation. Section 28 empowers the general body of a society to constitute a Committee for a period of five years in accordance with the bye-laws and entrust the management of the affairs of the society to such Committee. Hence, the constitution of a Committee would come within the ambit of the definition of “dispute”. The amendment made, demarcating the wards within the are of operation of the Society, touches upon the root of the constitution of the Society itself. When a member raises such a dispute against a society, definitely it has to go before the Co-operative Arbitration Court and cannot be challenged by an appeal provided under Section 83.
14. The appeal purportedly is from an order passed under Rule 176 of the KCS Rules. It has been held that Rule 176 is an inbuilt safeguard to protect the larger interest of the Society and the Registrar is competent to rescind a resolution, but only when any of the ingredients in the Rule is satisfied. In the present case, the Registrar has been conferred with the power to register an amendment of the bye-law by Section 12. The power to register is conferred under sub-section (3) and a refusal too is contemplated under sub-section (4). Hence, there cannot then be a power to rescind a resolution, after the amendment has been registered; which would amount to a review; which power the Registrar lacks.
15. This Court would have ordinarily relegated the party respondents, to the alternate remedy. Though delayed, benefit of Section 14 of the Limitation Act, 1963 could be claimed. A writ petition on the very same grounds is admitted and pending here, regarding the illegality of the resolution passed. The expediency of conducting an election in the context of the present Committee's term expiring on 05.12.2014 cannot also be ignored by this Court. There is not much of factual disputes to be resolved. The questions of law, whether the amendment of the bye-law can only be considered in a general body meeting convened under Section 29(1)(cd) and whether the Managing Committee is incompetent to convene a special body meeting, are the only grounds raised in the appeal as also in the writ petition.
16. Admittedly 152 members were present at the special general body meeting and there are 33000 members in the Bank. There is no dispute with respect to the quorum for a general body meeting under the bye-laws; which is admittedly satisfied on the members present and voting on 23.03.2014. The large number of members existing, is hence, of no significance. There is also no dispute on the aspect that the resolution was passed. A reading of the minutes of the meeting would definitely indicate that the petitioner in W.P.(C).No.9156 of 2014 had raised an objection that, it is illegal to consider such a resolution in a special general body meeting. But, it is also evident from the minutes book that, on consideration of the particular item, there was unanimous approval of the amendment proposed with respect to the demarcation of wards; to the proposed 13, which was passed as item No.4933(5). Neither does the appeal nor W.P.(C).No.9156 of 2014 challenge the demarcation of wards as such. The specific contention is that the passing of the amendment in a special general body meeting is violative of Sections 13A, 29(1)(cd) and 30 of the Act read with Rule 36 of the Rules.
17. Section 13A mandates the bye-laws to be consistent with the provisions of the Act and Rules. The amendment proposed and passed was definitely to that end. Section 29 speaks of annual general body meeting and mandates a general body meeting of a society to be held, within a period of six months, of the close of the financial year, for any of the purposes enumerated in clauses (a) to (e). Clause (cd) is the amendment to bye-laws. But for the stipulation of holding a general body meeting within a period of six months from the close of the financial year, there is no mandate that an amendment to the bye-laws can be made only in such general body meeting. No mandate is also discernible that such amendment to bye-laws can only be made in an annual general body meeting.
18. Section 30 of the Act speaks of special general body meeting, a reading of which does not indicate that an amendment of the bye-law is prohibited, to be placed or passed in such a meeting. The specific contention of the party respondents is that the Managing Committee cannot convene such a meeting by itself; other than on a requisition from the Registrar or from such number of members or a proportion of the total number of members, as may be prescribed. A reading of sub-section (1) of Section 30 does not lead to such an interpretation. The Committee of a society is authorised to call for a special general body meeting of the society at any time and shall also be obliged to call for such meeting when a requisition is received from the Registrar or a number of members as prescribed, in the Rules. The prescription in Rule 36 of the Rules is only to the effect that when a requisition is received from the Registrar or 1/5th of the total number of members, a special general body meeting shall be convened within a period of one month, from the date of receipt of such requisition.
19. As to the convening of a special general body meeting by the Managing Committee itself, that is also a General Body Meeting. In fact while the annual general body meeting is convened with only seven days notice, a special general body meeting has to be convened with 30 days notice; as provided for in the bye-laws. Such prescription was definitely followed in convening the special general body meeting on 23.03.2014.
20. To sum up, it cannot be found from the specific provisions pointed out by the party respondents, that an amendment to the bye-laws cannot be brought out only at a general body meeting. Neither can it be said that the amendment now brought about in the special general body meeting was not one which could be placed in a special general body meeting. The special general body meeting, in any event, is a general body meeting; but is categorised as “special”, as distinguished from an Annual General Body; and is provided for, to get over contingencies taking into account the expediency of a situation, where the Society has to decide on something which could only be decided by the General Body. Such a meeting also is required to be convened on the requisition of the Registrar or 1/5th of the members.
21. The party respondents contend that the Bank had sufficient time to make the amendments, since the amendment itself was bought out in 2010. All the same it cannot be ignored that, the Government has specifically exempted societies from carrying on the elections only on ward-basis, for various periods and latest by Exhibit P6, produced in W.P.(C).No.26410 of 2014; till 31.12.2014. The objection raised by the learned Special Government Pleader, is on this aspect. True, the mandate to conduct election on ward-basis was exempted for reason of many societies having not specified the wards. But, here is a case where the bye-laws of the Society itself provided for sub-division of wards, is the argument. The Committee, when the amendment was stayed, alertly took a resolution to carry on the election to the 11 constituencies itself; providing from the existing wards, 3 reservation for women and one for the depositors.
22. This is the specific aspect on which extraneous considerations have been alleged on the Election Commission. The petitioners would contend that the second resolution taken by the Managing Committee could, well have been proceeded with by the Election Commission, since this Court had found the non- obstante clause in Section 28A to be a legislative mandate, which overrules the bye-laws and rules in Azeezkutty v. Returning Officer [2008 (4) KLT 165]. However, the learned Special Government Pleader has relied on the decision in Mathai v. State Co- operative Election Commission [2007 (2) KLT 789] to contend that election proceedings can be carried out only in accordance with the bye-laws. When the bye-laws, as in the case of the subject Society, provide for election from specific wards, into which the area of operation has been divided, no election could be carried out in the society without the demarcation of wards into 13 constituencies and such amendment having been stayed by the Government, there could be no elections held at all, is the argument.
23. This Court is not convinced that the said contention is correct. Primarily it is to be noticed that, there is an exemption in operation from Section 28A, till December, 2014. The election date resolved by the Managing Committee with three additional seats would also be eminently possible, especially since the nomination alone; is from the various wards and election of each member is not on the basis of the votes polled by the members of a particular ward. The members of the society cast their votes enmasse, to the candidates nominated in each ward and by the maximum number of votes received by each member, the candidate who has received highest votes in a ward is declared as elected to the Managing Committee. Hence, the decision in Azeeskutty (supra) would be squarely applicable.
24. With respect to Mathai (supra), it is to be noticed that, therein this Court had held that “it is not clear as to whether all the voters together would elect the member from each ward or whether the voters from each ward would select the member to represent their ward” (sic)(para 16). There is no such dispute in the present case. Hence, Mathai (supra) would not be applicable.
25. A similar situation had arisen when for the first time reservation of seats for women and scheduled castes was provided, by Section 28A, introduced in 1985. The challenge made to such reservation was negatived in Gopinathan Nair v. Senior Inspector of Co- op. Societies [1986 KLT 1269]. An ancillary challenge was also made therein to addition of two seats, to comply with Section 28A, raising the strength of the Committee from 11 to 13; without an amendment to the bye-law. A learned Single Judge held so:
“The provisions of the bye-law are swept by the feet, when the statutory provision operates with its full force and effect. No bye-law can overpower the provisions of a statute. As noted earlier, the State mandates the presence of a woman member and a member of the Scheduled Castes/Scheduled Tribes, in the Committee of the Co-operative Society. It is open to the Society to earmark two of the existing seats in the Committee for reservation as contemplated under S.28A, one for the women and one for the Scheduled Castes/Scheduled Tribes. It is equally open to the Society to leave the existing pattern in tact, stipulating for the members to be elected in accordance with the existing procedure, and to provide additionally for the two seats, one for women and one for the Scheduled Castes/Scheduled Tribes. As to which of these courses should be adopted is a matter for the Society to decide. No formal change of the bye-law is visualised for achieving the above object. The Section does not say so. When the Section does not say so, it is not necessary to read into the Section, any cumbersome or additional provision, which will have only the effect of defeating and delaying the implementation of the statutory provision of Section 28A”.
The said view is further fortified by the Hon'ble Supreme Court, declaring that the bye-laws of a Co-operative Society framed in pursuance of the provisions of the statute cannot be held to be law or to have the force of law in Co- operative Central Bank v. Industrial Tribunal, Hyderabad [AIR 1970 SC 245].
26. However, this Court does not find the Election Commission having been swayed by any extraneous consideration. That could also be a possible view and the stay order issued by the Government would definitely inhibit the Election Commission from proceeding with the elections.
27. On the strength of the above findings, it has to be found that the resolution adopted by the special general body meeting, to demarcate the wards to comply with Section 28A reservation cannot be challenged on the allegations raised herein. The demarcation of the wards, as approved by the general body, is upheld. Any factual disputes regarding such demarcation will have to be taken up before the Arbitration Court. However, that need not interdict election. It is, hence, that this Court though having found the amendment, to the bye-laws to be eminently sustainable; looked at the alternate contention with respect to three additional seats being created. Any alteration made in the categorisation of wards would definitely have to be made maintaining the minimum number of 13. Hence, if election to 13 members of the Managing Committee is conducted, even after the election, the additional seats could be adjusted in two of the wards as and when any modification is directed. Even two additional seats to comply with the statutory mandate would not be imperfect or illegal since the statutory rigour prevails over the bye-laws. Neither is nomination based on the demarcation of wards nor is the election of each nominee sought to be confined to the wards alone. It is expedient to maintain the spirit of the legislation, which is the democratic functioning of a Co-operative Society. The rigour of Section 28A definitely mandates two additional reservation and the decision of the general body to increase the number of members by two cannot be assailed at all. Challenge made under Section 69 could only be against the demarcation as such of 13 wards; which could be agitated even after the election.
28. In the above circumstances, there shall be a direction to the Managing Committee of the respondent-Bank, to immediately take a resolution in consonance with the Act and Rules and fix a polling date and forward such resolution to the Election Commission, through the Assistant Registrar/Joint Registrar concerned. The Assistant Registrar/Joint Registrar concerned, who has to approve and forward it, shall treat such matter with all expediency and transmit the same to the Election Commission without any delay. The Election Commission shall also consider and issue the notification expeditiously on receipt of such resolution. Though the Act and the Rules mandate that such resolution has to be taken and election scheduled before the date of expiry of the term of the Managing Committee, an extra-ordinary situation has come to fore in the above case; which require extra-ordinary measures. This is a fit case in which such powers conferred under Article 226 of the Constitution, can be invoked to direct the out-going Managing Committee to fix a date of polling in compliance with the Act and Rules; but even on a date after expiry of its term. It is also made clear that three members of the outgoing Administrative Committee shall be put in office as the Committee members. The Administrative Committee so appointed would not be entitled to take any policy decisions and shall confine their activity to preparation of electoral rolls and handing it over to the Electoral Officer. This Court takes notice of the submission of the learned Special Government Pleader that proceedings under Section 65 has been taken against the Managing Committee members; but, however, it is of no consequence, since merely on such proceedings being taken, the Managing Committee members cannot be kept away from the administration or from participating in the election.
W.P.(C).Nos.26410/2014, 27493/2014 and 27765/2014 are allowed. W.P.(C).No.9156/2014 would stand dismissed. Parties are left to suffer their respective costs.
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Sd/- K.Vinod Chandran Judge ( true copy )