Karnataka High Court
B. Sankappa Rai And Ors. vs Central Registrar Of Co-Operative ... on 5 July, 2004
Equivalent citations: ILR2004KAR4298, 2004(7)KARLJ330, 2005 A I H C 21, 2004 AIR - KANT. H. C. R. 3336
Author: V. Gopala Gowda
Bench: V. Gopala Gowda
ORDER Gopala Gowda, J.
1. These petitions are heard together with the consent of the learned Counsel for the parties.
2. The petitioner in W.P. No. 47473/02 is seeking for issuance of a writ of certiorari to quash the endorsement dated 19.12.2002 rejecting his nomination to contest in the election to the Board of Directors of the 3rd respondent's society (hereinafter called the Society in short); for quashing the calendar of events issued by the 2nd respondent for holding the General Body Meeting of the 3rd respondent and election to the Board of Directors of the Society held on 30.12.2002 and further sought for issuing a writ of certiorari to quash the order at Annexure -B dated 10.5.1999 by which amendment in made to Clause No. 12(a)(3)(d) of the Bye Laws in respect of 'C' Class shares of 3rd respondent.
3. In W.Ps. 764-765/03, the petitioners, in addition to the aforesaid prayers, have further sought for issuing a writ of mandamus directing the Returning Officer and the Society to hold fresh elections to the Board of Directors of the Society and not to exclude any member admitted prior to 10.5.1999 from voting, participating and contesting in the elections on the ground of non payment of enhanced share capital in respect of 'C' category membership.
4. Brief facts for the purpose of appreciating the legal contentions urged on behalf of the parties are stated as follows:-
The petitioners in all these petitions are members of the Multi State Co-operative Society registered under the provisions of the Multi State Co-operative Societies Act, 1964, which is now repealed by the Multi State Co-operative Societies Act, 2002 (hereinafter referred to as the 'Act, 2002' for short). The area of operation of the 3rd respondent society extends to Karnataka and Kerala States, having its principal office at Mangalore, D.K. District. The society has got four category of membership open to the individuals. Prior to the amendment to Bye Law (12) of the registered bye laws of the society fees for membership of 'C' category was Rs. 100/-. The petitioners in these petitions have become members of the society when its share value was of Rs. 100/-.
5. On the basis of the resolution passed by the Board of Directors of the Society an amendment to Bye-law No. 12, the share amount to class 'C' category membership fees of the society was enhanced from Rs. 100/- to Rs. 500/-. As per the amended Bye law Clause 12(3)(d) 'C' category members shall not hold shares of the value exceeding 1/5th of the total share capital of the society. Much reliance is placed upon the following portion of the resolution.
"The member who fails to pay within the time shall not be eligible to exercise the right of vote till the amount required from the member is paid in full. The notice requiring him to pay the increased share value may be sent along with the General Body meeting notice only."
6. The contention urged on behalf of the petitioners is that, the amended bye law, shall not have retrospective effect. If retrospective effect is given, it affects the rights of the existing 'c' category members of the Society. It is further contended that giving retrospective effect to the amended bye law is totally impermissible in law and under the provisions of the Act. Therefore, the learned Counsel for the petitioners has prayed for issuing a writ declaring that the amended bye-law is only prospective.
7. The Society has passed the resolution to conduct election to the Board of Directors on 30.12.2002. Accordingly, the Returning Officer has issued the calendar of events as per Annexure-D in W.P. Nos. 764-765/2003. The petitioners did not pay the enhanced share fee as per the amended bye law. The relevant portion of the General Body Resolution is part of the amendment by way of note, which was accepted by the Registrar of Co-operative Societies. When the petitioners submitted their nomination for contesting in the election to the Board of Directors, which was held on 30.12.2002, their nomination were rejected by the Returning Officer by issuing the endorsement produced at Annexure -A dated 19.12.2002 in the 1st batch of petitions. According to the petitioners the same is in contrary to the provisions of the Act 2002 and the law laid down by the Apex Court in the cases reported in Smt. DAMAYANTI NARANGA v.. THE UNION OF INDIA AND ORS., , I.T. OFFICER, ALLEPPEY v. M.C. PONNOOSE AND ORS., and unreported decisions of this Court in W.P. 32986/1997 dd 20.7.1998 and W.P. 24864/1991 dd. 22.11.1991.
8. Placing reliance on these decision it is contended that right to become a member of a society includes to continue as member of such society under Article 19(1)(c) of the Constitution of India. It is further contended that no power is given to the authority to give retrospective effect. In the unreported decisions of this Court referred to above the same ratio is laid down.
9. The endorsement issued to the petitioners by the Returning Officer have deprived them to contest and participate in the elections. It is stated that the action of the Returning Officer and the Society is contrary to the provisions of the Act and law laid down in this regard. Therefore, petitioners have sought for quashing of the impugned endorsement, to set aside the elections held on 30.12.2002 and to direct the Returning Officer to hold elections without excluding the members who were on the rolls prior to the amendment of the bye law for non payment of the enhanced share fee.
10. It is the further case of the petitioners, that their exclusion and other similarly placed members is not only arbitrary but also illegal and exclusion of their names in the voter's list is bad in law. It is further submitted that the Returning Officer has published the voters' list containing 29,265 members though the total membership of 'C Category was 74,307 thereby he has excluded 60% of the members from voting and participating in the elections. Hence, it is contended that in the eye of law no election was held for the Board of Directors of the Society. It is contended that the amended bye law cannot be enforced against the existing 'C' category members demanding them to pay the enhanced membership fees amount. According to the petitioners, the resolution is contrary to Sections 11 and 12 of the Act of 2002 and the exclusion of the petitioners in the voters' list preventing them either from contesting or participating in the elections is arbitrary and without authority of law. Hence the same is liable to be quashed.
11. It is further contended by the learned Counsel for the petitioners that the action of the society and the Returning Officer is violative of Article 19(1)(c) of the Constitution of India. The counsel contends that the amendment of the bye law should be consistent with the provisions of the Act. It is contended that when a person becomes member of the society after fulfilling the eligibility criteria, it is not permissible for the society or the Central Registrar of the Co-operative Societies to prescribe any other eligibility clauses to the bye-laws with retrospective effect.
12. A detailed statement of counter is filed by respondent Nos. 4 and 5 in WP. 47473/02 who have got themselves impleaded as additional respondents. They are elected as Directors of the Society from 'C' category membership. It is contended that the petitions are not maintainable in law as the petitioners have got an alternative remedy under Section 84 of the Act of 2002. Respondents 4 and 5 have prayed to direct the petitioners to avail the alternative remedy by raising the dispute before the Central Registrar of Multi Co-operative Societies.
13. It is submitted by the learned Counsel Mr. Nataraj, that in the General Body Meeting held on 31.09.1998, a sub-committee was constituted to consider enhancement of the share amount of the members of 'C' category in the interest of the society. On the recommendation of the sub-committee, resolution was passed enhancing the share fee of the above category members from Rs. 100/- to Rs. 500/- as per Annexure R2. The same has been accepted by the Central Registrar of Co-operative Societies and permitted the society to amend its Bye-laws. Thereafter, notices were issued to 'C' category members and other members calling upon them to pay the enhanced fee of Rs. 400/- for the year 1998-99 as per Annexure R3, another notice was sent by the society on 1.6.2000 to them as per Annexure R4. The members of 'C' category have received the notices along with the annual report 1999-2000 produced as per Annexure-R5. Apart from the said independent notices given to them, in respect of the other members of the society, paper publication was also made by giving wide publicity in this regard specifically mentioning that unless the enhanced share fee amount is paid, they will not be permitted to either contest or exercise their vote in the elections that would be held. The paper publications made by the society in this regard are produced as per Annexures 'R6' and 'R7'. Therefore it is contended that petitioners cannot have any grievance regarding enhancement of 'C' category membership share fees. Neither the endorsement issued by the Returning Officer nor the amended Bye law clause regarding enhancement of the share value can be challenged by the petitioners at this belated stage. The Writ Petitions are liable to be dismissed on account of delay and laches.
14. It is further contended on behalf of the above respondents that in the earlier elections held by the society to the Board of Directors, 50% of the voters/members from 'C' category had participated. Non participation of 60 to 70% members cannot be the criteria for this Court to grant the reliefs. Hence the respondents have prayed for dismissal of these Writ Petitions.
15. Sri K.M. Nataraj, learned Counsel for the respondents No. 3 and 4 have placed reliance on Section 10 and 12 of repealed Act and the Act 2002, to contend that an amendment of the bye laws of a society, will come into force on the day on which it is registered by the Registrar of Co-operative Societies by issuing certificate of Registration unless it is specifically mentioned that it has retrospective effect. In support of the same, he has placed reliance on the following decisions of the Kerala High Court, reported in 1992(2) KLT 673; 1993(1) KLT 538 and 1996(1) KLT 27 wherein provisions of Sections 7,9,12 and 27 of the Kerala Co-operative Societies Act and Rules which are similar to the provisions of both the repealed Act and Act of 2002 have been interpreted and it is held that the amended bye laws will have retrospective effect. Therefore the learned Counsel justified the stand taken by the Society and the Returning Officer that the amended Bye law Clause 12(3) (d) and the Note made therein which is part of the certificate of registration, have got retrospective effect and the same cannot be interfered with at this stage. He contends that on account of delay and laches the petitioners are not entitled for the reliefs. He has further contended that the petitioners have got an efficacious and alternative remedy of raising an election dispute under Section 84 of the Act of 2002. The petitioners have not availed the alternative remedy.
16. Mr. Nataraj further submits that the stay order granted by this Court earlier came to be vacated on 9.1.2003 and for more than 1 and half years, respondents 4, 5 and others viz; respondents 4-15 in the connected petitions who are elected as Board of Directors have been functioning and have acquired statutory rights to function as such until the term is over and therefore the same cannot be interfered with by this Court at this stage. Hence, he has requested this Court to dismiss these petitions giving liberty to the petitioner to avail the alternative remedy.
17. Rebutting the above said contentions, Sri K. Shashi Kiran Shetty, learned Counsel for the petitioner, in W.R 47473/02 placing reliance upon the Judgment of the Supreme Court in the case of AHMEDNAGAR ZILLA S.D.V. and P. SANGH LTD. AND ANR. v. STATE OF MAHARASHTRA AND ORS., submitted that validity of the amendment cannot be questioned in a dispute either under the old provisions of the Act or new provisions of the Act; that there is no delay and laches in filing these Writ Petitions as the cause of action arose when the impugned endorsements were issued by the Returning Officer to the petitioners. He submits that they have rightly approached this Court within reasonable time. Therefore it is urged that the contention regarding delay and laches in filing these petitions is wholly untenable in law and the same cannot be entertained by this Court. The learned Counsel has further contended that the Returning Office has mechanically applied the amended Bye law Clause 12(3)(d) to the petitioners and others with retrospective effect which is without authority of law. The petitioners counsel has further contended that pursuant to the amended bye law the removal of the petitioners' names from the voters list is totally impermissible in law and the action of the Returning Officer is bad in law. Therefore, he has strongly contended that these Writ Petitions are maintainable in law.
18. It is also contended by the learned Counsel on behalf of the Society and the contesting respondents' that as per Section 28 of the Act 2002, no member of "C" category of the Multi State Co-operative society shall exercise his/her rights unless he/she has paid the enhanced share value and non payment of the same despite demand, disentitles them from voting. Therefore it is contended that the Returning Officer has rightly invoked the amended bye-law of the society, and excluded the petitioners and other similarly placed persons from the voters list.
19. After hearing the learned Counsel for the parties, the following points would arise for consideration of this Court:-
"a. Whether the Writ Petitions are maintainable in law, as the petitioners have got alternative remedy as contended by the respondents?
b. Whether the impugned amended Clause 12(3)(d) of Registered Bye-laws of the society has got retrospective effect and whether enhancement of share value from Rs. 100/- to Rs. 500/- to "c" category share holders is liable to be quashed?
C. Whether the Society and the Returning Officer are justified in excluding the petitioners and the other similarly placed persons from contesting and participating in the elections by placing reliance upon Section 28 of the Act of 2002?
C. What order?"
POINT(a) : Under Section 74 (1) of the Old act and Section 84(2) of the New Act the remedy of raising an election dispute is provided to the petitioners herein. No doubt, under the aforesaid previsions of the Act, various matters are enumerated in respect of which dispute can be raised touching the Constitution, Management or Business of a Multi Co-operative Society. The learned Counsel for the contesting respondent relied upon the word "Constitution" in the Act and contended that the impugned amendment of Bye-law Clause 12(3)(d) of the Registered Bye-laws of the society can also be a subject matter of the dispute, as it pertains to the Constitution of the society. The rejection of the nominations by the Returning Officer also can be subject matter of an election dispute.
20. The contention of the respondents Counsel that the petitioners have got an alternative remedy of raising the dispute under Section 84(2) of Act 2002 cannot be accepted by this Court. The Apex Court in the case has clearly held that the Tribunal is not competent to adjudicate the validity of the amended clause of the bye- law. Therefore, the petitioners cannot challenge the legality and validity of amended bye law and the impugned endorsements in the dispute. Therefore, availability of alternative remedy is not a bar for this Court to entertain these petitions and this Court need not direct the petitioner to avail the alternative remedy by raising the dispute as contested by the respondents counsel. There are no disputed questions of fact in these cases which require enquiry. The deletion of the names of the petitioners and similarly placed names from the voters list of the society is without authority of law and it is patently illegal. Hence the decision of the Supreme Court reported in WHIRLPOOL CORPORATION vs REGISTRAR OF TRADE MARKS, MUMBAI, wherein the Constitutional Bench decision of the Supreme Court is followed and held that merely because alternative remedy is available, if the action of the authority is without authority of law then the alternative remedy is no bar to exercise the power under Article 226 of Constitution of India, Accordingly Point (a) is answered.
POINT (b): This point relates to the effect date of amended bye laws of Section 10 of the Act 2002 and Section 9 of the repealed Act relates to acceptance of the amended Bye-laws. The Registrar of Central Co-operative Society has not expressly mentioned the particular date from which the amended Clause will come into force in the certificate of registration. The contesting respondents have placed reliance upon the resolution of the General Body and the provisions of Section 28 of the Act to contend that the amended Clause of the bye-law has got retrospective application. This contention cannot be accepted in view of law laid down by the Supreme Court in , wherein it has after interpretation of Section 2(44)(ii) ( as substituted by Section 4 of Finance Act, 1963) has clearly held that by issuing the notification in exercise of the powers conferred under the said provisions, the State Government cannot invest the Tahsildar with the powers of a Tax Recovery Officer with effect from a date prior to the date of the Notification issued. At paragraph (5) law has been succinctly laid down as hereunder:-
"The Courts will not, therefore, ascribe retrospectively to new laws affecting rights unless by express words or necessary implication it appears that such was the intention of the legislature. The Parliament can delegate its legislative power within the recognised limits, where any rule or regulation is made by any person or authority to whom such powers have been delegated by the legislature it may or may not be possible to make the same so as to give retrospective operation. It will depend on the language employed in the statutory provision which may in express terms or by necessary implication empower the authority concerned to make a rule or regulation with retrospective effect. But where no such language is to be found it has been held by the Courts that the person or authority exercising subordinate legislative functions cannot make a rule, regulation or bye-law which can operate with retrospective effect."
Mr. Kiran Shetty by placing strong reliance upon the decision of the Supreme Court AHMEDNAGAR ZILLA S.D.V. AND P. SANGH LTD. AND ANR. v. STATE OF MAHARASHTRA AND ORS. (supra)contended that Bye -laws Clause 12(3)(d) of the registered byelaws of the society has no retrospective effect. He has submitted that unless it is specifically mentioned the date from which amended clauses come into operation, the amended bye-law will come into force from the date it is registered. In view of the fact that if no specific date from which amended bye law will come into force is mentioned in the certification of the Registration, it cannot be said that the amendment has got retrospective effect and therefore the petitioners are liable to pay the enhanced membership share fees amount as demanded by the society. For the reasons stated supra the reliance placed by the learned Counsel for the respondent No. 4 and 5 upon the Kerala High Court decisions referred to supra to substantiate the contention that the amended bye-laws have got retrospective effect are all misplace and therefore the same do not render any assistance to the cases of the respondents.
21. In view of the answer to the former portion of point (b) that amended bye law has no retrospective effect and it is only prospective, the contentions urged on behalf of the respondents that unless the difference amount of Rs. 400/- as per the amended bye-law is paid by its existing 'C' category members, they are not entitled to contest and participate in the elections of the society is wholly untenable in law as the same is contrary to the provisions of the Act and rules. Accordingly, the latter portion of Point (b) is answered. But the same need not be quashed as it applies to members who enroll to 'C' category after the amendment.
22. In view of the foregoing reasons this Court has to hold that the impugned amended bye - law clause has come into force prospectively and it has no retrospective effect.
POINT No. (c): The action of the Society and Returning Officer by wrongly applying the amended clause of the bye law to the petitioners and similarly placed reasons and removing their names from the voters list and not allowing them to contest and participate in the elections by issuing impugned endorsements is bad in law and the impugned endorsements are liable to be quashed. The Returning Officer has conducted the elections excluding the petitioners and similarly placed persons either from contesting or participating in the elections, thereby more than 60% of the "C" Category members of the society have been made ineligible to exercise their vote to elect their own Board of Directors. The said action of both the society and returning officer is a clear case of arbitrary exercise of power.
POINT (d) : Elections were permitted to be held by vacating the interim order by this Court and elections results were declared, the respondents 4 and 5 as Board of Directors and have been functioning as such. At paragraph (ii) in the order paving way to hold elections it is clearly mentioned that the election that will be held will be subject to the result of these Writ Petitions. Therefore, it is not open for respondents 4 and 5 and respondents 4-15 in the connected Writ Petition to plead equity at this stage. Fresh elections will have to be conducted permitting all "C" category members to participate or contest in the elections.
ORDER
23. Writ Petitions are allowed. Rule issued. The impugned resolution annexed to the certificate of registration of amendment calling upon the members of 'C' category to make good the enhanced share value fees amount of Rs. 400/- is prospective in nature. It is clarified that the same will apply to the prospective members and will not apply to the existing members. The impugned endorsement are hereby quashed. The election held to the posts of Board of Directors of "C" category members of the Board of the society is hereby declared void.
24. A writ of mandamus is issued to the society and the Returning officer to conduct fresh elections permitting the petitioners and all other members enrolled in "C" category prior to and subsequent to the amendment by preparing a fresh voters list within five weeks from the date of receipt of this order.
25. Since the election of "C" category Directors is declared as null and void, the elected "C" category directors shall not function as Directors of the Co-operative Society.
26. After the order was dictated in the forenoon, at 2.30 p.m the learned Counsel Mr. Nataraj for the contesting respondents submitted that by restraining the elected members to function, the management and Administration of the Society till the elections are held will come to a stand-still. Therefore he requested this Court for modification of the said portion of the order.
27. In view of the aforesaid submission, in the interest of justice and in the interest of society in particular, this Court modifies para 25 of the order as under:-
"The elected Board of Directors from the "C" category shall function only for the day to day management and Administration of the Society" and they shall not take any policy decision and also draw the sitting fees or any other allowance.