Kerala High Court
Thankachan Zacherias vs State Of Kerala on 25 September, 2014
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN
WEDNESDAY, THE 24TH DAY OF MAY 2017/3RD JYAISHTA, 1939
WP(C).No. 34598 of 2015 (Y)
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PETITIONER(S)/PETITIONER:
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THANKACHAN ZACHERIAS,
AGED 58 YEARS, S/O.T.J.ZACHERIAS,
CHARTERED ACCOUNTANT, KANNADY THUNDIYIL,
NORTH OF BISHOP'S PALACE,CHANGANACHERRY,
KERALA-686101.
BY ADVS.SMT.SABINA JAYAN
SRI.R.RAJASEKHARAN PILLAI
RESPONDENT(S)/RESPONDENTS:
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1. STATE OF KERALA,
REPRESENTED BY ITS SECRETARY CO-OPERATIVE
DEPARTMENT,GOVERNMENT SECRETARIAT,
THIRUVANANTHAPURAM-695012.
2. THE JOINT REGISTRAR OF
CO-OPERATIVE SOCIETIES(GENERAL),
KOTTAYAM,COLLECTORATE.P.O,KOTTAYAM-686002.
3. THE CHANGANASSERY CO-OPERATIVE URBAN BANK LTD.,
NO.3195,REPRESENTED BY THE GENERAL MANAGER,
COLLEGE ROAD,CHANGANACHERRY-686101.
R1-R2 BY SENIOR GOVERNMENT PLEADER SMT.MARY BEENA JOSEPH
R3 BY ADVS. SMT.SARITHA THOMAS
SRI.P.KRISHNANKUTTY NAIR (KOLLAMALA)
SMT.T.MANASY
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD
ON 04-04-2017, THE COURT ON 24-05-2017, DELIVERED THE
FOLLOWING:
SKG
WP(C).No. 34598 of 2015 (Y)
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APPENDIX
PETITIONER(S)' EXHIBITS
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P1 TRUE COPY OF THE ORDER NO.0/6368/14/K.DIS DATED 25.9.2014
OF THE 2ND RESPONDENT AND IT'S ENGLISH TRANSLATION
P2 TRUE COPY OF THE ORDER NO.G.O.(RT)NO.645/2015/CO.OP.DATED
21.10.2015.
RESPONDENT(S)' EXHIBITS
----------------------- NIL
/TRUE COPY/
P.S. TO JUDGE
SKG
ANU SIVARAMAN, J.
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W.P(C).No. 34598 of 2015
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Dated this the 24th day of May, 2017
JUDGMENT
This writ petition is filed with the following prayers:
"i. issue a writ of certiorari or other appropriate writ order or direction calling for the records leading to Exhibit P2 and quash the same as unconstitutional, arbitrary, illegal and without application of mind.
ii. declare that the amended or byelaw No.28 of the 3rd respondent is not in consonance with Sec.28AA of the Co-operative Societies Act or the RBI circular dated 1.7.2010."
2. It is submitted that the 1st respondent State introduced an amendment to the Kerala Co-operative Societies Act by incorporating Sec.28AA as per the notification in Kerala Gazette dated 28.4.2010 to the effect that there shall be two elected members who are proficient in banking, auditing and financing etc. It is provided therein that the committees in office shall not be affected by the amendment. The professional qualification and experience has been described in the explanation provided under the section. The 3rd respondent Bank, erroneously comprehending professional qualification included law graduates which is not permissible either by the section or by the master guidelines issued by the Reserve Bank of India for WP(C).34598/15 2 the smooth and efficient function of Urban Co-operative Banks. The Bank's amendment of bye-law No.28 was impugned before the 2nd respondent himself by the petitioner who passed Exhibit P1 order cancelling the said order retrospectively with effect from the date of its approval and registration. Against the said order of retrospective cancellation, the Bank approached the Government and the Government passed Exhibit P2 order misunderstanding the term 'committee' as that of the Society or Bank and set aside Exhibit P1 order. The petitioner is aggrieved by Exhibit P1 order.
3. Heard learned counsel for the petitioner, learned Senior Government Pleader and the learned counsel appearing for the 3rd respondent.
4. Section 28AA of the Kerala Co-operative Societies Act, 2010 (for short, 'the Act') as amended by Act 7 of 2010 reads as follows:
"28AA: RESERVATION FOR PERSONS WITH BANKING EXPERIENCE OR PROFESSIONAL QUALIFICATION IN THE COMMITTEES OF URBAN CO-OPERATIVE BANKS- Notwithstanding anything contained in the byelaws of any Urban Co-operative Bank, there shall be reserved not less than two seats in the committees of such banks for members who WP(C).34598/15 3 possess experience in banking or professional qualifications.
Provided that this section shall not be applicable to the committees of Urban Co-operative Banks constituted prior to the commencement of the Kerala Co-operative Societies (Amendment Act) 2010.
Explanation:- For the purpose of this section.
(i) "members who possess experience in banking"
means members who are or were in paid service of a commercial bank, State Co-operative Bank, District Co- operative Bank and Urban Co-operative or a Service Co- operative Bank in the managerial cadre.
ii. "Professional qualifications" means membership in the Institute of Chartered Accounts of India or Master's Degree in Business Administration or membership in the Institute of Cost and Works Accountants of India or Master's Degree in Commerce with experience in Banking or experience in the inspection or audit of banks including Co-operative Bank."
5. The relevant portion of the bye-law of the Society as amended could roughly be translated as under:
"28. There shall be thirteen members in the Board of Directors as provided hereunder. One member from the Scheduled caste/Scheduled Tribe, three women members, one member as representative of the members who have deposit of more than Rs.10000/-, one member as the representative from the institutions as stated in Byelaw No.9(f), two members who either possess long experience in the banking or banking WP(C).34598/15 4 accounting and auditing or charted accountants who have considerable experience (Middle Senior Management) or law graduates shall be elected by the members who have voting right along with other board of directors to constitute the 13."
6. The petitioner, a member of the Society objected to the registration of the bye-law on the ground that it is not in conformity with Section 28AA of the Act, which was the purported reason for the amendment. By Exhibit P1 order, the Joint Registrar held that the amendment proposed in the bye- laws was not in conformity with the provisions of the Act and therefore cancelled the registration already granted for the bye-laws with effect from 17.8.2011. An appeal was preferred by the Bank before the Government. The Government, by Exhibit P2, held that Section 28AA of the Act is not applicable to committees of Urban Co-operative Banks constituted prior to the commencement of the Kerala Co-operative Societies (Amendment) Act, 2010. It is stated that since the Bank was established in 1951, Section 28AA would have no application. It is further stated that the 3rd respondent being a Bank governed by Section 56 of the Banking Regulation Act, it would be bound by the circulars issued by the Reserve Bank of India and WP(C).34598/15 5 therefore the bye-law amendment in tune with the Reserve Bank of India circulars is valid and is liable to be registered.
7. The learned counsel appearing for the 3rd respondent contended that Section 28AA of the Act was incorporated in the Act by Amendment Act, 2010 to give effect to the introduction of Chapter IXB to the Constitution of India by the Constitution 97th Amendment Act. It is therefore contended that since the Gujarat High Court struck down the said amendment in so far as it introduces Chapter IXB, the introduction of Section 28AA of the Act also ceases to be effective. It is further stated that Section 28AA in so far as it is not in conformity with Article 243ZJ(3) of the Constitution of India would be hit by Article 243ZT and would therefore be inoperable. On facts also, it is contended that there is no member with the qualification as stated in Section 28AA available and since the election to the Managing Committee had been conducted on 5.8.2014 in accordance with the amended bye-law as registered on 17.8.2011, the cancellation of the registration would render the election vitiated.
8. I have considered the contentions advanced. The 3rd respondent is a Co-operative Society registered under the WP(C).34598/15 6 Kerala Co-operative Societies Act, 2010. The Act, as amended in 2010, is squarely applicable to the 3rd respondent. The validity of the Constitution 97th Amendment Act has no application in the instant case, since what is being considered is the validity of an amendment to the bye-laws registered on 17.8.2011 before the enactment of the Constitution 97th Amendment Act.
9. It is trite law that the bye-laws of a Co-operative Society do not have any overriding effect over the provisions of the Act and the Rules. While it may be open to the Society to contend that the inclusion of other professionals in the committee in terms of RBI circulars does not offend the provisions of the Act, it is abundantly clear that after the insertion of Section 28AA in the Act by amendment in 2010, no committee could be constituted without complying with the requirement of the said Section. The registration of the bye-law amendment was found to be bad by Exhibit P1 order because it was contended by the Society to be amendment in tune with Section 28AA. The Joint Registrar held that the amendment to the bye-law is not in tune with Section 28AA.
10. I am now called upon to decide the legality of the WP(C).34598/15 7 order of the Government in Exhibit P2. Exhibit P2 proceeds on the basis that all Societies registered before 28.4.2010 are exempted from complying with the requirement of Section 28AA of the Act. This is a clearly erroneous premise, since only committees constituted before 28.4.2010 stand exempted from the requirement of Section 28AA of the Act.
11. Moreover, the reasoning that an urban bank being governed by the provisions of the Banking Regulation Act, need not comply with the provisions of the Kerala Co-operative Societies Act as amended is a totally fallacious one, since, if that be the case, the argument would essentially be that such Society would be exempted from the provisions of the Act requiring registration of amendment to it's bye-laws as well. The Constitution of the Committee of a Co-operative Society in Kerala being subject to the provisions of the Act and Rules, it is beyond doubt that the provisions of the said Act and Rules are clearly to be complied with in such matters. The validity of Section 28AA of the Act not being the subject matter of challenge and the amendment to the Constitution not being a legal issue available for consideration in these proceedings, the contentions on those aspects need not be gone into. WP(C).34598/15 8
12. I am of the considered opinion that both the reasons stated in Exhibit P2 order for interfering with the order of the Joint Registrar are legally unsustainable. Exhibit P2 order is therefore set aside.
The writ petition is ordered accordingly.
ANU SIVARAMAN JUDGE vgs