Andhra HC (Pre-Telangana)
Addagiri Gopal, S/O.Kristappa vs The State Of Andhra ... on 4 March, 2016
Equivalent citations: AIR 2016 (NOC) 639 (HYD.)
Author: M.S. Ramachandra Rao
Bench: M.S. Ramachandra Rao
THE HONOURABLE SRI JUSTICE M.S. RAMACHANDRA RAO
WP.No.33312 of 2014
04-03-2016
Addagiri Gopal, S/o.Kristappa. Petitioner
The State of Andhra Pradesh,Represented by its Principal Secretary, and
others....Respondents
#The Dharmavaram Co-operative Town Bank Limited, Dharmavaram Town, Rep. by its
Secretary. Petitioner
$The Andhra Pradesh Co-operative Tribunal, Rep. by its Secretary, Vijayawada,
Krishna District.Respondents
Counsel for the petitioner: Sri P. Veera Reddy, Senior Counsel appearing
for petitioner in W.P.No.33312 of 2014; and
Sri Karanam Ramesh, counsel for petitioner in
W.P.No.2785 of 2015.
Counsel for respondents: the learned Government Pleader for Co-
operation for respondent nos.1 to 3 in
W.P.No.33312 of 2014 and 2nd respondent in
W.P.No.2785 of 2015;
Sri Hemendranath Reddy, counsel for
respondent nos.4 and 5 in WP.No.33312/2014
Counsel for 4th respondent: None
<GIST:
> HEAD NOTE:
? Cases referred
1. AIR 1982 SC 756
2. 2015 (1) SCC 533
3. AIR 1974 AP 49 (DB)
4. (2007) 1 SCC 732
5. (1973) 1 SCC 633
6. AIR 1967 AP 291
7. AIR 1977 SC 747
THE HONOURABLE SRI JUSTICE M.S. RAMACHANDRA RAO
WP.No.33312 of 2014 and 2785 of 2015
COMMON ORDER:
Since the subject matter of these two Writ Petitions is related, they are being disposed of by this common order.
2. W.P.No.33312 of 2014 is filed by petitioner therein seeking a declaration that the inaction of respondent nos.1 to 3 in taking action against respondent nos.4 to 5 therein under the provisions of the Andhra Pradesh Co-operative Societies Act, 1964 (for short, the Act) for willfully disobeying the order dt.26.07.2014 of the Deputy registrar of Co-operative Societies/3rd respondent therein in A.R.C.No.1 of 2013 is illegal, arbitrary and seeking consequential orders. The petitioner in W.P.No.33312 of 2014 is arrayed as 3rd respondent in W.P.No.2785 of 2015.
3. W.P.No.2785 of 2015 is filed by the petitioner therein challenging the order dt.26.07.2014 of 3rd respondent in A.R.C.No.1 of 2013.
4. The Dharmavaram Co-operative Town Bank Limited is a Society registered under the Act. It is the 5th respondent in WP.No.33312 of 2014 and petitioner in WP.No.2785 of 2015.
5. For the sake of convenience, the petitioner in W.P.33312 of 2014 is hereinafter referred to as the petitioner and the petitioner Bank in W.P. 2785 of 2015 will be referred to as the Bank.
6. The petitioner is a director of the Managing Committee of the said Bank and he was elected as such in the elections held on 12.08.2012. The term of the Managing Committee is for five years and ends on 11.08.2017. The number of shareholders in the Bank is ten thousand. It has twelve directors in all.
7. On 07.10.2013, a show-cause notice was issued by the Bank to petitioner alleging that he had deliberately not attended the meetings of the Managing Committee held on 13.09.2013, 20.09.2013 and 03.10.2013 in spite of the fact that notices were issued to him to attend the said meetings by not receiving the said notices. It was also alleged that on 20.09.2013 after a General Body meeting was held, he had given a statement to Mee TV news channel in the premises of the Bank that the Bank will become bankrupt and the depositors should take back their deposits. It was further alleged that this was telecast was made not only on 29.09.2013 but also on 30.09.2013 and thereby acted detrimental to the interests of the Bank. It was also alleged that on 26.09.2013 itself the petitioner had withdrawn a sum of Rs.12,63,913/- which he had deposited in the Bank by closing his deposit and crediting it to his Savings account. The petitioner was asked to show-cause why he should not be removed as a Director of the Bank for these acts within fifteen (15) days from the date of receipt of the notice.
8. An explanation was submitted by the petitioner by registered post acknowledgment due on 30.10.2013 to the said show-cause notice denying the said allegations. He denied that he acted adverse to the interest of Bank at any point of time. He contended that he had attended the board meetings and General Body meeting whenever notices were served on him but no notice was served on him informing about the Board meetings on 13.09.2013, 20.09.2013 and 03.10.2013. He denied that he intentionally avoided to receive the notices to attend on the above dates and had not attended the said meetings. He also denied that he had commented in the Mee TV channel in a manner causing damage to the activities of the Bank. Lastly, he contended that he had kept money in the Bank for his personal use and whenever necessity arose he was withdrawing money for his personal use. He denied that in order to create confusion in the General Body meeting and to inspire depositors to withdraw their deposits, he credited his deposited amount to his Savings bank account.
THE RESOLUTION OF THE MANAGING COMMITTEE
9. However, a resolution was passed by the Managing Committee of the Bank on 15.11.2013 rejecting his explanation. It held that he failed to attend the three Managing Committee meetings consecutively on the above dates even though the notices of the said meetings were sent to him in time and no reason had been assigned by him for not attending the said meetings. It also recited that the petitioner, with an intent to diminish the reputation of the Managing Committee of the Bank, made adverse propaganda through Mee TV channel stating that the Bank had gone bankrupt, created fear in the minds of depositors and he had also withdrawn his deposits prematurely in order to make the depositors believe that the Bank is not sound. It further recorded that although he was asked to give an explanation, he did not give any explanation and therefore he is disqualified as a Director as per law and that the 4th respondent in W.P.No.2785 of 2015 is co-opted in his place as a Director. THE GENERAL BODY RESOLUTION THEREAFTER
10. It is not disputed that the resolution passed on 15.11.2013 was placed before the General Body of the Bank on 23.03.2014 and is alleged to have been approved or ratified by it by passing a resolution unanimously.
THE ORDER OF THE DEPUTY REGISTRAR UNDER SEC.61 OF THE ACT
11. Thereafter, the petitioner filed a petition under Section 61 of the Act before the Deputy Registrar of Co-operative Societies, Dharmavaram Town, Anantapur District (i.e., 3rd respondent in W.P.No.33312 of 2014 and 2nd respondent in W.P.No.2785 of 2015) challenging the resolution dt.15.11.2013 passed by the Bank.
12. Before the Deputy Registrar, the petitioner examined himself as PW.1 and marked Exs.A.1 to A.7 and the Bank examined RWs.1 and 2 and marked Exs.B.1 to B.17.
13. After considering the oral and documentary evidence placed before him, the Deputy Registrar set aside the resolution dt.15.11.2013 of the Managing Committee of the Bank disqualifying the petitioner from Directorship of the Bank and co-opting the 4th respondent in W.P.No.2785 of 2015 in his place.
14. In his order, the Deputy Registrar held that notice of the meetings should be served on the Board of Directors as per the provisions of the Act either in person or by registered post acknowledgment due, but notices for the meetings held on 13.09.2013, 20.09.2013 and 03.10.2013 were tried to be served on petitioner by courier service, which is not permitted by the Act. He further held that only six out of twelve Directors attended the said meeting; that the quorum was seven; that there is therefore no quorum; and the meetings held on these three dates were not validly constituted meetings. He further held that even for passing the resolution dt.15.11.2013 there was no quorum. He therefore held that petitioner did not suffer from any disqualification or cessation under Section 21-B of the Act.
15. In this proceeding, the order of the Deputy Registrar does not disclose that the point that petitioner made certain statements before the Mee TV channel adverse to the interests of the Bank was argued by the Bank. Also, no evidence in support of the said plea was marked before the Deputy Registrar.
THE PROCEEDINGS BEFORE THE CO-OPERATIVE TRIBUNAL
16. This order was questioned by the Bank in O.A.No.70 of 2014 before the Andhra Pradesh Co-operative Tribunal at Vijayawada under Section 76(1) of the Act.
17. Before the Tribunal, neither party adduced any evidence.
18. The Tribunal dismissed the appeal confirming the findings of the Deputy Registrar. It also held that under Rule 23-B of the Rules framed under the Act, the Chief Executive or the senior-most employee or the President or a person authorized under a bye-law of a Society shall send notice of a Committee meeting to the Members of the Committee either by personal service or registered post acknowledgment due; that in this case, notice was sent to petitioner personally on 07.09.2013 requesting him to attend the meeting on 13.09.2013, but as per endorsement of the Bank staff, marked as Ex.B.2, it was returned that petitioner refused to receive the notice and to attend the meeting; and thereafter, notice of this meeting was sent by courier dt.10.09.2013 which is also said to have been rejected on 11.09.2013 as per Exs.B.3 and B.4. The Tribunal held that the Bank staff examined as RW.2 stated that personal service as well as courier service was rejected by petitioner, but as per the Act only personal notice or service through registered post is contemplated and no notice had been issued by registered post acknowledgment due to petitioner. It held that courier service is not permitted by the Act. It also held that Section 21-B was inserted in the Act to throw out disinterested Members from the Managing Committee who did not evince interest in the affairs of the Society by remaining absent from the meetings of the Managing Committee regularly, but if a meeting convened had been adjourned without transacting any business either for want of quorum or for any other reason or if no notice of such meeting was served on the Members, such meetings should be excluded and not counted against a Member to disqualify him. It held that notices to conduct meetings on 13.09.2013 and 20.09.2013 were not served within time and there was no valid service of the notice on petitioner. It also held that in the meetings conducted on 13.09.2013 and 20.09.2013 there was no quorum since there were only six Directors who attended them. It further held that as per the procedure prescribed in the Act information must be given to the Registrar of Co-operative Societies by a President and Secretary of a Society about the absence of any Member from three consecutive meetings of the Managing Committee and his cessation as a Member under Section 21-B, and the Registrar would then, after recording his satisfaction that the Member had failed to attend the meetings, inform the Member and also the Society about his cessation; after such order is passed, Member has a right to apply to the Committee with a copy to the Registrar for reinstatement within fifteen (15) days from the date of intimation; and it is the General Body which is the ultimate authority under Section 30 which can remove the Committee Members but not the Managing Committee. It held that when the petitioner failed to attend the three consecutive meetings allegedly, it was incumbent on the Bank to report to the Registrar about this fact, but no such report has been sent by Registrar, and the Managing Committee itself passed the cessation order which is not permissible and it violated provisions of Section 21-B and Section 30 of the Act. It held that the Bank, even prior to the General Body resolution, removed the petitioner from the membership of the Managing Committee and co-opted the 4th respondent in W.P.No.2785 of 2015 in his place as a Committee Member, and since the three Committee meetings were not held validly, the petitioner did not suffer any disqualification. It held that the conclusion of the Deputy Registrar was correct and the award was rightly passed in favour of petitioner against the Bank and there is nothing to interfere with the Order passed by the Deputy Registrar.
19. Before the Tribunal, although a contention appears to have been taken in the grounds of appeal that the Deputy Registrar did not take cognizance of the activities of petitioner which was damaging the reputation of Bank, i.e., making a statement before the Mee TV channel adverse to the interests of Bank, this point does not appear to have been argued.
20. Challenging the order dt.21.01.2015 in O.A.No.70 of 2014 passed by the Tribunal, W.P.No.2785 of 2015 has been filed by the Bank.
21. The petitioner in W.P.No.33312 of 2014 however filed the said W.P.No.33312 of 2014 to implement the order passed by the Deputy Registrar on 26.07.2014 in A.R.C.No.1 of 2013.
22. Heard Sri P. Veera Reddy, Senior Counsel appearing for petitioner in W.P.No.33312 of 2014, the learned Government Pleader for Co-operation for respondent nos.1 to 3 in W.P.No.33312 of 2014 and 2nd respondent in W.P.No.2785 of 2015, Sri Hemendranath Reddy, counsel for respondent nos.4 and 5 in W.P.No.33312 of 2014; and Sri Karanam Ramesh, counsel for petitioner in W.P.No.2785 of 2015. None appeared for 4th respondent in W.P.No.2785 of 2015 even though notice in this Writ Petition has been served on him. CONTENTIONS OF THE BANK
23. It is the contention of the Bank that the decision of the Deputy Registrar in A.R.C.No.1 of 2013 has no legal validity because in that proceeding what was questioned by petitioner is a resolution of the Managing Committee dt.15.11.2013 declaring the petitioner as having ceased to be a Member or Director of the Managing Committee which would not come into effect unless the decision of the Managing Committee was ratified by the General Body. According to counsel for the Bank, since petitioner had not questioned the General Body resolution dt.23.03.2014 which ratified the decision of the Managing Committee, there is no question of implementing the decision of the Deputy Registrar as confirmed by the Tribunal. According to counsel for the Bank, the resolution passed by the General Body on 23.03.2014 approving/ratifying the resolution passed by the Managing Committee dt.15.11.2013 continues to remain in force, and therefore, the award of Deputy Registrar setting it aside is inexecutable and void ab initio. He further contended that the findings of the arbitrator as well as the Tribunal about the non-service of notice on petitioner of the meetings on 13.09.2013, 20.09.2013 and 03.10.2013 in accordance with the statute, is not correct and that petitioner had deliberately refused to receive notices sent through R.W.2 to him in person, that he cannot take advantage of the fact that service through courier is not permitted under the Act. According to counsel for the Bank, notices of all the three meetings were sent through an attender much in advance of the said meetings and petitioner had refused to receive them; and so courier service was resorted to since there was no postal service on account of Samaikhya Andhra movement at that point of time. He also contended that the Tribunal as well as the Deputy Registrar failed to decide about the statement given by petitioner to the Mee TV channel against the interests of the Bank even though the point was raised by the Bank.
CONTENTIONS OF THE PETITIONER
24. These contentions were refuted by Counsel for petitioner. He contended that the concurrent findings of fact by the Deputy Registrar and the Tribunal that no notice of the 3 meetings was served on petitioner cannot be interfered with under Art.226 of the Constitution of India. Once the petitioner did not receive the notices for those 3 meetings, the action of the Managing Committee in disqualifying him on that ground is null and void and the ratification of that decision by the General Body is of no effect and is also null and void. Therefore there is no necessity to challenge the resolution of the General Body. THE CONSIDERATION BY THE COURT
25. The plea that there was Samaikya Andhra movement and postal service was not available and that was why courier service was resorted to by the Bank to serve notices on petitioner to attend the 3 meetings, had not been advanced by the Bank either before the Deputy Registrar or before the Tribunal.
26. As regards the plea that notices were sought to be served through attender of the Bank on petitioner for these three meetings and petitioner refused them is concerned, although the Bank had examined R.Ws.1 and 2 in support of the said plea before the Deputy Registrar, in the cross-examination of the attender who was examined as R.W.2, it was suggested to him that he never went to the house of petitioner and he had made the endorsements as per the direction of the Chief Executive Officer of the Bank (which suggestion was denied). This witness also did not state that on account of Samaikya agitation the postal service was not functioning and that was why courier service had to be resorted to. The possibility of the attender acting as per directions of the Chief Executive Officer cannot be ruled out.
27. The Deputy Registrar as well as the Tribunal had considered the oral and documentary evidence on record and came to the conclusion that there was no proper service of notice on petitioner in the manner prescribed by Rule 23-B and did not accept the plea of Bank that personal notice was sought to be made on petitioner and petitioner had refused to receive the notices to attend these three meetings.
28. Both the Deputy Registrar and the Tribunal have held that Rule 23-B requires service of notice of meetings on the Directors/Members of Managing Committee in person or by registered post acknowledgment due and notice was not sent by registered post acknowledgment due to petitioner for these three meetings. Therefore, this finding of fact rendered by the Deputy Registrar at the first instance as well as the Tribunal on appeal cannot be said to be perverse since it is based on appreciation of evidence and the said finding is therefore confirmed by this Court.
29. It is settled law that findings of fact rendered by statutory authorities on appreciation of evidence cannot ordinarily be interfered with under Article 226 of the Constitution of India unless such findings are perverse or based on no evidence, and this Court would not re-appreciate the evidence like the Court of Appeal and come to a different conclusion on the issue. (See Babu v. Deputy Director of Consolidation and Krishnanand v. Director of Consolidation )
30. Coming to the plea of Bank that petitioner had not questioned the resolution dt.23.03.2014 of the General Body ratifying the decision of Managing Committee on 15.11.2013 that petitioner ceased to be a Member of the Managing Committee of the Bank is concerned, if notices of the three meetings have not been served on petitioner in the manner prescribed under the Act and the Rules framed thereunder, there is no question of invoking Section 21-B at all by the Managing Committee.
31. That apart, both the Deputy Registrar and the Tribunal have held that for these three meetings there was no quorum. Rule 23 (2) of the Rules framed under the Act specifies the quorum to be majority of the total members of the Committee. Since the number of Members of the Managing Committee of the Bank is twelve, the majority would be seven. The Deputy Registrar categorically held that there were only six Directors out of 12 directors present for the meetings held on 13.09.2013, 20.09.2013 and 03.10.2013, and these were not therefore validly constituted meetings. The Tribunal has held that for the meetings held on 13.09.2013 and 20.09.2013, there was no quorum. Therefore, these two meetings have not been validly held.
32. Although the counsel for Bank contended that the meetings even without quorum has to be considered to be valid meetings in the eye of law, the said contention is without any merit in view of the Division Bench judgment of this Court in S. Seetha Ramaiah Naidu v. Ongole Co-operative Bank Ltd. and another . In that case, while dealing with the provision of the very same Act, the Division Bench held that if there is no quorum there cannot be a valid meeting and that the quorum is the foundation for the validity of a meeting. The Bench observed that since the provision would deprive an elected Member of a seat to which he is elected, it has to be interpreted only as a validly constituted meeting. The Bench observed that a meeting can be said to be a meeting only when members meet for the purpose of discussing and deciding something for which the meeting is called, and if that purpose cannot be achieved because of lack of requisite minimum number of members, it does not constitute a valid meeting. It held that for the purpose of disqualifying a Director of the executive body of a Co-operative Society on the ground that he did not attend three consecutive meetings of the Board, a meeting which was adjourned for want of quorum and which then never took place cannot be taken into account for counting three consecutive meetings.
33. Thus, it has to be held that there was no validly constituted meeting on 13.09.2013 and 20.09.2013. Therefore, the absence of petitioner in these two meetings cannot be taken into account at all for the purpose of disqualifying him as a Director. Therefore, the very decision dt.15.11.2013 of the Managing Committee of Bank cannot be said to be a valid decision in law and, in fact, has to be construed as a nullity and one without jurisdiction since the jurisdictional facts necessary to take the said view were absent.
34. In Arun Kumar v. Union of India , the Supreme Court declared:
74. A jurisdictional fact is a fact which must exist before a court, tribunal or an authority assumes jurisdiction over a particular matter. A jurisdictional fact is one on existence or non-existence of which depends jurisdiction of a court, a tribunal or an authority. It is the fact upon which an administrative agencys power to act depends.
If the jurisdictional fact does not exist, the court, authority or officer cannot act. If a court or authority wrongly assumes the existence of such fact, the order can be questioned by a writ of certiorari. The underlying principle is that by erroneously assuming existence of such jurisdictional fact, no authority can confer upon itself jurisdiction which it otherwise does not possess.
75. In Halsburys Laws of England, it has been stated:
Where the jurisdiction of a tribunal is dependent on the existence of a particular state of affairs, that state of affairs may be described as preliminary to, or collateral to the merits of, the issue. If, at the inception of an inquiry by an inferior tribunal, a challenge is made to its jurisdiction, the tribunal has to make up its mind whether to act or not and can give a ruling on the preliminary or collateral issue; but that ruling is not conclusive.
76. The existence of jurisdictional fact is thus sine qua non or condition precedent for the exercise of power by a court of limited jurisdiction....
35. It followed its earlier decision in Raza Textiles Ltd. v. ITO , where it had laid down as under :
3. ... ...No authority, much less a quasi-judicial authority, can confer jurisdiction on itself by deciding a jurisdictional fact wrongly.
The question whether the Jurisdictional fact has been rightly decided or not is a question that is open for examination by the High Court in an application for a writ of certiorari. If the High Court comes to the conclusion, as the learned Single Judge has done in this case, that the Income Tax Officer had clutched at the Jurisdiction by deciding a jurisdictional fact erroneously, then the assessee was entitled for the writ of certiorari prayed for by him. It is incomprehensible to think that a quasi-judicial authority like the Income Tax Officer can erroneously decide a jurisdictional fact and thereafter proceed to impose a levy on a citizen. In our opinion, the Appellate Bench is wholly wrong in opining that the Income Tax Officer can decide either way.
36. If the very recommendation of the Managing Committee in its resolution dt.15.11.2013 is void, there is no question of ratification of the same.
37. A Division Bench of this Court in Mohd. Dilawar ali v. Andhra Pradesh Muslim Wakf Board and others has held that there cannot be ratification of illegal and void orders by the competent authority. In that case, services of an employee of the Wakf Board were terminated by a Committee consisting of one Board Member and some outsiders. It was ratified by the Wakf Board. This was questioned before the High court. A learned Single Judge dismissed it on the ground that the order of the administrative committee of the Wakf Board was ratified by the Board, and therefore, the appellant was not entitled to relief. He questioned the same before the Division Bench. The Division Bench held that the committee which originally passed the termination order consisted of only a Member of the Board and four outsiders and was not in conformity with the statutory provisions. It held that such a committee had no jurisdiction to entertain applications for appointment nor did it have power to terminate the services of existing employees, and so it had no legal sanction and lacked even the initial jurisdiction and every act of it is ab initio void. It held that even if the Wakf Board had directed to terminate the services of the appellant, it cannot be said that by ratifying the act of the administrative committee, it had rendered the said termination valid. It held that the decision of administrative committee, on account of ratification, did not become the decision of the Board itself, and that the ratification by the Board of illegal or void orders cannot confer upon it the statutory sanction, which it did not possess. It held that such ratification cannot amount to exercise of powers under the statute which contemplates decision to be of the Board itself and not ratification by the Board of a decision of an unauthorized or incumbent body or authority.
38. This principle has also been reiterated in Mysore State Road Transport Corporation v. Mirja Khasim Ali Beg and another . Conductors working in the Road Transport Department of the erstwhile State of Andhra Pradesh were allotted to the new State of Mysore on re-organization of the State, but their employment as conductors was continued in the depots which became part of the Mysore Government Road Transport Department. On coming into force of the State Re-organization Act on 01.11.1956, they were to be deemed to have been appointed with effect from that date to the posts held by them on that date by the appropriate authority in the new State of Mysore. Such authority under the Act would be a person holding the rank of General Manager of the Mysore Government Road Transport Department. They were dismissed from service by the Divisional Controller who was not head of that Department, i.e., not the General Manager, who was the Head of the Mysore Government Road Transport Department. It was contended that this dismissal had been confirmed by the General Manager of the Mysore Government Road Transport Department, and therefore, the Divisional Controllers order was proper. This contention was rejected by the Supreme Court which held that the original order of dismissal of the conductors was one without jurisdiction and was void and inoperative as it was in violation of Article 311 (1) of the Constitution of India. Therefore, the order passed on appeal by the General Manager cannot cure the initial defect.
39. In the present case, since the very notices of the meetings on those three dates had not been served on petitioner and since there was also no quorum for meetings held on 13.09.2013 and 20.09.2013, neither the Managing Committee can recommend petitioners disqualification under Section 21-B nor can the General Body ratify the same. Any ratification of the void order of the Managing Committee by the General Body is equally void and inoperative in the eye of law.
40. Having regard to the above findings that the notice of the three meetings was not served on petitioner in accordance with the procedure prescribed under the Act, and there was no quorum for atleast two of those meetings, the disqualification of petitioner under Section 21-B by the Managing Committee of the Bank or its ratification by the General Body are void ab initio.
41. Consequently, I do not find any merit in W.P.No.2785 of 2015, and it is accordingly dismissed.
42. So the Bank has no choice but to implement the order passed by the Deputy Registrar in A.R.C.No.1 of 2013 as confirmed in O.A.No.70 of 2014 before the Andhra Pradesh Co-operative Tribunal. Therefore, W.P.No.33312 of 2014 is allowed, and the Bank which is impleaded as 5th respondent therein is forthwith directed to give effect to the said orders. No order as to costs.
43. As a sequel, miscellaneous petitions pending if any in these Writ Petitions, shall stand closed.
__________________________________ JUSTICE M.S.RAMACHANDRA RAO Date: 04-03-2016