Punjab-Haryana High Court
Raikot Co-Operative Marketing-Cum ... vs State Of Punjab And Ors. on 21 May, 1987
Equivalent citations: AIR1988P&H77, AIR 1988 PUNJAB AND HARYANA 77, (1988) 2 CURLJ(CCR) 245, (1987) 5 REPORTS 181, (1988) 24 CO-OP LJ 176, (1988) 1 LANDLR 493, (1988) 1 REV LR 422, 1988 COOPTJ 505, 1987 PUNJ LJ 448, (1991) 70 COMCAS 601, ILR (1988) 1 P&H 424, (1988) ILR 1 P&H 424
JUDGMENT D.S. Tewatia, J.
1. These three writ petitions (C.W.P. No. 6264; C.W.P. No. 6350 and C.W.P. No. 6859 of 1986) project a common question of law of considerable importance as to whether the General Body of the Co-operative Society or its Managing Committee, or-in the case of the suppression of the Managing 'Committee, the Administrator is competent to appoint a Member to represent the Society in the apex Society of which the given society is an institutional Member. These petitions are, therefore; disposed of by a common judgment. Reference to facts wherever necessary having a bearing on the aforesaid proposition of law shall be taken from civil Writ Petition No. 6264 of 1986.
2. The Punjab State Co-operative Supply & Marketing Federation, Limited ("Markfed" for short) is an apex body of which the Cooperative marketing-cum Processing Society, Limited and Co-operative Agricultural Service Society, Limited; being the primary societies, are its institutional Members. The election of such directors of the Board of Directors of Markfed; as were to be elected by the Member Societies mentioned above had been fixed for 25th November; 1986. The Member Societies, which were to elect the said Directors had been grouped into 10 Zones. The Registrar; co-operative Societies, while approving the election programme reserved two Zones, namely Zone 9 and Zone 10 for the election of the Directors out of the Co-operative marketing Societies alone. Zone 9 comprised 53 Co-operative Marketing. societies falling. in Districts Amritsar, Gurdaspur; Jullundur, Kapurthala, Hoshiarpur and Ropar and Zone 10, comprised of 74 Co-operative marketing. societies spread over. Districts Bhatinda; Sangrur, Faridkot, Ferozepore, Ludhiana and Patiala. In zone 9 as many 50 societies were run by the Administrators; instead of by their Managing Committees; Whereas in Zone 10 as many as 60 societies were under the Administrators. In district Patiala; a11 the 13 Co-operative Marketing societies were said to be under the Administrators; that in terms of sub-s. (2) of S. 19 Punjab Co-operative Societies Act, 1961(hereinafter called the Act'), the Member of Primary Society, who was to represent the society In the election of the Directors of the Board of Directors, Markfed had either been nominated by the Managing Committee of the Member Society or the Administrator, functioning in place of the Managing Committees and not by the Society, i.e. by the General Body of the Society.
3. It is further alleged in the petition that only society in its General Body Meeting could appoint one of its Members to represent it in the ejection to the Board of Directors of the Markfed by virtue of the provisions of sub-s. (2) S. 19 of the Act. Therefore, the action of the Managing Committee or the Administrator in appointing a, Member to represent the Society in the said election is void ab initio and such Members are not entitled to take part in voting.
4. In the written statement filed on behalf of Markfed, respondent 4, it is averred that any challenge to the election at a time when nomination papers stood filed is belated; that the election program. had been advertised on 17th September, 1986, in English, Urdu and Punjabi newspapers and zonal-list of share-holders (Member Society) had been exhibited in Markfed Office and the office of the District Headquarters along with notice of election; that Sh. Jaswant Singh, who had been authorized in file the petition by the petitioner-Raikot Co-operative Marketing-cum-Processing Society, Limited; was himself. candidate from Zone l0 and he was estopped from filing the petition; that from zones 4, S and 8, the candidates had been' declared elected unopposed within the meaning of the Election rules contained in Appendix 'C' of the Punjab Co-operative Societies Rules, 19963(hereinafter called 'the Rules') and that their election had not been challenged in the election petition; that any procedure defect in the electoral process is saved by the provisions of S. 29. of the Act; that the Managing Committee of the Member Society was competent to nominate one of the Members of the Society to represent the said Society in the election of the Director of the Board of Directors; that in the absence of the Managing Committee, the Administrator in:. his capacity as such in view of the provisions of S. 27 of the Act; the rules and the bye-laws, was competent to nominate a Member of the Society to represent the said Society in the aforesaid election.
5. Bye-law 6 of the Markfed provides that the membership of the Federation shall be open to Supply Co-operative Societies and those Co-operative Societies engaged in marketing and processing of Agricultural and allied produce and Government, Bye-law 16 of the Markfed provides that the management of the affairs of the Federation shall vest in a Board of Directors, which inter alia shall comprise of 10 representatives of Member society to be elected on zonal-basis by dividing the area of operation in to 10 Zones.
6. Section 19, sub-section (2) of the Act, which is in the following terms, provides for appointment of one of its members to vote on its behalf in the affairs of another Cooperative Society of which it is a Member:
"S. 19(2): Notwithstanding anything contained in sub-s. (1), a co-operative society which is a member of another co-operative society may, subject to the rules, appoint one of its members to vote on its behalf in the affairs of that other society."
Perusal of sub-s. (2) of S. t9 of the Act would show that it is the Co-operative Society which is authorised to appoint one of its Members. The question, therefore, that falls for consideration is as to what is the import and meaning of the expression "Co-operative Society".
7. Clause (c) of S. 2 of the Act defines the "Co-operative Society' as meaning a Society register or deemed to be registered under this Act.
8. The above definition obviously renders no help in the quest for the meaning of the expression "Co-operative Society". There can, however, be no dispute about the fact that the Co-operative Society is different from the Committee which has been defined by clause (b) of S, 2 of the Act, as meaning the governing body of the Co-operative Society, by whatever name called, to which the management of the affairs of the Society is entrusted. Section 23 of the Act, which is in the following terms, gives an indication that the general body of Members of the Cooperative Society is synonymous with the Co-operative Society.
"S. 23. Final authority in a co-operative society--(1) The final authority in a cooperative society shall vest in the general body of members:
xxxx xxxx xxxx xxxx "Section 23 of the Act in clear terms tells us that the authority and power that vest in the Co-operative Society in terms vest in the general body of Members of that Society, that is the power and authority of the Cooperative society is to be exercised by the general body of its Members.
9. The perusal of sub-s. (2) of S. 19 of the Act, however, envisages that the action of the Cooperative Society in terms of said subs. (2) is subject to the Rules. Section 85 of the Act provides for the framing of the Rules by the Government to carry out the purposes of the Act. Clause (iv) of sub-s. (2) of S. 85 of the Act, which is in the following terms, authorizes the Government to specify the matters in respect of, which the Society may or shall make bye-laws:--
"S. 85. Rules.-(I) The Government may, for any co-operative society or class of such societies, make rules to carry out the purposes of this Act.
(2)... ... ... ...
(iv) the matters in respect of which the society may or shall make bye-laws and for the procedure to be followed in making, altering and abrogating bye-laws and the conditions to be satisfied prior to such making, alteration or abrogation."
10. Clause (1) of R. 8 of the Rules, which is in the following terms, specifies powers and duties of the committee as one of the topics regarding which the Society can frame bye-laws:
"Rule 8. Subject-matter of bye-laws--(S. 85(2)(2)(iv))(1) A co-operative society shall make buy-laws in respect of the following matter:--
... ... ...
(1) powers and duties of the committee and the officers of the co-operative society; and ... ... ...
11. By-law 28 of the Model Bye-laws of the Cooperative Agricultural Service Society, Limited (hereinafter referred to as 'the Model Bye-laws') provides that unless otherwise provided in these bye-law, the ultimate authority in all matters, relating to the administration of the Society shall vest in the General Body.
12. Bye-law 29 of the Model Bye-laws provides that without prejudice to the general provisions of the preceding bye-laws, the general body shall have the 'following powers and duties:--
(i) the election of the Managing Committee in accordance with the procedure laid down in the Act; Rules and these bye-laws;
(ii) the consideration of the annual report of the Society, its audited balance sheet, profit and loss. account, trading account and the it inspection notes;
(iii) disposal of profits;
(iv) amendment of bye-laws;
(v) transaction of any other business with the permission of the Chairman of the General Body.
13. Bye-law 38 of the Model Bye-laws, the relevant portion of which is in the following terms, spells out the powers and duties of the Managing Committee:
"38. The Managing Committee shall exercise all the powers and discharge all the duties of the society, except those reserved for General Body, subject to any regulations or restrictions duly laid down by the society in General Meeting or in the bye-laws:
... ... ...
14. A combined reading of Bye-laws 28, 29 and 38 of the Model Bye-laws, read with Clause (1) of R: 8 of the Rules, Clause (iv) of sub-s. (2) of S. 85 and sub-s. (2) of S. 19 of the Act would show that the Managing Committee would be entitled to exercise all the powers and discharge all the duties of the Society except those reserved for general body, subject to any regulations or restrictions duly laid down by the society in a general meeting or in the bye-laws. Bye-law 29 of the Model Bye-laws provides the powers and duties, which are specifically reserved for the general body of the Society.
15. Perusal of Bye-law 29 of the Model Bye-laws would show that appointment of a Member to represent the Society in the affairs of another Society is not mentioned. By virtue of the provisions of Bye-law 38, a11 such powers end functions that are not enumerated by Bye-law 29 have to be performed and exercised by the Managing Committee. There can be thus no manner of doubt that the Managing Committee of this Society (which are Members of the Markfed) were competent to appoint in terms of sub-s. (2) of S.19 of the Act a Member of that Society to represent that Society in the election of the Director of the Board of Directors of Markfed
16. To the similar effect are the corresponding Bye-laws of the Co-operative Marketing-Cum-Processing Society, Limited (hereinafter referred to as the Society's Bye-laws). The relevant Society's Bye-laws are reproduced below:
Bye-law 27.
"Unless otherwise provided in these bye-laws the ultimate authority in all matters relating to the administration of the society shall vest in the General Body."
"Bye-law 28: Without prejudice to the general provisions of the preceding bye-law, the General Body shall have the following powers and duties:--
(i) the election, suspension, and removal of the elected members of the Managing Committee;
(ii) the consideration of the annual report of the society, its audited balance sheet and profit and loss account and the inspection notes;
(iii) disposal of profits;
(iv) the fixing of maximum credit limit of the society consistent with these bye-laws, subject to the approval of the Registrar;
(v) amendment of by-laws;
(vi) expulsion of members;
(vii) transaction of any other business with the permission on the Chairman of the General Body."
"Bye-law 29: All business discussed or decided at a general meeting shall be recorded in a proceeding book which shall be signed by the Chairman of the meeting."
"Bye-law 36: The Managing Committee shall exercise all the powers and discharge all the duties of the society except those reserved for General Body subject to any regulations or restrictions duly laid down by the "Society" in a general meeting or in the by-laws."
17. Mr. G. S. Sandhu, Advocate, for the petitioners, has referred us to a judgment of Chinnappa Reddy, J. (as he then was) reported in (1969) 5 Co-op LJ 12(Andh Pra)(relevant excerpt from which was reproduced in the petition), wherein his Lordship had observed that "Society" means the general body of the Society and not the Board of management.
18. There is no dispute with the aforesaid interpretation of the expression "Society". The question that here arises for consideration is as to whether the general body of the Society is to exercise the functions of the Society or the Managing Committee can also do so. In the light of the statutory provisions of the Act, the rules and the bye-laws, the conclusion is inescapable that the Managing Committee is entitled to act for the Society in areas which are not specifically reserved for the Society to act.
19. The important question that now survives for consideration is as to whether the Administrator of the Society, who administers the affairs of the Society, on suppression of the Managing Committee of the Society can also exercise like the Managing Committee the powers and functions of the General Body of the Society.
20. Sub-section (3) of S. 27 of the Act, which is in the following terms, provides that the Administrator shall have powers inter alia to perform all or any of the functions of the committee:
"S. 27. Removal or suspension of committee or member thereof.-
(1) ... ... ...
(2) ... ... ...
(3) The Administrator so appointed shall, subject to the control of the Registrar and to such instructions as he may from time to time give, have powers to perform all or any of the functions of the committee or of any officer of the society and take all such action as may w be required in the interest of the society."
... ... ...
21. Perusal of sub-s. (3) of S.27 of the. Act would show that the Administrator would be competent to exercise all or any of the powers of the Managing Committee. We have already held that the Managing Committee can exercise the powers and function's of the Co-operative Society envisaged by sub-s. (2) of S. 19 of the Act. Consequently, the Administrator too by virtue of the provision of sub-s. (3) of S. 27 of the Act would be entitled to appoint a Member of the Society in terms of sub-s. (2) of S. 19 of the Act.
22. The insinuation in the petition, which was particularized in Para 4 thereof, and which was reiterated by Mr. G. S. Sandhu, Advocate, for the petitioner, during arguments, that the large number of the Societies had been put under, the Administrators with a mala fide reason to get such persons nominated as representatives of the given Societies in terms of sub-s. (2) of S. 19 of the Act, as were to toe the line of the ruling party, has not only been denied but facts stated in the written statement on behalf of respondents 1 and 2, would show that the insinuation, in question is without any foundation and basis. While replying to Para 4 of the petition, it is mentioned that in Zone 9, only six nominations were sent up by the Administrator, meaning thereby that with regard to only six Societies, the representatives had been nominated by him in terms of sub-s. (2) of S. 19 of the Act and regarding Zone 10, only 13 representatives had been nominated by the Administrator.
23. In view of the above, we are not satisfied in this case that there had been any deliberate attempt to appoint Administrators of the Societies; having an eye.. on the impending elections of the Board of Directors of Markfed.
24. If this Court is convinced that a large number of Societies had been put under the Administrators at a time when the elections to the Markfed, in question were looming large on the horizon, then this Court may unhesitatingly hold that there has been abuse of power on the part of the concerned authorities and may quash the election on that ground because mala fides and fraud vitiate everything.
25. Power is a trust. It is to be exercised to advance the public interest; and we trust that like any other power, this power of appointing Administrators too would be exercised in that spirit.
26. Mr. O. S. Sandhu, next urged that the Zones had not been framed equitably. It was contended that whereas Amritsar Zone had 350 Members, Ferozepore had only 183 Members. In our view, it is a matter for the concerned authority, which is authorised to frame the Zones. It has to see administrative convenience and other matters. It is expected that it would divide the operational area of the Markfed in 10 Zones in a manner that as far as possible each Zone has nearly equal number of Members. Flagrant disparity of numbers between one Zone and the other is likely to excite suspicion, which the concerned authority would do well to avoid.
27. For the foregoing reasons, we find no merit in the se writ petitions (C.W.P. No, 6264; C. W.P. No. 6350 and C. W.P. No. 6859 of 1986) and dismiss the same, with no order as to costs.
28. Petitions dismissed.