Skip to content


Lambha Vividh Karyakari Seva Sahakari Mandli Ltd. and anr. Vs. District Registrar, Co-op. Societies (Rural) and ors. - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtGujarat High Court
Decided On
Judge
Reported in(1973)14GLR786
AppellantLambha Vividh Karyakari Seva Sahakari Mandli Ltd. and anr.
RespondentDistrict Registrar, Co-op. Societies (Rural) and ors.
Cases ReferredMadan Mohan Sen Gupta v. State of West Bengal
Excerpt:
- - therefore, in any view of the matter, this preliminary objection must fail. in fact, after such bye-laws laying down the conditions of service were made and any person entered the employment of a society, those conditions of service would have to be treated as conditions accepted by the employee when entering the service and would thus bind him like conditions of service especially forming part of the contract of service. the learned advocate general as well as mr. their lordships held that it was well understood that a mandamus lies to secure the performance of a public or statutory duty in the performance of which the one who applies for it has a sufficient legal interest. if any of these elements existed then, whatever the terminology used, and even though in certain.....j.b. mehta, j.1. the petitioners in these two petitions challenge the rejection of the nomination paper which was filed at the ensuing election of the directors of the federal society namely the co-operative bank in question by the committee which was set up by the board of directors under the relevant rules. in the first petition on behalf of the petitioner no. 1 member society and as its representative and as the member of the managing committee, petitioner no. 2 khodabhai chhaganbhai had filed the nomination for the ensuing election which was to be held on october 31, 1972. the said nomination was sought to be rejected on the ground that the petitioner no. 2 was carrying on money lending business. this decision was sought to be taken by the respondent election committee on september 6,.....
Judgment:

J.B. Mehta, J.

1. The petitioners in these two petitions challenge the rejection of the nomination paper which was filed at the ensuing election of the Directors of the Federal Society namely the Co-operative Bank in question by the Committee which was set up by the Board of Directors under the relevant rules. In the first petition on behalf of the petitioner No. 1 member Society and as its representative and as the member of the Managing Committee, petitioner No. 2 Khodabhai Chhaganbhai had filed the nomination for the ensuing election which was to be held on October 31, 1972. The said nomination was sought to be rejected on the ground that the petitioner No. 2 was carrying on money lending business. This decision was sought to be taken by the Respondent Election Committee on September 6, 1972 merely on the objection, but the Chairman of that Committee pointed out to the members that before rejecting the nomination the persons concerned must be heard and that the objectors should also have been asked to remain present. The objectors, however, did not remain present. On a re-consideration the petitioner was asked to render his explanation and to remain present with his evidence at the hearing objection on September 13, 1972. As per proceedings which are recorded in this connection, on September 13, 1972 a surprising thing happened. Four members of this Election Committee other than the Chairman which consisted only 5 members took up the attitude that they did not want to hear these petitioners. Therefore, without hearing the petitioners in both these petitions, the nomination papers of the petitioners were rejected In the first petition the rejection was on the ground that its representative petitioner No. 2 of the member society was carrying on money lending business. In the second petition the nomination was rejected on the ground that since many years he was not residing in the area of the petitioner No. 1 member society. It should be noted that in the second petition the nomination was filed to represent also petitioner No. 3 member society. Even that nomination was also similarly rejected. The petitioners in both the cases thereupon under the relevant Rule 8 of the Election Rules approached the District Registrar Respondent No. 1. In appeal the District Registrar, however, passed an order on September 25, 1972 to the effect that these questions were not within his jurisdiction and, therefore, nothing was required to be decided in that connection. He, however, asked the petitioners to pay the relevant court fees and send the papers to the Board of Nominees. The petitioners have, therefore, in view of the ensuing election filed the present petitions on October 9, 1972. In view of the urgency of these matters an early hearing was given. The Respondents have, however, filed no affidavit to controvert the allegations in these petitions. The Respondents have at the outset raised various preliminary objections. The first objection was that the alternative remedy of appeal before the nominee was not exhausted. It is true that by way of abundant caution the petitioners have approached the Board as advised by the Registrar. The existing alternative remedy could never be urged as a bar to the exercise of jurisdiction by this Court especially in such cases where the order is completely arbitrary and perverse and against all principles of natural justice. The relevant Election Rule 8 in Part III provides that the decision of the Election Committee shall be appealable before the District Registrar within a period of 8 days after the intimation of the rejection of the nomination. It is further provided that the District Registrar shall treat this appeal as a dispute under Section 96 'and shall dispose of the matter in accordance with the provisions of 1961 Act and the Rules. The Respondents have vehemently argued including the Advocate General that this provision of appeal at the initial stage was not to the District Registrar as the persona designata. By the two notifications under Section 3(3) and Section 98 issued by the State on July 16, 1970 at Gazette Part IV-B page 1729 and on June 25, 1970 Gazette Part I, page 800, the nominees therein mentioned are given the powers of the Registrar under Sections 96 to 101, and also under Sections 98 by second notification. In view of the delegation, the Registrar's order was sought to be justified. Even assuming an appeal lay, that would not be enough so as to bar the jurisdiction of the High Court when an order is alleged to be ultra vires, arbitrary and perverse and contrary to all principles of natural justice. Besides this, Registrar has refused to exercise jurisdiction in this appeal on the ground that he had no jurisdiction. He did not pass this appeal to the nominee so that it should be decided by the delegate, as it is now sought to be contended. There is a further debatable question in view of the decision of the Division Bench of the Maharashtra High Court in Madhukar Ganpatrao Somvanshi v. Sheshrao Narayanrao Biradar : AIR1972Bom129 where it has been held that such a bye-law providing for an appeal would be inconsistent with the provisions of the Act. Even under our Act, Section 97 (i)(d) provides for a limitation when the dispute under Section 96 is in respect of the election of office bearer of a society, and such dispute under Section 96 should be raised only within two months from the date of the declaration of the result of the election. Therefore, the Maharashtra Division Bench had pointed out in view of these provisions that there was a likelihood of conflict of decisions if same question was to be inquired into on two or more occasions. In such election matters, utmost expedition was required. When the provision of election petition by raising the dispute of election, after the election took place, was enacted, it was very doubtful whether such an inconsistent bye-law would be saved under the new Act. It is not necessary to conclude this controversy in the present petition, but this remedy in any event was highly debatable. Therefore, in any view of the matter, this preliminary objection must fail.

2. The second preliminary objection was that the bye-laws of a Co-operative Society including its election rules which are made under the relevant bye-law having a contractual origin may be binding on the members by reason of that contract, but they would have no binding effect so as to have a force of law. In Co-operative Central Bank Ltd. v. Additional Industrial Tribunal, Hyderabad : (1969)IILLJ698SC their Lordships considered this question under a similar scheme in the context of bye-laws of a Co-operative Society as to whether they would have the force of law. Their Lordships pointed out that it was the settled position that if a statute gives power to a Government or other authority to make rules, the rules so framed would have the force of statute and would be deemed to be incorporated as a part of the statute. That principle, however, would not apply to bye-laws of the nature that a co-operative society was empowered by the Act to make. The bye-laws that are contemplated by the Act could be merely those which govern the internal management, business or administration of a society. Their Lordships pointed out that they may be binding between the persons affected by them, but they did not have the force of a statute. In respect of Bye-laws laying down conditions of service of the employees of a society, the bye-laws would be binding between the society and the employees just in the same manner as conditions of service laid down by contract between the parties. In fact, after such bye-laws laying down the conditions of service were made and any person entered the employment of a society, those conditions of service would have to be treated as conditions accepted by the employee when entering the service and would thus bind him like conditions of service especially forming part of the contract of service. Their Lordships further pointed out that such bye-laws that can be framed by a society under the Act are similar in nature to the Articles of Association of a Company incorporated under the Companies Act and such Articles of Association have never been held to have the force of law. It was further pointed out that in a number of cases, conditions of service for industries are laid down by Standing Orders certified under the Industrial Employment (Standing Orders) Act 1946. Even though they were held binding between the employers and the employees they were not held to have such force of law as to be binding on Industrial Tribunal adjudicating an industrial dispute. Therefore the settled legal position is that normally the Bye-laws have a contractual original. Even when they are framed under the Co-operative Act and are registered as such by the Registrar they would not have the force of law. They are similar in nature to the Articles of Association. They are binding between the persons affected by them because of the contractual origin, but they have no force of statute. This decision settles the legal position as to whether the Bye-law as such has the force of law without being incorporated as part of the statute. The employees could never urge that such bye-laws had a force of law so as to be binding on the Industrial Tribunal. So far as the Industrial Standing Orders are concerned, it is true that in Workmen in Buckingham and Carnatic Mills v. Buckingham and Carnatic Mills 1970 (1) Labour Law Journal 26, at Page 29, Their Lordships have held that the observations of the Labour Court were erroneous. It observed that the Standing Orders certified under the Industrial Employment Act, 1946 though binding on the employer and the workers had no statutory force and, in consequence, were merely directive and not mandatory. Their Lordships in terms observed that the Labour Court had misunderstood the decisions of the Supreme Court on this point. Their Lordships had held in their earlier decision in Workers of Dewam Tea Estate and Ors. v. Their Management (1964-1) Labour Law Journal 358 that standing orders certified under the Industrial Employment (Standing Orders) Act, 1946 became part of the statutory terms and conditions of service between the employer and employees and that they would govern the relations between the parties. Therefore, what is laid down by Their Lordships in the aforesaid Co-operative Bank's case is that the standing orders certified under the Industrial Employment Act, 1946 which had become part of the statutory terms and conditions of service between the employer and employees were not having such a force of law as to be binding on Industrial Tribunal adjudicating the dispute. Their Lordships have never held that even when these bye-laws are referred and cited in the statute so as to incorporate them in the statutory control laid down under the Act, even so far as the members are concerned, the relevant bye-laws which are so incorporated would not impose any statutory obligations. There are various provisions in the Co-operative Act and under which while laying down various controls, this statute has regulated the powers by various regulatory measures enacted for proper implementation of this Cooperative measure. In Section 28(7) it is categorically enacted that the voting right of a member of a Federal Society shall be regulated by the Rules and by the Bye-laws of the Society. It could hardly be contended that so far as Section 28(7) is concerned, this regulatory provision as regards voting right of members of a Federal Society does not expressly incorporate the various regulations made under the Rules and the Bye-laws. If, therefore, the voting rights are sought to be interfered with otherwise than as prescribed by these regulatory measures, it is not that the bye-law would be contravened, but it would be an action ultra vires Section 28(7) in view of this express reference and citation. So far as the present controversy is concerned, Section 74 in terms provides that the management of every society shall vest in a committee, constituted in accordance with this Act, the Rules and Bye-laws, which shall exercise such powers and perform such duties as may be conferred or imposed on it respectively by this Act, the rules and the bye-laws. This provision in terms enacts how a Co-operative Society's management shall be carried on under this Act which is vested in a committee. Section 74 in terms provides how such committee shall be constituted in accordance with the Act, Rules and the Bye-laws. Therefore, it is obvious that a Committee which is not constituted in accordance with the Act, Rules and Bye-laws, or in accordance with the statutory mandate, would not be the Committee which can claim powers of management. Section 74 further provides that this committee which is so constituted for management of the society shall exercise such powers and perform such duties as may be conferred or imposed on it respectively by the Act, Rules and the Bye-laws. Therefore, Section 74 not only creates the management committee under the Act, but defines its powers and duties. These powers and duties must be treated as statutory powers and statutory duties and a committee which exercises such statutory powers and statutory duties must fulfil the test of a statutory authority. It is true that the Bye-laws had their origin in the contract and they had to be registered under Section 9(b) by the Registrar, if they were found in conformity with the Act and the Rules. If they were not so found, the Registrar shall have the power to direct the Society to amend such bye-laws so as to bring them in conformity with the Acts and the Rules. Section 2(2) defines 'by-laws' as by-laws registered under this Act and for the time being in force and include registered amendments of such by-laws which includes compulsory amendment under Section 14. Therefore, to the extent that these bye-laws are in terms referred and cited in any provision of the Act, they are re-written in the section and the section could not be read without the language of the bye-laws being re-written therein. In Collector of Customs v. Sampathu Chetty : 1983ECR2198D(SC) Their Lordships pointed out the distinction between a mere reference to or a citation of one statute in another and an incorporation which in effect means the bodily lifting of the provisions of one enactment and making it part of another so much so that the repeal of the former leaves the latter wholly untouched. When such type of incorporation in this wider sense is not done, the reference to or citation without a wider incorporation would have the effect, when the other statute is repealed, as laid down in Section 8(1) of the General Clauses Act, so that the reference would be construed as reference to the provision so re-enacted. In all such cases, what is so cited and referred would always be deemed forming part of the Act in the same manner as if it was enacted in the body of the Act. Therefore, Section 74 must be treated as creating statutory powers and statutory duties of this management Committee in which the management of the Co-operative Society is vested and which is to be constituted in accordance with the Act, Rules and the Bye-laws. The learned Advocate General as well as Mr. Vakil had pointed out that the Committee is constituted under the Bye-laws. If the Bye-laws have no statutory origin, but only a contractual origin, the Committee would not be the statutory authority. Ordinarily it would be true. In the present case, however, Section 74 gives the Bye-law the statutory support. There is hardly any substance in Mr. Vakil's contention that there would be no power or duty of the Committee under Section 74 because bye-laws would be varying so far as different societies are concerned. What Section 74 enacts is a salutary control by laying down what shall be the powers and what shall be the duties of this Committee and how it shall be constituted. If, therefore, the Committee is not constituted as required by Section 74 or it seeks to exercise power except in accordance with the mandatory Bye-laws, the Committee would be ultra vires or the exercise of power in question would be ultra vires Section 74. In this connection the decision in Praga Tools Corporation v. C.V. Manual : (1969)IILLJ479SC would be very material. At page 1309 Their Lordships pointed out that under Article 226 every High Court shall have power to issue to any person or authority orders and writs, including writs in the nature of habeas corpus, mandamus, etc. or any of them for the enforcement of any of the rights conferred by Part III of the Constitution and for any other purpose. Their Lordships held that it was well understood that a mandamus lies to secure the performance of a public or statutory duty in the performance of which the one who applies for it has a sufficient legal interest. Thus, an application for mandamus will not lie for an order of reinstatement to an office which is essentially of a private character nor can such an application be maintained to secure performance of obligations owed by a company towards its workmen or to resolve any private dispute. Further proceeding, Their Lordships observed that the applicant for a mandamus should have a legal and a specific right to enforce the performance of those duties. Therefore, the condition precedent for the issuance of mandamus is that there is one claiming it a legal right to the performance of a legal duty by one against whom it is sought. An order of mandamus, is, in form, a command directed to a person, corporation or an inferior tribunal requiring him or them to do a particular thing therein specified which appertains to his or their office and is in the nature of a public duty. Their Lordships, however, further added that it was not necessary that the person or the authority on whom the statutory duty is imposed need be a public official or an official body. Their Lordships gave an illustration which would cover the present case that a mandamus could issue to an official of a society to compel him to any out the terms of the statute under or by which the society is constituted or governed and also to companies or corporations to carry out duties placed on them by the statutes authorising their undertakings. Even as regards the alternative relief of declaration their Lordships on the same page 1310 held that a declaration could be issued against a person or an authority or a corporation where the impugned act is in violation of or contrary to a statute under which it is set up or governed or public responsibilities imposed on such person, authority or body by such statute.

3. This decision settles the question that a mandamus or even a declaratory relief could issue to an official of a society or to a company registered under the Companies Act, if such officer, society or the company which is constituted and governed by the statute authorising such undertaking does not carry out the mandatory obligation by way of duty imposed on it by the statute. Where the impugned Act is in violation of or contrary to the statute under which the Society or a limited company is set up, for such ultra vires act both a mandamus can issue or a declaratory relief could be granted. In Vidya Ram Misra v. Shri Jai Narain College : (1972)ILLJ442SC their Lordships have exhaustively considered this question by referring even to the latest decision of the House of Lords in Malloch v. Aberdeen Corporation (1971) 1 W.L.R. 1578. The test evolved by Lord Wilberforce in that case, as to cases where administrative law remedies including principles of natural justice would not be applied, was to confine them to what were known as 'pure master and servant cases'. Such cases were defined by the learned Lord as those in which there was no element of public employment or service, no support by statute, nothing in the nature of an office or a status which was capable of protection. If any of these elements existed then, whatever the terminology used, and even though in certain inter-partes aspects the relation might be master and servant, there might be essential procedural requirements to be observed, and failure to observe them would result in a dismissal of an employee being declared to be void. These observations were approved by their Lordships and were applied to the facts of that Vidya Ram's case where it was found there was no element of public employment and nothing in the nature of status which was capable of protection. Therefore, the real question in such cases would be whether it is a question of purely contractual obligation or whether there are other elements which would justify the protection of administrative law, e.g. where there were public employments, public offices, or support by statute or something in the 'nature of office or status which could be protected by such remedy. This principle would be clearly applicable to such cases where a society or a corporate entity seeks to commit ultra vires act against its member in violation of the statutory provision which lays down a mandatory obligation that power or duty in this connection shall be exercised only in accordance with the Act, Rules and the Bye-laws. Where Bye-law is by reference and citation incorporated in this statutory regulation under which the society or corporation is set up and governed, there would always be the case in view of the statutory support and in view of the nature of such office or the status, which would attract the protection of administrative law when the office bearer is sought to be put out of contest by exercising any power ultra vires the Act.

4. It would be equally important in this connection to consider the other question that the bye-law must be creating the mandatory obligation. If Bye-law is merely director in nature and is not mandatory as per the settled rules of construction, such bye-law even if it is contravened would not be giving rise to a remedy at administrative law. This would happen even in cases of bye-laws which have a statutory origin, as was laid down by Their Lordships in Ratilal Chhaganlal v. Dhari District Municipality : AIR1971SC749 . In that case a declaratory relief even to such Municipal Secretary was refused on the sole ground that the rules framed by the Municipality in that connection were directory and not mandatory. The learned Advocate General had in this connection vehemently relied upon a decision of our learned brother T. U. Mehta J. in Special Civil Application No. 1176 of 1972 decided on 3/4th October, 1972. (Natubhai Gordhandas Patel v. State XIV G.L.R. 625). Four tests were laid down after exhaustive consideration by our learned brother by way of guidelines to decide whether a particular regulation or bye-law is enforceable as a statute:

(I) 'The first test was that if the regulation or bye-law in question imposes a legal obligation breach of which is punishable at law or which can be enforced through an ordinary process of law, then it possesses a statutory character.

As an illustration, the following observations of Lord Russel C. J. in Kruse v. Johnson (1898) 2 Q.B. 91 at 96 were noted:

But first it seems necessary to consider what is a by-law. A by-law of the class we are here considering, I take to be an ordinance affecting the public, or some portion of the public, imposed by some authority clothed with statutory powers ordering something to be done or not to be done, and accompanied by some sanction or penalty for its non-observance.(2) A corollary to the above proposition is that if a regulation or a bye-law creates a vested right in any individual or an ascertained body of persons, then also that regulation or bye-law may possess a statutory character.

(3) But if the said regulation or bye-law has merely a contractual character, its statutory force is lost as was held by the Supreme Court in Indian Airlines v. Sukhdeo Rai : (1971)ILLJ496SC and U. P. Warehouse Corporation v. C.K. Tyagi : (1970)ILLJ32SC .

(4) If the regulation or bye-law does nothing more than regulating the internal affairs of the statutory body, it merely possesses the character of an article of association of a company and does not possess any statutory authority. (Vide Co-operative Central Bank Ltd. v. Indus Tribunal : (1969)IILLJ698SC ).

5. The learned Advocate General vehemently argued that the propositions 3 & 4 would govern such a case. Our learned brother has rightly held that the propositions 3 & 4 are applicable to those cases where a bye-law has merely a contractual character or where it is merely a managerial regulation which does nothing more than regulating the internal affairs of a statutory body. In the present case the bye-law in question is not merely contractual in character. When it has been by reference and citation incorporated in the statutory regulation laid down in Section 74 of the Act defining the powers and obligations of the Managing Committee, it is not a merely managerial regulation for the obligation it creates is the mandatory obligation, which relates to the right of the representative of a member society to be elected as an office bearer of the Federal Society. In such a case the bye-law has not only the statutory support, but the bye-law creates the mandatory obligation and imposes the statutory duty and the violation of the bye-law would make the act of the statutory authority ultra vires its Charter. In T. P. Dover v. Lodge Victoria : [1964]1SCR2 at page 1146 Their Lordships considered the entire question in connection with such domestic bodies as-to the source of power of such associations like clubs and masonic lodges to expel their members. The source of this power was the contract on the basis of which the members had joined. Their Lordships pointed out that the contractual origin of the rule of expulsion had its corollary in the cognate rule that in expelling a member the conditions laid down in the rules must be strictly complied with. The classic decision in Maclean v. Workers' Union in 1929-1 Ch. 602, page 623, was followed and their Lordships held that such a domestic tribunal was bound to act strictly according to its rules and was under an obligation to act honestly and in good faith. Where the rule provided in any particular respect that some condition must be fulfilled, then that condition must be strictly complied with, since the power of expulsion was itself dependent on the terms of the rule. At page 1147 a few principles were summarised by pointing out that (i) A member of a masonic lodge is bound to abide by the rules of the lodge; and if the rules provide for expulsion, he could be expelled only in the manner provided by the rules; (2) The lodge is bound to act strictly according to the rules; whether a particular rule is mandatory or directory falls to be decided in each case having regard to the well settled rules of construction in that regard, and (3) The jurisdiction of a civil court was rather limited; it could not obviously sit as a court of appeal from decisions of such a body; it could set aside the order of such a body, if the said body acted without jurisdiction or did not act in good faith or acted in violation of the principles of natural justice. Therefore, it is well settled that where a bye-law even where it has contractual origin, is mandatory in its nature,, there would be no power acquired under such bye-law of take an action unless the condition precedent laid down therein was first fulfilled. Therefore, if the bye-law is mandatory in its nature, the power to expel a member could never be exercised unless those mandatory conditions were first fulfilled and in any event such expulsion would be ultra vires the very statute or Charter of the body which is created. In the present context of a Co-operative Society or a Limited Company when a regulation or Bye-law is mandatory in nature and if its conditions precedent were not fulfilled, the power sought to be exercised would be clearly vitiated as ultra vires exercise of power. In such a case both the remedies by way of mandamus or declaratory relief would be available, especially when what is sought to be deprived of or enforced is the right of member to become an office bearer which could always be enforced through ordinary process of law.

6. In view of the aforesaid settled legal position it is not necessary to go into the decisions of the various High Courts which have taken a view that a writ against a Co-operative Society in such cases could be issued although the decision in such cases has rested on much wider grounds that the Cooperative Society was a statutory authority within the meaning of the 'State' as defined in Article 12 of the Constitution as laid down by the Division Bench of the Madhya Pradesh High Court in Dukhooram Gupta Hari Prasad Gupta v. Co-operative Agricultural Association : (1962)ILLJ353MP and by a Division Bench of the Delhi High Court in Mohinder Singh v. Union of India : AIR1969Delhi170 , or on the ground' that the management of such Co-operative affairs was in the nature of management of public affairs as laid down by Single Judge in Madan Mohan Sen Gupta v. State of West Bengal : AIR1966Cal23 . It would suffice for the present purpose to resolve the present controversy on the narrower ground that the bye-law in question had the relevant statutory support so as to be enforceable, and because the bye-law created such a mandatory obligation in the present context that the representative of the member society could invoke protection of administrative law when he was driven out from the contest at the ensuing election by such an arbitrary, ultra vires exercise of statutory power.

7. Turning to the facts of the present case, there is no controversy that even though the Chairman of this Election Committee, which had acted as delegate of the Director Board which was managing the Federal Society (Respondent Bank), took the most reasonable attitude of refusing to proceed in such matter of rejection of nomination paper merely on the allegation made in the objection petition, when the objectors were not even prepared to substantiate their allegation by appearing before the Election Committee, the other four members took absolutely a perverse attitude. At the initial stage they appeared to have agreed with the Chairman in giving opportunity to these two concerned petitioners to appear with the evidence and have their say. At the final occasion, however, they took a stubborn attitude with the Chairman and straight away did not hear the concerned petitioners. Therefore, the nomination papers in both the cases have been rejected without giving any hearing to the concerned petitioners in contravention of all principles of natural justice. The nomination papers could be rejected only on the ground that there was a statutory disqualification as per the relevant election rules under the bye-laws or in the Act rules. In any event the election Committee which was to scrutinise the objection had a duty to justly decide this controversy between these two rival parties in which it was constituted as a Judge. It is only on the existence of the relevant disqualification ground that the nomination paper could be rejected. Therefore, the Election Committee bad no power under the relevant bye-law to reject the nomination papers without first being satisfied as to the existence of the disqualification ground and the approach in such a case must be quasi-judicial approach. It is well settled as laid down by Their Lordships in Malhotra's case A.I.R. 1972 B.C. 689 that whenever such an order is to be passed affecting the right of a party on being satisfied as to the existence of the relevant statutory ground, even an administrative function has to be exercised with a quasi-judicial approach. Their Lordships have followed the ratio adopted in Kraipak's case : [1970]1SCR457 . Therefore, in such a matter both a certiorari and a mandamus or a declaratory relief could always be issued looking to the nature of duties of the Election Committee. As to the ground of disqualification what is relied upon in the first petition is that he was carrying on money lending business which would be competing with the business of the Bank. This ground is not specifically enumerated in the Election Rules which are annexed at Exh. B to the petition. The Election Rules are made under the relevant Bye-law No. 8(i)(iv) in Chapter 8 dealing with the Managing Committee, its constitution and powers. The relevant Bye-law provides that the Directors shall be elected according to the rules framed by the General Meeting and approved by the Registrar. Even in the Bye-law, disqualifications are mentioned. This disqualification, however does not appear in the relevant Election Rules in Part I, and even in bye-laws no such disqualification appears. The respondents have, however, rightly pointed out that under the Act rules of 1965, Rule 32(2) provides that notwithstanding anything contained in Sub-rule (1), in case of societies dispensing credit, no person who does money lending business shall be eligible for appointment as a member of the Managing Committee. Rule 35 of the Act-Rules has been amended by Sub-clause (3) which provides that no person who carries on business of the kind carried on by the Society shall be eligible to be appointed as a servant or officer of the Society without the sanction of the Registrar. Therefore it could never be urged by the petitioner in the first petition that this could not be considered as a ground of disqualification because the Act-Rules must have precedence and must be read in to the relevant election bye-laws and Rules. In the present case, however, the respondents have upheld the objection on the sole ground that the objection has been raised. When they gave opportunity to the objectors to produce evidence, the objectors did not remain present. The concerned petitioner had vehemently denied this suggestion. He was not given any opportunity to be heard. Therefore there is not an iota of material in the present case on the basis of which such objection could be upheld. Mr. Shah for those four concerned members of the Election Committee vehemently argued that opportunity must be given to the Election Committee to go into this matter once again. There can be a remand if there was some material and the only ground in the petition was that principles of natural justice were violated In the present case admittedly except the bare objection there was no material whatsoever. The objectors were not prepared to tender any evidence in this connection. Therefore, besides the fact that an opportunity to be heard was denied to the concerned petitioner, there was no material whatsoever on the basis of which the Election Committee could decide that this petitioner was dis-qualified on the ground that he was doing money lending business and was not eligible for appointment as a member of the managing Committee, which is in this context styled as Board of Directors. In the present case the respondent has illegally rejected the nomination of petitioner No. 2 which affects the rights of the petitioners There is no evidence in support of the objection and the Petitioner is not given opportunity to controvert the objection and has not been given opportunity to lead evidence and of being heard. Therefore, the concerned Respondent has acted in flagrant violation of natural justice and so far as the first petitioner is concerned, such a thoroughly arbitrary action contrary to natural justice must be quashed or held to be invalid. 1 here-fore, in the first petition a mandamus must follow directing the Election Committee and the Society to treat the petitioner No. 2 in the first petition as validly nominated candidate.

8. So far as the second petition is concerned, the objection is upheld on the ground that since last few years the concerned member was not residing m the area of the member society. The Respondents were unable to show any ground either in the Act rules or in the Bye-laws or in the Election rules under which this ground would be a ground of disqualification. What Mr. Shah vehemently urged was that such a person could not have been validly enrolled as a member by the member society, and so he could not have become a member of the Managing Committee of the member society, as only a person who was a member of the managing Committee of the member society could be a representative who could contest this election. This question could therefore be gone into by the Election Committee. The contention is thoroughly misconceived. Section 23(i) provides that where a person becomes a member of any society on his making a declaration as required by the by-laws of the society or otherwise and such declaration is found to be false, then such person shall be disqualified to continue as a member of the society. Section 23(2) provides that where a person continues as the member of a society, notwithstanding the disqualification incurred by him under Sub-section (1), he shall be removed from the society by the Registrar after giving him an opportunity of being heard. Under Section 26, a person ceases to be a member only on his resignation or on his removal or expulsion. Therefore, the concerned member would always continue as a member, once he was validly admitted. It is not the case that he had made any false declaration in the member society. Even in that event the power of removal would have been with the Registrar under Section 23(2) of the Act. Even Section 11 provides that when any question arises whether for the purpose of the admission of a person as a member of a society under the Act, the person was resident in a particular town or village etc., such question shall be decided only by the Registrar. Therefore, this question is the statutory question under the Act which could be decided only by the Registrar when it was properly raised. Therefore, the Election Committee has proceeded completely under a misconception of law. Subsequent cessation of residentship was never a ground of disqualification under the relevant election bye-laws. In that view of the matter so far as the petitioner in the second petition is concerned, his nomination was rejected on a completely ultra vires ground without giving him any opportunity to be heard. Therefore, in both these matters, the power having been arbitrarily and perversely exercised by the Election Committee, the order refusing to accept the nomination of the concerned petitioners in both the cases was completely invalid, null and void order. Therefore, in these cases both the petitions are allowed by declaring those orders rejecting the nomination papers of the concerned petitioners to be null and void and by quashing those orders. A further mandamus is ordered in each case that the Respondent Society as well as the Election Committee shall treat both these concerned petitioners as validly nominated at the ensuing election. It is true that under Rule 9, twelve days' time has to be given for holding the election showing the names of validly nominated candidates. That statutory period would not be available and, therefore, the present election cannot be held legal on the notified date on October 31, 1972. The Respondent Society and the Election Committee are therefore, further directed to hold election after fresh notice under Rule 9 showing the names of these two concerned petitioners.

9. Rule is accordingly made absolute in both the petitions with no order as to costs in the circumstances of the case.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //