Telangana High Court
The Catholic Co. Opertive Urban Bank ... vs The State Of Telagnana on 12 December, 2024
THE HONOURABLE SMT JUSTICE T.MADHAVI DEVI
W.P.NO. 32591 OF 2024
ORDER:
In this writ petition, the petitioner is challenging the order dated 14.11.2024 passed in I.A.No.246 of 2024 in C.T.A.No.32 of 2024 by the Single Member of Telangana Cooperative Tribunal at Hyderabad as illegal, arbitrary and unconstitutional and consequently to set aside the same and to pass such other order or orders in the interest of justice.
2. Brief facts leading to the filing of the present writ petition are that the petitioner is a bank and the respondent No.5 is one of the Director of Managing Committee of the bank. On the ground that the respondent No.5 was acting against the interest of the bank and was also disqualified to continue to be a Director of the bank, the respondent bank has issued a show cause notice to the petitioner and thereafter, passed a resolution No.14 in the General Body Meeting held on 21.09.2024 expelling the petitioner from the membership of the bank. Challenging the same, the respondent No.5 has filed a C.T.A.No.32 of 2024 along with I.A.No.246 of 2024 and vide orders dated 14.11.2024, Tribunal has granted interim 2 TMD,J W.P.No. 32591 of 2024 suspension of the resolution No.14 passed by the respondent bank pending disposal of the main appeal. Challenging the said interim order, the present writ petition has been filed.
3. Learned counsel for the petitioner has reiterated the submissions made by the respondents in their counter affidavits to I.A.No.246 of 2024 filed before the Tribunal and submitted that the respondent No.5 has become disqualified to continue as a member in the society as he was not only working against the interest of the society but also since he was member of another society having same or similar objectives/business. It is submitted that principles of natural justice have been followed while issuing a show cause notice to the petitioner and thereafter, but the Tribunal has erroneously granted interim suspension by observing that the petitioner was not a member of the other society as on the date on which he was become the member of the petitioner's society and further that there was no quorum for passing of the resolution No.14 in the general body held on 21.09.2024. Thus, according to him, the interim order of the Tribunal has to be set aside. It is submitted that due to the continuation of the respondent No.5 as Director of the bank, 3 TMD,J W.P.No. 32591 of 2024 the reputation of the bank has been suffering as the respondent No.5 was involved in committing illegal activities.
4. The respondent No.5, on the other hand, supported the order of the Tribunal and submitted that at the time when the petitioner has become the member of the society, in the year 2009, the petitioner was not a member of any other society and it is only in the year 2009, that the respondent No.5 has become a nominal member of the Tirumala Cooperative Urban Bank Limited, since his wife had obtained a loan from the said bank. Therefore, according to him, the petitioner ought not to have been declared as disqualified to continue as the member of the society. Further, he submitted that after issuing a show cause notice, the respondents have not afforded any opportunity to appear before the general body and explain his case. It is submitted that the date and time of the general body meeting has also not been intimated to the respondent No.5 and hence, the action taken by the petitioner bank is illegal, arbitrary and in violation of principals of natural justice. He further submitted that as per Section 53 of the Act, the quorum for expelling a member is the majority of the total number of members and 2/3rd of the members present, voting against the Director. It is 4 TMD,J W.P.No. 32591 of 2024 submitted that in this case, the said quorum was not present and therefore, tribunal was correct in allowing the I.A.
5. Learned counsel for the petitioner bank, however, refuted the same and submitted that Section 19(1) of the TCS Act clearly provides for the disqualification of a member of the society if he is a member of any another society with the same or similar business and further that the quorum as per the Telugu version of the Act is the majority of the members of the society present or 2/3rd of the members present voting against the employee. He submitted that Rule 23 of the TCS Rules clearly provide for a quorum of general body meeting which is 1/10th of the total number of members of the society. Therefore, according to him, the general body being the supreme authority in the case of co-operative society, has taken a decision to expel the petitioner from the bank and here there was no need for any interference.
6. Having regard to the rival contentions and the material on record, this Court finds that Sec.21 of TCS Act provides for disqualification of membership of society and Clause (a) thereof prescribes the conditions for such disqualification. Clause (h) provides that a member is 5 TMD,J W.P.No. 32591 of 2024 disqualified to continue as a member if he is a member of any other society with same or similar business/operations and that the respondent No.5 has admittedly become the member of another co-operative society carrying on banking business i.e., Tirumala Cooperative Urban Bank Limited, because his wife has obtained a loan therefrom. It is further submitted that when the respondent No.5 has become a nominal member of the said bank, he had to intimate this fact to the Society. In support of this Contention, he referred to Section 21(h) which reads as under:
(h) fails to give information relevant to him to the society as specified in the bye-laws.
7. From a literal reading of the above, it is clear that a person shall be disqualified for being admitted as and for being a member, if he fails to give information relevant to him to the society as prescribed in the bye-laws.
8. Section 19 prescribes the eligibility for membership and the proviso to clause (a) prescribes that applicant should not already be a member of a co-operative society registered under the act or any other co-operative act providing the same or similar operation. Therefore, it appears that in the year 2009, 6 TMD,J W.P.No. 32591 of 2024 when the respondent No.5 has been granted the membership of the petitioner society, he was not a member of any other co- operative society registered under this act and therefore, there was no impediment in his becoming a member. However, Section 21 provides for disqualification after becoming a member and clause-1(aa) provides that a person shall be disqualified for being admitted as and for being a member i.e., for continuation as a member if he is not eligible for membership under Section 19 or if he fails to give information relevant to him to the society as specified in the bye-laws. Therefore, this provision does not specify as to whether the other membership should allow voting rights in the other society. It appears that it is sufficient if he becomes a member of any other society with same or similar services and he would become disqualified. Therefore, the ground on which the Co- operative Tribunal has granted relief to the petitioner is not sustainable. However, the disqualification would become effective only if the general body passes a resolution to this effect.
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TMD,J W.P.No. 32591 of 2024
9. The Section 23 of the TCS Act prescribes the procedure for expulsion of members and for the purpose of ready reference, the same is reproduced hereunder:
(1) Any member who has acted adversely to the interests of the society may be expelled upon a resolution of the general body passed its meeting by the votes of not less than where by majority of the total membership of the society is present and two-thirds of the members of the society present and voting.
(2) No member shall be expelled under sub-section (1) unless,
(a) member caused loss of financial to the society.
(b) member is involved in impersonation, forgery or any other Criminal Activity against the society.
(c) Provided that the member shall be given an opportunity of making his/her representation to the Managing Committee.
(3) A copy of resolution expelling the member shall be communicated to the member within 30 days under copy to the Registrar.
10. Learned counsel for the petitioner relied upon the Rule 23 of Telangana Co-operative Societies Rules of 1964, the quorum of general body meeting. This Court finds that Section 23 prescribes the procedure for expulsion of members and also refers to the quorum to be maintained for such a resolution. For the sake of ready reference, Rule 23 is also reproduced hereunder:
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TMD,J W.P.No. 32591 of 2024 Quorum for meeting: (1) Save as expressly provided in the Act no general meeting shall be held or proceeded with unless there is a quorum as specified in the bye-laws provided that the bye-laws shall not specify quorum which is less than [1/10th] of the total members.
(2) The quorum for a meeting of the committee shall be the majority of the total members of the committee.]
11. As provided under the General Clauses Act, the rules are only machinery provisions of the Act and cannot override the provisions of the Act. While Rule 23 which has been substituted vide G.O.Ms.No.37, dated 28.01.2002, prescribes the quorum for general body meeting to be more than the 1/10th of the members. Section 23 prescribes the quorum for a general body to pass resolution for expulsion of members and as per the said provision, the resolution shall be passed by the general body by the votes of not less than a majority of total membership of society present and 2/3rd of the members of the society present and voting. Though the learned counsel for the petitioner has relied upon the Telugu version of the Act, this Court finds that the Act was drafted and passed in English version and therefore, the Telugu version wherein instead of the word 'and' the word 'or' is used cannot prevail over the English version i.e., the original version of the Act. Therefore, this Court 9 TMD,J W.P.No. 32591 of 2024 is satisfied that the quorum as required under Section 23 of the Act was not there at the time of passing of the resolution No.14 in the general body meeting held on 21.09.2024. Therefore, the order of the tribunal on this ground is sustainable. Therefore, this Court does not find any reason to interfere with the order of the tribunal which is only an interim Order. However, the tribunal is directed to consider and adjudicate the appeal without being influenced by any of the observations of this Court.
12. Accordingly, the writ petition is dismissed. There shall be no order as to costs.
13. Miscellaneous petitions, if any, pending in this writ petition, shall stand closed.
____________________________ JUSTICE T.MADHAVI DEVI Date: 12.12.2024 bak