Karnataka High Court
M.L. Nagaraj vs State Of Karnataka on 13 April, 1994
Equivalent citations: ILR1994KAR1588, 1995(1)KARLJ576, 1995 A I H C 3117, (1995) 1 KANT LJ 576
JUDGMENT Shivappa, J.
1. These three matters pertain to the Nurserymen Co-operative Society Limited, Lalbagh, Bangalore. In these Petitions the order of supersession, election to the Board of Directors and inclusion of new members to the Society are under challenge.
2. Since common questions of law and facts arise in these Petitions they are clubbed and heard together and common Order is passed.
3. The facts in brief are :-
The Nurserymen Co-operative Society Limited, Lalbagh, Bangalore (hereinafter referred to in short as 'Society') has got State-wide jurisdiction to promote nursery to safeguard the interest of nurserymen and seedsmen and also to promote and encourage development of Horticulture and nursery business in the State. The Society had only 57 members initially who were all professional men who fulfilled the conditions of Bye-law which reads as under: -
"The membership of the Society shall be open only to those who are by profession nurseryman and seedsman in the State and such a person has to file an application for membership in the prescribed form recommended and approved by the Board of Directors."
4. The number of Board of Directors who were initially eight was enhanced to 12. The election to the Board of Directors was scheduled to be held on 24.12.1991 in the General Body Meeting. When the General Body Meeting was in progress, respondent No. 3 informed the members that the Committee of Management has been superseded and in its place the Joint Registrar has been appointed as Administrator and consequently the election was postponed. The Notification issued by the Returning Officer is produced as Annexure-'B'.
5. A show-cause notice was issued by 2nd respondent pointing out certain commissions and omissions, as per Annexure-'C'. The Board of Management answered all the averments as per Annexure-'D'. Inspite of their reply, respondents have taken action, superseding the Board of Management on the date of election. That action of supersession has been questioned on the grounds that the action is arbitrary, illegal and politically motivated. It is also contended that the order is not a speaking order and that it suffers from non-application of mind. It is further contended that one of the Board of Directors of the Society is the Deputy Registrar of Co-operative Societies as a Government nominee on the Board and at no point of time he raised dissent note regarding commissions and omissions. In every meeting accounts were placed and it was approved and the Government representative was a party to each and every act. It is their specific case that the Board has not committed any act warranting interference of the Government and contended that the order of supersession on the date of election amounts to circumventing the democratic process in motion. A revision was filed before the first respondent. The first respondent confirmed the order of supersession. It is also contended that in view of the impugned order of supersession, they are prevented from discharging their duties and they have made allegations that the Administrator is likely to admit persons who do not qualify the requirements and have sought for restraining the Administrator from admitting any new members and also for quashing the order, Annexure-'E' dated 23.12.91 passed by the 2nd respondent and the order, Annexure-'F' dated 20.4.1992 passed by the first respondent and a Mandamus to hold the General Body Meeting and election from the stage it was intercepted.
6. This Court on 1.7.1992 observed that the impugned order is prima-facie not one passed with due application of mind and suffers from non-consideration of the explanation offered by the petitioners and further observed that there is a total lack of reasonable reason evidencing the application of mind as to why the explanation is not accepted, and suspended the operation and execution of the order passed by respondent No.2 vide Annexure-'E' superseding the Committee of Management of the Society and appointing the Joint Registrar of Co-operative Societies as Administrator and permitted to proceed with the General Body Meeting and election process from the stage it was intercepted. Later, on 20.1.1992 this Court passed an order observing that the question of staying the order does not arise as the order has already been given effect to and vacated the order earlier granted, but, ordered for an early hearing. When the matter stood thus, the Administrator enrolled more than 150 persons as members of the Society and issued calender of events to hold the election. The petitioners in W.P.No. 40409/93 sought for a direction to quash the calender of events, Annexure-'A' dated 3.11.93 issued by respondent No.3 and sought for stay of election scheduled to be held on 29.11.93. This Court granted the interim order of stay.
7. It is contended in W.P.40409/93 that the Administrator deliberatly, inspite of the pendency of W.P.No. 16378/92, has taken law unto his hands and has enrolled the new members, which act is opposed to the Bye-law of the Society and that those persons enrolled by the Administrator have no locus-standi to participate in the election.
8. As per Bye-law 15, the membership of the Society is open to only those who are by profession nursery man and seedsman in the State. As per Bye law 16 all applications shall be placed before the Board for a decision to admit a person as member of the Society. The Board may either admit or reject the application. But in the event of rejection it shall be intimated in writing to the applicant and those persons who are enrolled shall be duly notified.
9. Under Bye-law 45, the Board of Directors shall consist of 15 Directors as follows:-
"1) One shall be the nominee of the Registrar of Co-operative Societies;
2) One shall be the nominee of Financing Bank;
3) One shall be the ex-officio President;
4) Twelve shall be elected from members among themselves including one SC/ST candidate and one woman."
The Board elected by the General Body Meeting shall hold office for three Co-operative years till another Board is elected and it is this Board of Directors as per Bye-law 15(g) read with Bye-law 53 has to approve and dispose of the applications for membership.
10. In the instant case, it is the grievance of the petitioners in W.P.Nos. 16378/92 and 40409/93 that the Administrator appointed under Section 30 of the Act has the powers of the Committee and can discharge such of the functions which the Committee in law can discharge, but he cannot exercise the powers which the General Body alone can exercise under the Act. There is vast distinction between the Board of Directors of the General Body and the Committee constituted under the Bye-laws. The Administrator is just a stop-gap-arrangement to continue the day to day administration and not meant to take policy decisions.
11. The learned Counsel for the petitioners invited my attention to a Decision of this Court reported in 1989(2) KLJ 17 Puttegowda v. Dy. Register of Co-operative Societies and contended that the impugned order of supersession is passed without considering the explanation offered by the petitioners in regard to each allegation made in the show-cause notice and no reasons are assigned for rejecting the explanation offered to each of the allegations and they have been rejected by generalisation that the allegations have been proved and consequently the order is devoid of reasons and it is a non-speaking order.
12. Further, the learned Counsel for the petitioners contended that fresh calender of events was not necessary for holding the election, if once this Court comes to the conclusion that the order of supersession is bad and the election which was intercepted earlier has to be continued from the stage it was intercepted and on this proposition he relied on a Decision of this Court reported in 1979(1) KLJ 371 Hanumanthegowda v. B.D.O. paragraph (4).
13. The learned Counsel for the respondents contended that this Court cannot act as a Court of Appeal and reappraise the facts which lead to the making of an order of supersession. This contention is unfounded, because, there is non-consideration of the explanations and the order suffers from want of reasons and non-application of mind.
14. The Point that arises for Consideration is whether the election has to be held from the stage it was intercepted excluding the new members enrolled during the pendency of the Writ Petitions or whether it should be held as per the calender of events which is the subject matter of W.P.No. 40409/93 permitting the new members to participate in the election?
15. Ultimately, it is for the General Body of Members of the Society to decide with whom they will deal and who should be associated with if the principle of co-operation is to bear its fruitful results to the advantage of the majority of the members and for this purpose it is well within the jurisdiction of the General Body of the Society to take into consideration the antecedents of the person applying for membership of the Society. It is for the majority of the members of the General Body to act within its rights either to admit or to decline membership to the applicants, because, admission of a person as member of the Society must promote the object keeping in view the deservingness of the applicant. It is common knowledge that healthy growth of co-operative societies is primarily dependent on mutual trust among others. If majority of members do not have a trust in the member, the best thing for everybody is that that person stays out, It is true while on the one hand an institution like a co-operative society should not be allowed to be exploited by influential persons to form a caucus, it is equally necessary that elements considered undesirable by overwhelming majority of persons should not be foisted on unwilling members to destroy the homogenity of the organisation by which the very basis of co-operative effort will be put in jeopardy. It is well within the jurisdiction of the General Body of the Society to take into consideration the relevant criteria prescribed in the Bye-law to seek admission.
16. This Court directed the Counsel who represented the Society to produce the applications filed by various persons before the Administrator seeking membership. Under Clause 15(b) of the By -law of the Society a person who seeks admission shall have an area minimum of (half an) acre of own land converted into a Horticultural Nursery, provided that in the case of Nurseries located within the Municipal or Corporation limits; such minimum area is at least 1/4 of an acre. A glance of the applications and the particulars produced shows that there was no proper enquiry on the requirement to be fulfilled to become a member. The persons who are ineligible and who do not possess necessary qualification are entertained as members. The Administrator who enrolled the new members has acted without proper verification regarding the eligibility of the persons who sought membership.
17. Section 26 of the Karnataka Co-operative Societies Act reads thus:-
"(1) Subject to the provisions of this Act, the rules and the bye-laws, the final authority of a Co-operative Society shall vest in the general body of members;"
18. Even under Bye-law 53 it is the Board of Directors who have the power to dispose of the applications for membership.
19. In T.RAMEGOWDA vs.R.KRISHNAMURTHY AND ORS. the Supreme Court has held that the Administrator continued for a limited purpose and he has no authority to enroll members and declared that there is no justification to insist for holding election with new members as those members were admitted by the Administrator without authority of law.
20. Since the Administrator has enrolled new members without verification, which act is without authority of law and he has exercised the powers of the Board of Directors the answer has to be in the negative in the sense that the new members enrolled by the Administrator has no authority to participate in the election. Then the other question would be whether the order of supersession is sustainable. Since, there is non-consideration of the explanations offered by the Board of Management and there is non-application of mind to the explanations offered, the order of supersession is unsustainable and the same is not a speaking order, then the only irresistable conclusion is that the election has to be held from the stage it was intercepted in W.P.No. 16378/92. Therefore, it is ordered that the order of supersession is bad in law and without proper consideration of the explanations and the same is liable to be set aside. Accordingly, it is set aside.
21. The new members enrolled by the Administrator is without authority of law and in utter disregard to the Bye-laws of the Society and they have no right to participate in the election. Since the order of supersession is declared invalid, the election has to be conducted from the stage it was intercepted at the earliest opportunity. The members who are enrolled during the pendency of the Writ Petition shall not participate in the election and the Administrator shall notify the election with fresh calender of events and hold the election with the members who were then in existence when W.P.No. 16378/92 was filed. The General Body or the Board of Directors elected by the General Body shall consider the application of the new members enrolled by the Administrator keeping in view the criteria or the eligibility contemplated under Bye-law 15 and dispose of their application in accordance with the Bye-law after due consideration.
21. Thus, W.P.Nos. 16378/92, 39724/92 and 40409/93 are allowed.
22. Parties to bear their own costs.