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Sewa Sahakari Sanstha Mahagarh and ors. Vs. Ramchandra Narayan Kokil and ors. - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtMadhya Pradesh High Court
Decided On
Case NumberMisc. Petn. No. 70 of 1972
Judge
Reported inAIR1974MP164; 1974MPLJ447
ActsConstitution of India - Article 226; Madhya Pradesh Co-operative Societies Rules, 1962 - Rule 41; Madhya Pradesh Co-operative Societies Act, 1960 - Sections 49(3) and 64
AppellantSewa Sahakari Sanstha Mahagarh and ors.
RespondentRamchandra Narayan Kokil and ors.
Advocates:A.S. Garg, Adv.
DispositionPetition allowed
Cases Referred(See Barium Chemicals Ltd. v. Company Law Board
Excerpt:
.....the returning officer has no authority to regulate the proceedings and that he is present at the general meeting only to watch the proceedings relating to election and to supervise the same. this being so, the returning officer, even assuming that he was duly appointed had clearly no power to adjourn the meeting or to stay the elections. however, none of these provisions enable the returning officer to declare the results and clause (13) clearly says that the declaration is to be made by the president of the meeting. rule 36 of the rules clearly provides that it is the president or in his absence the vice-president or in the absence of both a member elected by the members present at the meeting, who shall preside over the meeting. section 27 (a) under which the impugned order has been..........directors of the society was elected and respondent no. 3 was made its president. the first annual general meeting was then held on 2-10-1968. admittedly, the term of the board of directors was for a period of three years so that the term of the board of directors elected on 31-12-1967 including the president and the vice-president was to expire on 31-12-1970. according to section 49 of the act, the society was required to call the annual general meeting within a period of 12 months from the date of last annual general meeting and if the term of the committee was to end within a period of three months from the date of the annual general meeting, then the election of the members of the committee had also to be held therein. it is strange that after the first annual general meeting of the.....
Judgment:

J.S. Verma, J.

1. This petition under Article 226 of the Constitution of India relates to the affairs of Sewa Sahakari Sanstha, Mahagarh, a primary credit society duly registered under the M. P. Co-operative Societies Act, 1960 (hereinafter referred to as the Act). The petitioners seek to have the order, dated, 22-6-1972 (Annexure X to the petition) issued by the Assistant Registrar, Cooperative Societies, District Mandsaur quashed hereby. By this order purporting to be made under Section 57(a) of the Act, the Assistant Registrar has directed the Co-operative Extension Officer, District Mandsaur (respondent No. 2) to seize the entire record of the Society from the petitioners and to hand over the same thereafter to Bhawani Shankar (respondent No. 3) who has been described as the President of the Society.

2. At the very outset, we are constrained to observe that the undisputed facts placed before us do disclose a shocking state of affairs in respect of the management of the Society and it is clear that notwithstanding such facts being brought to the notice of the Assistant Registrar, no action was taken, by the Assistant Registrar to put an end to the highhanded manner in which the affairs of the society were being managed by respondent No. 3 Bhawani Shankar, who had been elected as the President of the Society at the end of 1967. We have no doubt that but for such inaction of the Assistant Registrar, which must be attributed at least to his callous indifference if not active complicity with the respondent No. 3 Bhawani Shankar, the situation which resulted therefrom and has ultimately occasioned this petition, would not have arisen.

3. On 31-12-1967, the Board of Directors of the Society was elected and respondent No. 3 was made its President. The first annual general meeting was then held on 2-10-1968. Admittedly, the term of the Board of Directors was for a period of three years so that the term of the Board of Directors elected on 31-12-1967 including the President and the Vice-President was to expire on 31-12-1970. According to Section 49 of the Act, the Society was required to call the annual general meeting within a period of 12 months from the date of last annual general meeting and if the term of the Committee was to end within a period of three months from the date of the annual general meeting, then the election of the members of the Committee had also to be held therein. It is strange that after the first annual general meeting of the society, which was held on 2-10-1968, the next annual general meeting was admittedly held only on 11-6-1972 and during the period intervening either no such meeting was called or if it was called the President Bhawani Shankar (respondent No. 3) adjourned it on some pretext or the other, which, in our opinion, was no justification for postponing the annual general meeting. During this period, the petitioners brought the dereliction of this duty on the part of the President to the notice of the authorities but, as already stated, they remained silent on the issue. Obviously such conduct on the part of the authorities assisted the respondent No. 3, Bhawani Shankar in deferring the calling of the annual general meeting till it was held on 11-6-1972.

6. By the notice, dated 10-6-1972 (Annexure L to the petition), the annual general meeting was called for 11-6-1972, wherein the last item of the agenda was relating to holding of the election which had been long overdue. It may be reiterated here that the term of the Board of Directors including that of the President and the Vice-President had expired on 31-12-1970 so that the persons elected on 31-12-1967 continued to hold office after 31-12-1970 simply because the annual general meeting had not been called by respondent No. 3 till 11-6-1972. There is no dispute that when the meeting commenced on 11-6-1972 under the President ship of respondent No. 3, the business relating to first six items of the agenda was duly transacted. However, when item No. 7 which was the last item of the agenda was reached, which related to the election and some of the elections had been held so that the stage for electing the members of the Managing Committee i.e. the Board of Directors including the President and the Vice-President was being reached, the meeting became disorderly and led probably even to some violence. The role attributed to the individuals, who caused such disturbance in the meeting is, however, disputed. Respondent No. 3, who was presiding over the meeting appears to have then left the meeting along with some of his followers but before he left, respondent No. 3 took the minutes book from the Manager and is alleged to have said that the proceedings of the meeting were being cancelled. Thereafter the minutes book, which had been handed over to Constable No. 274 Brijlal, who was on duty, was given to the members who continued to remain at that place. It also appears that the remaining members continued to hold the meeting and completed the elections.

5. After respondent No. 3 Bhawani Shankar had left that meeting, it appears that the meeting was continued by 107 members of the Society and the proceedings of this latter part of the meeting are contained in Annexure N to the petition, which is a record of these latter proceedings of the meeting on 11-6-1972 being signed by the 107 members who took part therein, out of the 161 members, who had initially been present when the meeting had commenced that day. A report of the incident which led to the disruption of the meeting in between was made by Kanhaiyalal, Manager of the Society to the Police soon after the incident and the same was handed over to Constable No. 274, Brijlal, who was on duty at that place.

6. There is some dispute with regard to the actual action taken by Bhawani Shankar respondent No. 3 before he left the meeting along with his followers. According to the respondents, the meeting had been adjourned by its President Bhawani Shankar, respondent No. 3 before he left, whereas, according to the petitioners, respondent No. 3 Bhawani Shankar snatched the minutes book from the Society's Manager Kanhaiyalal and left that place. In short, the dispute is whether respondent No. 3 had actually adjourned the meeting before he left it or not. In view of the conduct of respondent No. 3 in avoiding the meeting for several years without any cogent reasons and the further fact that he was admittedly opposed by a majority of 107 members out of 161 members present at the meeting, as also the undisputed facts with regard to what transpired at the meeting, we are inclined to accept the petitioner's version with regard to the manner in which respondent No. 3 left the meeting. We are, therefore, unable to accept the respondents' contention that there was a regular adjournment of the meeting before respondent No. 3 left the same. Admittedly, there was no want of quorum as prescribed by Rule 37 of the Madhya Pradesh Co-operative Societies Rules, 1962 (hereinafter referred to as the Rules) and the adjournment was not made by the President to any specified date, which may have been announced. The only reason why respondent No. 3 appears to have thought it fit to leave the meeting, as is evident from the record, was that respondent No. 3 Bhawani Shankar was not able to have his views accepted by the considerable majority of the members present at the meeting. We have no hesitation in holding that having failed in his attempt to win over the majority to his side, respondent No. 3 was looking for a pretext to avoid the election and for that reason alone he left the meeting in an attempt to avoid the elections, which would have undoubtedly ousted him from the office that he has held till then. From the record, we do not find any reason why the meeting should have been adjourned nor has any provision of law being pointed out to us, which conferred any right on respondent No. 3 to adjourn the meeting at that stage. Rule 37 of the Rules permits adjournment of the meeting by the President for want of Quorum and that provision was clearly not available since admittedly the number of members present was much larger than the quorum requisite for holding the meeting.

7. The meeting which continued after respondent No. 3 Bhawani Shankar had left the same, elected the President and the Vice-President and the Members of the Board of Directors as required by the last item of the agenda of that meeting. This latter part of the meeting was held after duly electing the President in view of the fact that its President Bhawani Shankar respondent No. 3 had already left the meeting. Rule 36 of the Rules lays down that in the absence of the President and the Vice-President a member elected by the members present at the meeting shall preside over the same. Admittedly, the President and the Vice-President till then had left themeeting so that by virtue of this rule the members present at the meeting were competent to elect a person from amongst them to preside over the meeting from that stage and this was actually done. A copy of these proceedings was forwarded also to the Assistant Registrar, Co-operative Societies, District Mandsaur. Thereafter at about 4 P.M. the same day the newly elected President, the Vice-President and the Board of Directors took charge of the management of the Society. Further meetings of the newly elected Board of Directors were held on 14-6-1972 and 19-6-1972, copies of the proceedings of which were also sent to the Assistant Registrar, Co-operative Societies. A letter dated 15-6-1972 (Annexure U to the petition) was sent by the Assistant Registrar' to the President of the Society stating that the report of the Returning Officer indicated that there was some fight in the general meeting on account of which he had stayed the election. Accordingly, the Assistant Registrar directed that the record of the Society should not be given to any one until elections were held again. This communication was to the President of the Society by Office and not by name. At this stage, it is relevant to state that the Returning Officer, as appears from his report, stated that the elections had been stayed by him after the disturbance even though he has further stated in that report that the meeting continued thereafter under the President ship of a new President elected from amongst the members present at the meeting. No provision has been pointed out to us which could empower the Returning Officer to stay the election or to adjourn the meeting. Clauses 13 and 23 of Rule 41 of the Rules which are particularly relevant for this purpose clearly indicate that the Returning Officer has no authority to regulate the proceedings and that he is present at the general meeting only to watch the proceedings relating to election and to supervise the same. This being so, the Returning Officer, even assuming that he was duly appointed had clearly no power to adjourn the meeting or to stay the elections. For this reason, the Returning Officer having also decided to leave the meeting even though the same was continued, his absence has not been shown to vitiate the elections for contravention of any provision of law.

8. On 22-6-1972, the Assistant Registrar issued the impugned order (Annexure X) directing the seizure of the entire records of the Society and sealing of its office. Accordingly on 23-6-1972, respondent no. 2 took possession of the office. The present petition was filed on 11-7-1972 challenging this action of the Registrar.

9. We shall first dispose of certain preliminary objections raised by Shri U. N. Bachawat appearing on behalf of the respondents. The first preliminary objection of Shri Bachawat is that an alternative remedy was available to the petitioners by way of an appeal under Section 77 of the Act so that the discretionary power of this Court in such a proceeding need not be exercised. The second contention in this respect is that the dispute involved in the case is covered by Clause (v) of Sub-section (2) of Section 64 of the Act, so recourse should have been taken to that provision to have the dispute adjudicated instead of filing the present petition. Both these objections are also supported on the ground that the adjudication of the dispute involves determination of disputed questions of fact which could be more properly gone into in an appeal under Section' 77 of the Act or an adjudication made by the Registrar under Section 64 of the Act.

In view of the facts of this case and the circumstances which have led to the filing of this petition, we are of the opinion that this petition cannot be thrown out on such preliminary objections. It is no doubt true that an appeal is provided by Section 77 of the Act against every original order made thereunder. Even assuming that such an appeal lies against the impugned order notwithstanding Shri Garg's argument to the contrary we do not think it proper to sustain this preliminary objection particularly in view of the fact that the petition has come up for final hearing being duly admitted by this Court. The limitation prescribed for every appeal under Section 77 of the Act is 30 days and the same has expired long back. This petition was filed and was admitted by this Court before the expiry of the period of limitation prescribed for an appeal under Section 77 of the Act so that it was not necessary for the petitioners to have preferred an appeal after admission of this petition even though as a matter of abundant caution it would have been safer for the petitioners to have done so. In case the petition is dismissed at this stage on this preliminary ground, the result would be in effect that the petitioners would be left with no remedy and such a result would not be desirable in view of the facts and circumstances already narrated. Apart from this, the facts material for deciding this petition are mainly matters of record and the only disputed fact is with regard to the manner in which respondent No 3 left the meeting on 11/6/1972. This disputed fact also presents no difficulty for decision since the petitioners' version finds considerable support from the re--port of the Returning Officer (Annexure R-l) filed and relied on by the respondents themselves. Moreover, the continuance of that meeting after respondent No. 3 had left the same and completion of the elections at that meeting presided over by a President elected from amongst the member present at the meeting is a fact beyond controversy from the material present. There is, thus, no material fact substantially in dispute between the parties requiring any further evidence for its determination. The existence of an alternative remedy by way of an appeal, under Section 77 of the Act is, therefore, no ground for dismissing this petition in view of the peculiar facts of this case.

The other preliminary objection is also not tenable. The dispute in this case is in respect of the action taken by the Asst. Registrar by the impugned order f (Annexure X) by which seizure of the entire record of the Society and thereafter delivery of the same to respondent No. 3 was directed under Section 57-A) of the Act. Clause (v) of Sub-section (2) of Section 64 of the Act covers within its ambit any dispute arising in connection with the election and such a dispute, in our opinion, is not covered within its ambit. It is no doubt possible to say that the impugned order (Annexure X) made under Section 57 (a) of the Act may have been in consequence of the dispute relating to the election; but it does not make the dispute as one arising in connection with the election of the society. Such a conclusion also follows from the fact that Section 57 (a) of the Act under which the impugned order has been made is in no way directly connected with the election of the Society. It is also significant that the disputes contemplated within the ambit of Section 64 of the Act are only those to which the Registrar himself is not a party for the simple reason that the adjudication of such disputes is to be made by the Registrar himself. That being so, a dispute to which the Registrar himself is one of the parties, as in the present case the impugned order being made in exercise of the Registrar's powers under Section 57 of the Act, cannot be treated as one falling within the ambit of Section 64 of the Act. We are, therefore, not inclined to hold that a dispute arising as a result of the impugned order (Annexure X) can be termed as a dispute arising in connection with the election In any case, the Registrar himself being one of the parties to the dispute before us, we do not think that the machinery provided by Section 64 of the Act for adjudication of the disputes falling there under would be at all an efficacious remedy in the present case.

10. We are, therefore, of the opinion that the preliminary objections rais-ed on behalf of the respondents must be rejected.

11. The first question now is whether the petitioners have any legal right to challenge the validity of the order (Annexure X). Shri Bachawat, on behalf of the respondents, contends that there was no valid election of the petitioners because respondent No. 3 who was President at that meeting, as also the Returning Officer had left before the alleged election is said to have taken place. His argument is that no valid election could have taken place in the absence of the Returning Officer nominated for the purpose. Reliance is placed particularly on Clauses (13) and (26) of the Rule 41 of the Rules for this argument. In this connection some provisions applicable to the case may be noticed. Learned counsel was unable to point out any provision regarding the appointment of the Returning Officer other than Clause 26 of Rule 11 of the Rules. However, Sub-section (3) of Section 49 of the Act enables the Assistant Registrar or his nominee to attend such a meeting. This provision does not enable the Assistant Registrar or his nominee to either preside over the meeting or to regulate its conduct. Assuming, therefore, that the Returning Officer was validly appointed in the present case, the only authority he had was to attend the same and discharge the functions of the Returning Officer contemplated particularly by Clauses (13) and (23) of Rule 41 of the Rules. However, none of these provisions enable the Returning Officer to declare the results and clause (13) clearly says that the declaration is to be made by the President of the meeting. Rule 36 of the Rules clearly provides that it is the President or in his absence the Vice-President or in the absence of both a member elected by the members present at the meeting, who shall preside over the meeting. Rule 38 of the Rules which relates to the minutes of the general meeting provides that the minutes of the meeting shall be entered in a minutes book and shall be signed by the President of the meeting. The Returning Officer is not required to sign those minutes. It is further provided in Rule 38 of the Rules that until the contrary is proved every general meeting pf a Society in respect of the proceedings whereof minutes were so recorded, shall be deemed to have been duly called and held. Such a record of the meeting wherein the petitioners were elected to the several offices were duly recorded and, in our opinion, the contrary has not been proved. We have already stated that respondent No. 3, who was earlier the President had deliberately avoided calling the general meeting for holding the elections for several years and there can be no doubt that this was done obviously for the purpose pf enabling respondent No 3 to continue in office as long as he could manage to do so by postponing the general meeting. This fact cannot be overlooked while deciding this question. Thus, on the facts and in the circumstances of this case, we are of the opinion that there was substantial compliance with the provisions relating to the election of the Board of Directors of the Society including the President and the Vice-President and that the election of petitioners, who were so elected in the meeting held on 11-6-1972 which continued after respondent No. 3 Bhawani Shankar and the Returning Officer had left that meeting, was valid. It must, therefore, be held that the petitioners, who were so elected validly held that office as a result of that election on and from 11/6/1972 so that they have a legal right to file this petition in order to challenge the impugned order made by the Assistant Registrar.

12. The next question is whether the impugned order (Annexure X) is valid. Section 27 (a) under which the impugned order has been made empowers the Registrar, if satisfied, that the records of the society are likely to be tampered with or destroyed and the funds and property of the society are likely to be misappropriated or misapplied to direct their seizure and delivery thereof to the persons so authorised. The only material reasons why the Assistant Registrar made the impugned order were that there was disturbance in the general meeting held on 11-6-1972, as a result of which, according to the Assistant Registrar, the petitioners were in unauthorised possession of the record etc. In view of our conclusion that the petitioners were not unauthorised persons to be in possession of the records etc. such a ground was clearly non-existent. So far as the ground relating to disturbance in the general meeting held on 11-6-1972 is concerned, that by itself was wholly irrelevant for exercise of the power given under Section 57 (a) of the Act. Thus, there was no valid ground on the basis of which the Assistant Registrar, could be so satisfied before making the order and such satisfaction undoubtedly is a condition precedent for exercise of that power. We are conscious of the fact that the satisfaction of the Assistant Registrar is subjective in such a case but where such satisfaction is disputed the power ofjudicial review is available to a limited extent within which alone we have chosen to exercise the same. It is settled that where the subjective satisfaction of an authority is challenged, the power ofjudicial review is available to quash the order even though passed in good faithif the same is made beyond the limits of the power conferred or is passed onfrounds extraneous or if there are no rounds at all for passing it. In either of these situations, the opinion of the authority so formed cannot be said to be based on relevant facts. It is only when there is no such defect in the order that no challenge can be made on the ground of propriety or sufficiency of the material which led to the opinion. (See Barium Chemicals Ltd. v. Company Law Board, AIR 1967 SC 295). Having already held that the only grounds on which the satisfaction was based in this case were either non-existent or irrelevant it must be further held that the impugned order made by the Registrar was invalid being without jurisdiction.

13. Before parting with this case, we are constrained to observe that this case reveals how an unscrupulous and power hungry person occupying the office of the President of the Society can set at naught the democratic process envisaged by the provisions of law providing for the management of such societies, if he is not checked by the authorities conferred with the powers of superintendence. It is to ensure against such a possibility that considerable powers of superintendence have been given to the Registrar, Co-operative Societies and his assistants. However, we are amazed to find that the authorities concerned in this particular case were wholly oblivious to such a duty enjoined upon them, with the result that respondent No. 3 Bhawani Shankar continued to function as the President of the Society even after the expiry of his term and was able to successfully ward off the election on account of the complete inaction of the authorities either by inadvertence or design. Ordinarily, from such conduct of the authorities, we would have preferred to infer that this was a case merely of inadvertence on the part of the authorities, which certainly is lesser of the two evils although both are undoubtedly undesirable, but the manner in which the Assistant Registrar stepped in promptly after respondent No. 3 had been ousted from the office of the President and that too only to assist respondent No. 3 to regain the control and management of the Society leaves no room for any doubt that such conduct on the part of the Assistant Registrar, at least at that stage, was by design in order to assist respondent No. 3 to continue as the President of the Society long after his term had expired since obviously as a result of the democratic process envisaged he could not have continued in that office having lost confidence of the majority of the Society's member. We, therefore, direct that a copy of this order be sent to the Chief Secretary of the State Government for taking such action as he may deem fit to at least ensure that recurrence of such incidents is avoided.

14. The result is that this petition succeeds and is allowed. The order dated 11/6/1972 passed by the Assistant Registrar, Co-operative Societies is set aside. The petitioners shall get their costs of this petition from respondent No. 3. Counsel's fee Rs. 200, if certified. The outstanding amount of security deposit shall be refunded to the petitioner.


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