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B. Krishnappa Vs. Bengalore City Co-operative Bank Ltd. and anr. - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtKarnataka High Court
Decided On
Case NumberCivil Petn. No. 15 of 1953
Judge
Reported inAIR1954Kant59; AIR1954Mys59
ActsCode of Civil Procedure (CPC), 1908 - Sections 11; Mysore Co-operative Societies Act, 1948 - Sections 52, 59 and 62; Constitution of India - Article 226
AppellantB. Krishnappa
RespondentBengalore City Co-operative Bank Ltd. and anr.
Appellant AdvocateK.R. Parthasarathy, Adv.
Respondent AdvocateC.S. Venkataswami Naidu, Adv. and ;Adv. General
Excerpt:
.....as the registrar and finally by the government. we fail to see how a dispute raised by one of the members of the society against an action of the society taken at a meeting at the general body of the society in the exercise of a power conferred by one of the society's bye-laws, cannot be said to be a dispute touching the business of the society. the petitioner is not a salaried employee of the society and is not liable to be dismissed from membership without regard to the provisions of the act and bye-law, as well as the principles of natural justice. the society like any corporate body can function through its elected or appointed agents and the representations made by a secretary in a formal proceeding cannot be explained away as his own not affecting the society, as he has locus..........spite of this, however, the meeting did go on and by a majority of the members present at the meeting a resolution for removal of the petitioner from the membership of the bank was passed on 25th september 1949. the personal assistant to the registrar and the registrar held that the resolution was not proper but on an application filed by the bank for revision of these orders, the government approved of the removal in its order dated 18-6-1952 and this is impugned before us.2. the petitioner who argued the case himself with the facility and force of one accustomed to it, attacked the order firstly on the ground that it offends the rule of 'res judicata'; secondly that the application which led to it was not maintainable, thirdly that it was obtained on malicious ex parte.....
Judgment:

Venkata Ramaiya, J.

1. The order which the petitioner wants to be quashed by this Court, in exercise of its jurisdiction under Article 226 of the Constitution of India, relates to his removal from the membership of the Bangalore City Co-operative Bank, Ltd., Bangalore.

The petitioner became a member of the said Bank about 15 years back and in his zeal to promote the interests of the Bank questioned from time to time the propriety of the acts of the Directors in managing the affairs of the Bank and subjected them to proceedings under the Cooperative Societies Act before the Registrar and his Assistants. The remission by the Directors of portions of the debts due by one Sri Kodandaramaiah and some others was an instance of this kind. His objection to the remission was upheld by the Assistant to the Registrar as well as the Registrar and finally by the Government.

Thereafter the petitioner was served with a notice stating that a special General Body Meeting would be convened at the request of certain members of the Bank to consider firstly the question of the remission and secondly removal of the petitioner from the membership of the Bank. The petitioner again filed a petition before the Assistant Registrar objecting to these. In the course of those proceedings the then Secretary, Mr. B. Rangaswamy, stated on behalf of the Bank:

'that he would acquaint the General Body that the said proposition need not be moved since Sri B. Krishnappa is working in the interest of the Bank. The petitioner said that excepting Sri Kodandaramaiah's case in proposition No. 1, he will not press the other items.'

The aforesaid statements bear the signatures of the petitioner and Mr. B. Rangaswamy on 20-9-1949.

The Personal Assistant to the Registrar on the same day made an order to the following effect: 'In the circumstances the petition is dismissed. Separate orders will issue as regards the discussion of the subject relating to the write off of the amount due by Sri Kodandaramaiah.'

In spite of this, however, the meeting did go on and by a majority of the members present at the meeting a resolution for removal of the petitioner from the membership of the Bank was passed on 25th September 1949. The Personal Assistant to the Registrar and the Registrar held that the resolution was not proper but on an application filed by the Bank for revision of these orders, the Government approved of the removal in its order dated 18-6-1952 and this is impugned before us.

2. The petitioner who argued the case himself with the facility and force of one accustomed to it, attacked the order firstly on the ground that it offends the rule of 'res judicata'; secondly that the application which led to it was not maintainable, thirdly that it was obtained on malicious ex parte representations and lastly that it is vitiated by errors apparent on the face of the record.

The plea of 'res judicata' rests on construction placed on the order passed by the Government negativing the resolution of the Bank for remission of any portion of Kodandaramaiah's debt as also a decision in favour of the petitioner concerning his removal. The proceedings in which the question of remission was considered were treated as separate from those about the petitioner's removal and the finding arrived at in the latter was mentioned only as a fact in the other case. As the question of removal was not in issue in the other case and referred to as being dealt with separately the rule of 'res judicata' can have no application to the order in question.

The order cannot be held to be defective on the-ground that no appeal was filed under Section 62, Co-operative Societies Act, as appeal lies only when there is a point of law, as Section 59 of the Act, which is wider in scope than Section 62 enables Government to call for and examine either of its own accord or at the instance of the aggrieved party, the correctness, legality or otherwise of any order under the Act. The Government, therefore, has jurisdiction under both sections to make the order and resort to either of these in any case is a matter for its determination.

As regards errors in the order, it is conceded that the number of the original suit in the civil court referred to as pending is a mistake and that as a matter of fact, there was no order of injunction in a pending case from any Court which could justify the participation of Kodandaramaiah in the meeting. The view that the matter involved is not a 'dispute' under Section 52 of the Act is, in our opinion, incorrect.

The petitioner has by his diligence found a recent decision of a Full Bench of the Madras High Court printed in -- 'Madhava Rao v. Surya Rao', : AIR1954Mad103 (FB) (A), in which the word 'Dispute' touching the business of a registered society, has been discussed. Reference is made with approval in the course of the decision to the following observations of the learned Chief Justice in another case:

'We fail to see how a dispute raised by one of the members of the society against an action of the society taken at a meeting at the general body of the society in the exercise of a power conferred by one of the society's bye-laws, cannot be said to be a dispute touching the business of the society. On the day when the resolution was passed expelling the petitioner from membership admittedly this matter of expulsion was 'one of the items of business on the agenda of the meeting. We do not think it extravagant to hold that the expulsion of an undesirable member is also a part of the business of the society. If so, any dispute relating to such an expulsion would be a dispute touching the business of the society.'

It is significant that there is a parenthesis in Section 52 to denote what is intended to be not a 'dispute' by express mention of disciplinary action against paid employees as such. The petitioner is not a salaried employee of the society and is not liable to be dismissed from membership without regard to the provisions of the Act and bye-law, as well as the principles of natural justice. He was entitled to claim intercession of the Registrar when he felt that his membership was sought to be taken away unjustly. We think that the petition filed by him before the Assistant Registrar questioning the validity or propriety of convening the General Body meeting to consider the resolution for expelling him was rightly treated as a dispute under Section 52 of the Act.

3. As regards the resolution passed by the meetings which is relied on in the order for expulsion of the petitioner, it was contended that there was breach of undertaking on the part of the Sank in allowing the resolution to be passed and that it was contrary to the assurance of Mr. Rangaswamy as Secretary before the Personal Assistant. The meeting itself was alleged to have been a packed body of persons set up only to vote for expulsion without giving any consideration to the reasonableness of it. The Directors .are said to have exercised overpowering or undue influence over the members so packed, to stifle opposition and with' the authorities to have the resolution approved. The statement of parties on the strength of which the application of the petitioner in Dispute Case No. 1 of 52-53 was dismissed do suggest that the question of removal would not be pressed and by reason of this the petitioner is prejudiced as he had neither the benefit of a decision of the matter nor of adherence to it.

On behalf of the Bank Sri Venkataswamy represented that the Directors personally voted against expulsion and that it was not within their power- to avoid the meeting being held or the resolution being passed. The society like any corporate body can function through its elected or appointed agents and the representations made by a Secretary in a formal proceeding cannot be explained away as his own not affecting the society, as he has locus standi in such a proceeding as a representative of the Bank and not as an ordinary person to state anything which may be the basis of a decision.

4. It is true that as urged on behalf of the respondents this is not a proceeding in which the reasonableness of the order can be canvassed, the question is one of jurisdiction and not as to how it is exercised.

5. The Co-operative Societies Act has made special provisions for the smooth and efficient working of societies and has provided a machinery and procedure for settlement of differences. Relying on bye-laws framed under the Act and particularly on No. 77 which makes it obligatory on the Directors to convene a meeting of the General Body when there is a requisition for it by 100 members. No. 75 vesting supreme authority in all matters effecting the administration in the Bank, which, for the purpose of the bye-laws shall mean the general body of the members of the bank assembled at a meeting: No. 23 under which the Bank shall have power to remove any member for any act which in its opinion is likely to be injurious to the credit, reputation or interest of the Bank, it was contended that whatever may be the grievance against the Secretary or the Directors, petitioner cannot question the right of the members to remove him and power of Government to hold that the removal is necessary or justified.

The operation of the bye-laws is subject to the provisions of the Act. By virtue of these very provisions, the resolution of the majority for removal of any one as a member is not final or absolute but is liable to be set aside as was done in this case by the Assistant Registrar on the around that it was contrary to what was agreed to by the Secretary before him. The notice of the meeting sent to the petitioner appears to be an intimation due to him as an ordinary member like any other and not Such as is required when his membership is proposed to be taken away. The resolution in fee notice only states 'that Sri B. Krishnappa (Petitioner) of .............. be removed from membership under bye-law No. 23 A' without, assigning reason for the same. Apart from the difficulty to know the wrongs attributed to him, the petitioner says that he did not expect that this resolution was open to discussion after the undertaking of the Secretary in the proceedings before the Personal Assistant. The Registrar therefore in his order dismissing the appeal of the Bank against the order of the Assistant Registrar remarked that the principles of natural justice have not been observed.

As to how the import of the Secretary's statement in the previous proceeding was conveyed at the meetings he said that from a perusal of the previous proceedings of the meeting

'It is gathered that it was made to appear as personal to the person who expressed the said opinion. Sometimes it has also been stated to be the opinion of the Board of Directors. In the copious discussion that went on regarding the proposition the person who expressed the opinion or gave an undertaking before the lower court is not seen to have pleaded on behalf of respondent. On the other hand some of them have made statements against the respondent.'

The Government order fails to notice, that while the members as a whole have a right to seek removal of any one, statements made by the Secretary concerning it cannot be ignored and the person sought to be removed has also a right to claim intimation of charges, opportunity for explanation and consideration at a meeting properly held.

Robson in his book on Justice and Administrative Law states at page 227:

'The principle of natural justice is that a man shall not be removed from office or membership or otherwise dealt with to his material disadvantage, without fair, adequate and sufficient notice being given to him of what is alleged to his detriment and of having an opportunity of meeting the accusations which are brought against him........ The Courts are extremely zealous in the enforcement of the maxim 'audi alteram partem' and there are innumerable cases in the reports where decisions have been quashed on this ground.'

Since the resolution for removal does not allege any specific acts or particular grounds against the petitioner, service of a notice on the petitioner intimating that the meeting would be held to consider the resolution cannot be regarded as sufficient compliance with necessary formalities or even to the requirements of bye-law 23.

In -- 'Labouchcre v. Earl of Wharncliffe, (1879) 13 Ch. D, 346 (B), the expulsion of a member from a club was set aside on the ground amongst others of want of notice of a definite charge. Jessel, M. R. at page 350 posed the question 'What ought the Committee of a club to do when the conduct of one of its members is impugned?' and answered

'They ought to see what the conduct has been and what excuse or reason can be given by the member for it; and they ought to give notice to that member that his conduct is about to be inquired into and afford him an opportunity of stating his case to them.'

In -- 'Andrews v. Mitchell', (1905) AC 78 (C) dealing with the expulsion of a member from a Society without a charge and a trial Lord Halsbury observed

'........You must summon a man and you mustgive him time to consider what he has got to do and you must give him the charge against him in writing. These are all matters of substance and not mere matters of form.'

6. What may be gathered from the materials placed here is that the petitioner has been a critic, rather a severe and sometimes unreasonable critic of the management and often put the Directors to necessity of having to justify their acts. There is no accusation of his being a defaulter or having sought for pecuniary advantage to himself or benefit to others at the cost of the Bank. On the other hand such are the grounds of complaints by him against others which were found in some cases to be justified. The criticism, though distasteful to a class of members, does not appear to be wanton or frivolous as can be seen from some of the orders made by the authorities and appointment of a special officer for the management of the Bank.

7. The Bangalore City Co-operative Bank is a fairly long standing, important institution with a large number of members interested in promoting its reputation and usefulness. The members have a right and duty to see that these are not impaired by any acts of persons entrusted with the management. This is hardly possible unless the members are free to express their views and point out defects before the authorities haying control over the administration and working of the Society. It continuance of any one as a member is to depend on the mere pleasure and sufferance of others, any one found inconvenient may be arbitrarily got rid of and this it may lead to elimination of even 'bona fide' protest or healthy opposition against the wishes of the majority. In the interests of the Society and in fairness to the member it is necessary there should be imputation of something definite to indicate that he is unfit to be a member or that his membership is detrimental to the society and the member concerned should be afforded opportunity to refute the charge before he is sent out. These are lacking in the case.

8. However extensive the power of the Government may be considered to be under Section 59 of the Co-operative Societies Act its orders are liable to be questioned on the ground of want of jurisdiction or failure to apply the principles of natural justice. As observed in the Full Bench decision of the Madras High Court, in which as already mentioned, the question of expulsion of a member is held to be a 'Dispute touching the business of a Society', the decisions which are protected from review by the Courts are 'constitutional' decisions, decisions pronounced in conformity with the Act the rules and the bye-laws and the principles of natural justice'.

According to -- 'Veerappa Pillai v. Raman and Raman Ltd.', : [1952]1SCR583 (D), Article 226 enables the High Court to issue the writs or declarations referred to therein in grave cases where the subordinate tribunals, bodies or officers act wholly without jurisdiction or in excess of it or in violation of the principles of natural justice.......... or there is an error apparent on the face of the record and such act, omission or error or excess has resulted in manifest injustice. More than one of the several conditions mentioned as necessary are found to exist in this case. In spite of bye-law 23, jurisdiction of the general body to deal with the resolution for removal of the petitioner was not absolute but was subject to the statements of the Secretary with reference to it on behalf of the Bank in the prior proceeding. Even otherwise, the resolution cannot have the sanction of the bye-law as the power of removal can be exercised only when there is allegation of an act about which an opinion of its being likely to be injurious to the Bank can be formed or a serious breach of a bye-law is found. There is no reference to the commission of any act or breach in the resolution for consideration.

The meeting at which the resolution was passed is open to the objection of Sri Kodandaramaiah having participated in it, his being allowed to vote and speak in favour of the resolution. Admittedly the restoration of the membership of this person was held to be invalid in the order of Government dated 26-2-49 and there was no order, resolution or decision subsequently by which he could claim to be a member. His presence and participation in the meeting cannot be ignored as there is no certainty of the decision not being influenced by these. In this contest there is an error or excess of jurisdiction affecting the resolution. The order of Government overlooks this and the disregard of the rules of natural justice, manifests errors in assuming facts which are not correct and in holding that he question of expulsion cannot be treated as a 'Dispute'. It is not just or proper that the petitioner should be deprived of his membership by such an order.

The Order of Government G. O. No. A. F. 2469/C.S.4-52-4 dated 18-6-1952 declaring that petitioner cannot continue as a member of 1st respondent Bank upholding the resolution of the General Body is, therefore, quashed. Parties will bear their own costs.

9. Petition allowed.


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