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Kinigam Service Co-operative Society Vs. Deputy Registrar, Co-operative Societies and anr. - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtOrissa High Court
Decided On
Case NumberO.J.C. No. 221 of 1981
Judge
Reported inAIR1981Ori112; 51(1981)CLT421
ActsOrissa Co-operative Societies Act, 1963 - Sections 12(6); ;Orissa Co-operative Societies Rules, 1965 - Rule 14A(1), 14A(3) and 14(3); Constitution of India - Articles 226 and 245
AppellantKinigam Service Co-operative Society
RespondentDeputy Registrar, Co-operative Societies and anr.
Appellant AdvocateY.S.N. Murty, ;Y.S.R. Murty and ;D.P. Choudhury, Advs.;B.B. Rath, ;J.K. Das and ;R.N. Acharya, Advs.
Respondent AdvocateAdv. General and ;Addl. Standing Counsel (for No. 1) and ;A.S. Naidu, Adv. (for No. 2)
DispositionPetition allowed
Cases ReferredState of Uttar Pradesh v. Babu Ram Upadhya
Excerpt:
.....rahman, 1993 (2) glr 430 and new india assurance co. ltd. v smt rita devi, 1997(2) glt 406, approved. new india assurance co. ltd. v birendra mohan de, 1995 (2) gau lt 218 (db) and union of india v smt gita banik, 1996 (2) glt 246, are not good law]. - if notice had been given as required by the rule, possibly, a meeting thereof would have been held, i section 12 (6) of the act clearly indicates that in the event of default to make the amendment, the registrar, after giving the society a reasonable opportunity of being heard, could register the amendment. it is well settled that the power to make subordinate legislation is derived from the enabling act and it is fundamental that the delegate on whom such a power is conferred has to act within the limits of the authority conferred by..........the members of the society. obviously, rule 14 refers to amendments sought for voluntarily by the society. rule 14-a lays down the procedure for amendment of bye-laws under the direction of the registrar as provided in section 12 (5) of the act, the three sub-rules thereof are as follows:--'(1) where it appears to the registrar that amendment of the bye-laws of a society referred to in sub-section (5) of section 12 of the orissa co-operative societies act is necessary, he shall indicate the reasons therefor, and issue a notice calling upon the committee of such society to convene a general meeting to consider such amendment;(2) the notice referred to in sub-rule (1) shall specify-- (a) the text of bye-laws as existing and the bye-laws as proposed for amendment, or the new bye-laws as.....
Judgment:

Misra, C.J.

1. Challenge in this application under Article 226 of the Constitution is to the order dated 5-12-1980 in Annexure 3 passed by the Deputy Registrar of Co-operative Societies (opposite party No. 1 herein) in purported exercise of powers under Section 12 (6) of the Orissa Co-operative Societies Act, 1962 (hereinafter referred to as the 'Act') registering an amendment to the Bye-law No. 30 (ii) (a) of the Berhampur Co-operative Central Bank Limited (hereinafter referred to as the Bank), opposite party No. 2.

2. The short facts relevant for appreciating the contentions advanced before us and for disposal of the writ application are these:--

The petitioner is a Service Co-operative Society registered under the Act while the Bank is a Central Society also registered under the same Act, and the petitioner is affiliated to the said Central Society. The Bank had its Bye-laws duly registered by the Registrar under the Act. Bye-law No, 30 (i) made provision for management and prescribed that the management of the Bank shall vest in a committee consisting of 15 members. The area of operation of the Bank was divided into 10 election zones as indicated in Sub-rule (ii) (a).

On 31-1-1981 the petitioner received a notice dated 29-1-1981 from the opposite party No. 1 calling the general body meeting for election of the Committee of Management which also contained the election programme. Upon enquiry, the petitioner found that the opposite party No. 1 had amended the Bye-law No. 30 (ii) (a) of the Bank and had changed the zonal arrangement contained therein. The petitioner-Society gathered, upon enquiry, the information that the opposite party No, 1 -- DEputy Registrar had issued a notice D/-3-11-1968 (Annex. 2) to the Secretary of the Bank requiring him in exercise of powers under Section 12 (5) of the Act read with Rule 14-A of the Rules made thereunder to amend the Bye-law No. 30 (ii) (a) in the manner indicated in the enclosure to the notice and to submit the amendment proposal to him within 30 days from the date of issue of the notice for registration of the amendment. In the very notice it was further stated that--

'The Secretary of the Bank may appear before the undersigned on 5-12-1980 at 11 A. M. in my office for hearing in pursuance of Section 12 (6) of the Orissa Co-operative Societies Act, 1962.'

The General Body meeting of the Bank was not convened to consider the proposal for amendment. The Committee of Management appeared before the Deputy Registrar on 5-12-1980 and wanted time for filing objection against the proposed amendment. The petition for time was rejected and the Deputy Registrar under Annexure 3 passed the impugned order running thus:--

'In exercise of powers conferred upon me under Section 12 (6) of the Orissa Co-operative Societies Act, 1962, I, Sri S. Swain, Deputy Registrar, Co-operative Societies, Berhampur Division, Berhampur, do hereby register the amendment to Bye-law No. 30 (ii) (a) of the Berhampur Co-operative Central Bank Limited, Regd. No. J. 395, as shown in the aforesaid documents and do hereby sign a certificate of registration of such amendment.'

The petitioner challenges the impugned order by contending that--

(1) The amendment to Bye-laws can be made only by members at a meeting of the Central Body of the members of the Society, and even for amendment, under direction of the Registrar the General Body meeting had to be convened;

(2) The notice under Annexure 2 is vitiated in law as the provisions of Rule 14-A had not been complied with The direction in the notice should have been to convene a General Body meeting for the purpose of considering the amendment;

(3) A reasonable opportunity of being heard had not been given to the Society. Therefore, action under Section 12 (6) of the Act could not be taken; and

(4) The action of the Deputy Registrar, who is no other than a nominated member of the Committee of Management of the Bank, is also otherwise vitiated.

3. A counter-affidavit has been filed by the opposite party No. 1 wherein it has been contended that the petitioner had a statutory remedy of appeal under Section 109 of the Act; no prejudice had been caused by the amendment inasmuch as by the amendment the petitioner's right to be a voter was in no way affected; the Registrar has statutory power to call upon the Society to make the amendment within a specified period if he was of the opinion that the amendment was necessary or desirable in the interest of the Society and the procedure provided under Rule 14-A had been duly complied with; the power under Section 12 (6) of the Act has been duly exercised and, therefore, the order registering the amendment was not open to challenge.

The Bank filed a separate affidavit through its Assistant Secretary pleading that no General Body meeting of the Bank was held to consider the proposed amendment. It was contended that the notice was illegal and the order registering the amendment was, therefore, not a valid one.

An additional counter-affidavit on behalf of the opposite party No. 1 was also filed by the Sub-Assistant Registrar attached to the office of the Deputy Registrar supporting the action of amendment.

4. As there was no interim order of stay of election, at the request of parties the application itself was heard on 23-2-1981 and judgment was reserved. For certain clarification, the matter was re-listed on 11th March, 1981 and again on 16th March, 1981. Taking advantage of the fact that the matter was listed again after being reserved for judgment, two applications for intervention were filed one by one Brundaban Tarei claiming to be a newly elected Director, and the other on behalf of four persons claiming to have been elected to the Board of Management of the Bank. The election is said to have taken place on 27-2-1981.

On 16-2-1961, this Court had directed to the following effect:--

'We do not intend to give any interim direction for stay of the election, but we make it clear that if the petitioner's stand succeeds the fact that we have not granted stay would not be available to the other side to contend that it is open to election dispute and that no interference would be caused under Article 226 of the Constitution.'

The election was, therefore, a pendente lite matter, and since the writ application had already been heard before the election was held, we have not considered it appropriate to allow intervention. In fact, in course of the further hearing on 16th March, 1981 we had told counsel for the two sets of Intervenors that their petitions would not be entertained.

5. Section 12 of the Act deals with amendment of Bye-laws of the Society. Sub-sections (5) and (6) thereof which are material provide that:--

'(5) Where in the case of an Apex Society, Central Society, Co-operative Bank or Financing Bank or in the case of any other society assisted by the State or Central Government in any of the forms Specified in Sub-section (1) of Section 31, the Registrar is of the opinion that an amendment of the bye-laws of any such society is necessary or desirable in the interest thereof, he may, in the prescribed manner, call upon the society to make such amendment within such period, as he may specify in that behalf.

(6) If the society fails to make the amendment within the period aforesaid, the Registrar may, after giving the society a reasonable opportunity of being heard, register the amendment and shall forward to the society a copy of the registered amendment together with a certificate signed by him; and such certificate shall be conclusive evidence that the amendment has been duly registered.'

Rule 14 prescribes the procedure regarding amendment of Bye-laws, and by the very first sub-rule every amendment has to be made only by a resolution passed by not less than two-thirds of the members present at a meeting of the General Body of the members of the Society. Obviously, Rule 14 refers to amendments sought for voluntarily by the Society. Rule 14-A lays down the procedure for amendment of Bye-laws under the direction of the Registrar as provided in Section 12 (5) of the Act, The three sub-rules thereof are as follows:--

'(1) Where it appears to the Registrar that amendment of the Bye-laws of a Society referred to in Sub-section (5) of Section 12 of the Orissa Co-operative Societies Act is necessary, he shall indicate the reasons therefor, and issue a notice calling upon the committee of such society to convene a general meeting to consider such amendment;

(2) The notice referred to in Sub-rule (1) shall specify--

(a) the text of Bye-laws as existing and the Bye-laws as proposed for amendment, or the new Bye-laws as proposed to be incorporated; or the existing Bye-laws which are proposed for deletion;

(b) the period within which such amendment should be sent to the Registrar for registration after getting it passed by the general meeting;

(3) Where the committee of a society files an objection to the proposed amendment, such an objection shall be duly considered by the Registrar, and if the committee desires to be heard, it shall be given an opportunity of being heard. The Registrar may, after considering the representation of the society, register the amendment.'

The notice under Annexure 2 did not conform to the requirements of Sub-rule (1) of Rule 14-A inasmuch as while the Rule required issue of a notice calling upon the committee of such society to convene a general meeting to consider the amendment, the Deputy Registrar by the impugned notice required:--

'I,...... do hereby call upon the said Berhampur Co-operative Central Bank Limited to amend its Bye-law No. 30......'

Admittedly, there has been no meeting of the General Body. If notice had been given as required by the Rule, possibly, a meeting thereof would have been held, I Section 12 (6) of the Act clearly indicates that in the event of default to make the amendment, the Registrar, after giving the society a reasonable opportunity of being heard, could register the amendment. The Registrar has the discretion of registering the amendment, but the mandate in sub-section (6) of Section 12 of the Act is that the society should be given a reasonable opportunity of being heard. While Sub-section (6) requires an opportunity of being heard to be given to the society. Rule 14-A (3) makes provision for hearing the committee of the society. It is pertinent to note that Sub-rule (3) before its amendment in 1978 referred to the society only and not to the committee of the society. That was in consonance with Sub-section (6) of Section 12 of the Act. The amendment, however, introduced the committee. Admittedly, the committee is different from the society. 'Society' has been defined in Section 2 (k) of the Act to mean 'a co-operative society registered or deemed to be registered under the Act'. The committee of a society would be as provided in Section 28 of the Act. There was no dispute before us that a society is different from its committee. While the Act provided that a reasonable opportunity of being heard should be extended to the society, the Rule as amended required the opportunity of hearing to be given to the committee. The Rule has been made in exercise of the power of subordinate legislation. It is well settled that the power to make subordinate legislation is derived from the enabling Act and it is fundamental that the delegate on whom such a power is conferred has to act within the limits of the authority conferred by the Act. The delegates cannot override the Act either by exceeding the authority or by making the provision inconsistent with the Act. (See AIR 1972 SC 2427, Hukam Chand v. Union of India). The Supreme Court also indicated in the case of State of Uttar Pradesh v. Babu Ram Upadhya (AIR 1981 SC 751) that rules must be consistent with the provisions of the Statute. Therefore, as the Statute required the Society to be given a reasonable opportunity of being heard, the Rule could not confine the right of hearing to the Committee of Management, a body different from the Society. The learned Advocate General fairly conceded before us that Sub-rule (3) was inconsistent with, the provision of the Statute and, therefore, was ultra vires the Act.

In the instant case, the Committee had appeared before the Deputy Registrar and had asked for an adjournment for availing the opportunity of hearing. The Deputy Registrar rejected the prayer on the very first day fixed for hearing and forthwith proceeded to register the amendment. In view of our finding that Sub-rule (3) of Rule 14-A is ultra vires the Statute and in view of the position that no notice to the Society was given for being heard, we are inclined to agree with the counsel for the petitioner that the amendment has been registered without complying with the Statute.

There is force in the contention of the counsel for the petitioner that the scheme of the Statute contemplates consideration of the amendment of Bye-laws by the General Body -- whether the amendment be voluntary or is imposed by the Registrar. Where it is an imposition by the Registrar, the proposed amendment has to be considered by the General Body, and if it be not carried, there is scope for objection which shall be heard. Bye-laws are essentially contractual in character. When Bye-laws are to be amended, it is appropriate that the members are apprised of the proposal for amendment and are given an opportunity of considering the propriety of the amendment, and where they do not accept the amendment, they must be given a hearing whereafter the Registrar may impose the amendment. The manner in which the amendment in the instant case has been carried is not, therefore, in accordance with the scheme contained in the Act.

6. The learned Advocate General canvassed before us reiterating the contention in the counter-affidavit that as there was no prejudice caused to the petitioner by the amendment, the writ application should not be entertained. As we have found, the procedure prescribed for the amendment had not been followed, notice in conformity with the provision in Rule 14-A had not been given, Sub-rule (3) of Rule 14-A being ultra vires the Statute, appearance of the Committee of Management on the date fixed does not amount to availing the statutory opportunity of being heard; a reasonable opportunity of hearing had not also been granted. The cumulative effect of these would certainly vitiate exercise of jurisdiction, particularly where the scheme in the Statute is that amendment should be by a voluntary process as a rule and could be imposed under certain circumstances as an exception. Where the Statute prescribes a particular procedure to be complied with, for exercising jurisdiction in an exceptional manner, it is appropriate that the procedure should be strictly followed and failure to comply with the statutory requirement should be seriously viewed. There may be instances where the Court would address itself to the question of prejudice while considering whether extraordinary jurisdiction should be exercised. But where patently the provision itself is ultra vires the Act and the statutory mandate has not been followed and rules of natural justice have not been complied with, though the statutory content is a reasonable opportunity of hearing being given, we do not think, the objection of the learned Advocate General should be entertained. We are, therefore, of the firm opinion that the order under Annexure 3 passed by the Deputy Registrar is vitiated and has, therefore, to be quashed.

7. The writ application is accordingly allowed with costs and we quash the order under Annexure 3 by issue of a writ of certiorari. The action taken on the basis of such an amendment must automatically fall.

8. Hearing fee is assessed at Rupees 100/- (one hundred) to be paid by opposite party No. 1 only.

Misra, J.

9. I agree.


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