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R. Venkatasubba Reddiar Vs. the Registrar of Co-operative Societies, Madras and ors. - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtChennai High Court
Decided On
Case NumberWrit Appeal No. 36 of 1954
Judge
Reported inAIR1955Mad267; (1956)IMLJ284
ActsConstitution of India - Article 226; Madras Co-operative Societies Act, 1932 - Sections 12(2) and 12(3); Madras Co-operative Societies Rules - Rule 24
AppellantR. Venkatasubba Reddiar
RespondentThe Registrar of Co-operative Societies, Madras and ors.
Appellant AdvocateM.K. Nambiar and ;C.F. Louis, Advs.
Respondent AdvocateSpecial Govt. Pleader, ;E. Venkatesan, ;P. Kothandaramayya and ;V.V. Krishnamurthy, Advs.
Disposition Appeal allowed
Cases Referred(Clinch v. Financial Corporation
Excerpt:
.....of the act requires that the registrar should be satisfied before registering the amendment of the by-laws that they are not contrary to the act or to the rules, and it is only after his being so satisfied that he should register the amendments; 50 prescribes the period of notice for resolutions, and for any amendment to a by-law proposed as well as notice for a general body meeting. ' at page 61, he quotes, how is it possible for the court to know how many share-holders abstained from attending the meeting, being satisfied that the arrangement, as it was proposed, was advantageous to them, and being quite content to exercise no voice about it -(clinch v. tribunal under an act like the one here shall be conclusive and final (section 105), then we should not;.....co-operative societies and to form new societies, that is, to reconstitute the madras state co-operative bank ltd, the madras co-operative central land mortgage bank ltd. and the madras handloom weavers' co-operative society ltd. ordinance ii of 1953 was issued for that purpose. it was decided to reconstitute, the madras co-operative central land mortgage bank ltd, hereinafter called 'the . bank' excluding from its area of operation the part of the territory transferred to the andhra state. for this purpose the ordinance provided that the registrar of co-operative societies for the state of 'madras should take steps to reconstitute the existing societies and form new societies for the andhra state. the registrar drafted certain proposals for the purpose of reconstituting the madras.....
Judgment:

Satyanarayana Rao, J.

1. This is an appeal against the order of our learned brother, Rajagopala Aiyangar J. dismissing W. P. No. 1026 of 1953'. The application was filed by one of the directors of the Madras Cooperative Central Land Mortgage Bank Ltd., for the issue' of a writ of certiorari or any other appropriate writ, direction or order calling for the Records relating to the passing of the resolution No. 7 by the General body of the Madras Co-operative Central Land Mortgage Bank Ltd., on, 5-9-1953, and for quashing the registration of the same on the same day by the Registrar of the Co-operative Societies.

2. Consequent on the separation of the Andhra State it was decided by the Government of Madras to reconstitute the existing State Co-operative societies and to form new societies, that is, to reconstitute the Madras State Co-operative Bank Ltd, the Madras Co-operative Central Land Mortgage Bank Ltd. and the Madras Handloom Weavers' Co-operative Society Ltd. Ordinance II of 1953 was issued for that purpose. It was decided to reconstitute, the Madras Co-operative Central Land Mortgage Bank Ltd, hereinafter called 'the . Bank' excluding from its area of operation the part of the territory transferred to the Andhra State. For this purpose the ordinance provided that the Registrar of Co-operative Societies for the State of 'Madras should take steps to reconstitute the existing societies and form new societies for the Andhra State. The Registrar drafted certain proposals for the purpose of reconstituting the Madras Co-operative Central Land Mortgage Bank Ltd., and forming the Andhra Cooperative Central Land Mortgage Bank Ltd., and sent them to the bank for confirmation by the general body of the bank.

On 3-8-1953 the Bank gave notice or a general body meeting of the share-holders of the Bank to be held' on 5-9-1953 at 11 A. M. In the premises of the bank. In the agenda for that meeting proposal for bifurcation of the Bank consequent on the formation of the Andhra State and also amendments to by-laws were included. Actually along with, that notice the proposed amendments to by-laws were not circulated to the members of the general body. On 16-8-1953 a meeting of the Board of Directors was held, and at that meeting the Directors resolved that certain amendments to the by-laws should be made. A supple/ mentary notice of 20-9-1953 was issued to the members of the general body, and a printed notice in which the existing by-laws and the proposed amendments were embodied, was circulated to the members. The important changes were, while the executive management of the Bank vested in a Board consisting of 18 members including the Registrar of Co-operative Societies, it was proposed to reduce the strength of the Board to 10. members including the Registrar. It was proposed that three members should be elected from among the Individual members distributed as follows: one from among the shareholders in the City of Madras two from those residing in the remaining districts of the State and five from among the representative of the share-holding mortgage banks; and one to be nominated by the Registrar. Thus, Including the Registrar, the number was reduced to 10. A' transitory by-law under by-law No. 22(a) was also proposed,' which was in these terms.

'Notwithstanding anything contained in these by-laws every director now in office in the Madras Co-operative Central Land Mortgage Bank who is a share-holder residing or a representative of a primary land mortgage Bank, within its area shall continue, to retain his directorship and other offices till 31-12-1954.'

At the meeting of the general body held, on 5-9-1953 the amendments to the by-laws, which, view put forward as resolutions were carried. With reference to the transitory by-law above set forth, however, at the general body meeting Sri O. S. Rathnasabhapathy Mudaliar moved and M. S. Palaniappa. Mudaliar seconded that the date at the end of the transitory by-law under the by law 23(a), viz, 31-12-1954 be Changed to 31-12-1953. By resolution No. 7 the transitory by-law as amended was passed unanimously. Immediately on the same day the amended by-law was registered by the Deputy Registrar of Co-operative Societies to whom the power was delegated by the Registrar, as required by Section 12(2) Madras Co-operative Societies Act, (Madras Act 6 of 1932).

3. The complaint of the petitioner, who wasabsent from the meeting of the general body,was that the amendment proposed to the transitory by-law altering the date of the term of theOffice of the Directors and. reducing the period,from 31-12-1954 to 31-12-1953 was contrary to therules and the by-laws of the Bank and that therequired notice of the amendment was not given.He therefore urged' that the by-law was 'ultra,vires' and unauthorised by the Act and the ruleframed thereunder, and that, it should not have been registered by the Registrar under Section 12 ofthe Act. He prayed therefore that the registration of the by-law by the Registrar, should- bequashed.

4. The Registrar of Co-operative Societies fileda counter affidavit in which he alleged that theregistration of the by-law was valid and that theresolution did not offend the rules or the by-lawsof the Bank. According to his opinion, the requirements of Rule 24 of the rules framed underthe Act had been compiled with, and he was alsosatisfied that the amendment was not contraryto the Act or to the rules.

5. The learned Judge thought that the application was one for quashing the by-law effected by the resolution passed. on 5-9-1953. He found-however that the amendment introduced, altering the date, was really a substantial amendment, which required 20 days clear notice or at least 5 days' notice under the' latter part of by-law 50-and that therefore the by law violated the rules and the by-laws of the Bank. Notwithstanding that finding the learned Judge dismissed the application on the ground that under Section 12(3) of the Act, when once the amendment to the by-law was registered by the Registrar, it acquired the force of conclusive evidence, and that the antecedent violation of the rules and the by-laws was of no consequence. In this view he dismissed the application.

6. At the outset it was pointed out by the ' learned counsel for the appellant that, the learned Judge fell into an error in holding that the application was for quashing the by-law passed by the resolution of 5-9-1953. The prayer in the petition was not to quash the by-law, but to quash the registration of the same. Of course under Section 12(3) to the Act if a by-law was registered by the Registrar, it is treated as conclusive evidence that the same was duly registered; It is to avoid the effect of this collusiveness, the petitioner prayed that the registration itself should be quashed and not the by-law. Though the ground was that the by-law violated the rules and the bylaws, as the require notice was not given of the amendment carried at the meeting it was the registration that the petitioner sought to avoid.

7. The short question with which we are now concerned in this appeal is whether the amendment passed by the general body altering the date, is contrary to any rule or by-law, and whether the registration of the by-law by the Registrar was valid. If the by-law was passed contrary to the rules or by-laws, it cannot be disputed that the registration by the Registrar would be without Jurisdiction. Section 12(2) of the Act requires that the Registrar should be satisfied before registering the amendment of the by-laws that they are not contrary to the Act or to the rules, and it is only after his being so satisfied that he should register the amendments; An appeal is provided by the same sub-section to the local Government within two months from the date of the issue of the order of refusal, if the Registrar refuses to register an amendment to the by-law. But If he registers contrary to the Act or to the rules or the by-laws, no remedy is provided under the Act. As an appeal is provided against the refusal of the Registrar to register an amendment, the functions'of the Registrar in considering the question of registration are undoubtedly 'quasi' judicial, so as to attract the jurisdiction of this. Court to interfere by way of writ; and it was not eon-tended that this is not the correct position.

8. Before considering the question whether the amendment of the by-law was passed contrary to the rules of the by-laws, it is necessary to refer to the relevant provisions of the Act and the Tules. Section 65 of the Act confers upon the local Government the rule-making power. By virtue of the power so vested in the local Government, rules were framed under the Act. Rule 24 lays down the procedure regarding the amendments of by-laws. It requires that every amendment should be made only by a resolution, passed by a majority of the members present at a meeting' of the general body of the members of the society, and that no such resolution shall be-valid unless notice of the amendment proposed has been given in accordance with the by-laws.

Under the by-laws of the Bank by-law No. 50 prescribes the period of notice for resolutions, and for any amendment to a by-law proposed as well as notice for a general body meeting. It requires that there should be -a month's notice for a meeting of the general body. For an ordinary resolution five days' clear notice is required; but if a resolution is for an amendment of a by-law, 20 days' clear notice has to be given, and it is cut down to five days; if the amendments are proposed by the Board. Under Rule 51, no amendment to the by-laws is permitted except at the General Body meeting of the members, and the amendments do not take effect until registeredby the Registrar. The powers of the General Bodyare enumerated in by-law No. 46. The constitution of the Board of Directors and their term ofoffice before reconstitution Is laid down under by-law 22, which vests the executive managementof the Bank in 18 directors, of whom the Registrar is an ex-officio member. Under by-law 22(a) the elected members of the Board will hold office. for a period of three years.

9. When it was decided to reconstitute the existing Bank consequent on the separation of the Andhra State the existing Board was not dissolved, six out of 18 directors went to the Andhra State and, 12 directors remained. The reconstitution consisted of merely transferring certain territory from the jurisdiction of the existing bank to the newly constituted Andhra Co-operative Central Land Mortgage Bank Ltd., which was registered. The reconstitution, therefore, by it self did not affect the term of office of the 12 continuing directors, and they would ordinarily be entitled .to hold office for a period of three years from the date of their election, that is in this case till 31-12-1954.

The proposed by-laws were intended to reduce the strength of the Board to 10, which of courseimplied that it was prospective and-not retrospective, that Is, it did not aim at cutting down or terminating the tenure of the office of any of the existing Directors; & to 'emphasise this, it would seem .;that, the proposed transitory by-law under by-laws 22(a) was included in the agenda of the general bodymeeting on 5-9-1953. -The by-law as circulated tothe members, including the petitioner emphasisedthat the existing directors would continue to retaintheir directorship and other offices till 31-12-1954.There was no reason or occasion, therefore for anabsent Director to presume that at the meetingof the general body the situation, would be altered to his detriment, and that the term of office'would be reduced or cut down by one year.. Curiously, however, at the meeting the amend?ment cutting down the period from 31-12-1954 to31-12-1953 was moved without any' prior notice& was adopted. The question is whether this amendment required notice under the by-laws and therules.

It would be seen that the amendment was not of a formal nature, but was intended seriously toprejudice the directors, as it purported to reducethe term of the office by one year, it was arguedby the learned Advocate-General who appearedfor the Registrar that the amendment to the resolution Introducing the transitory by-law did notrequire notice, as it was the right and privillegeof a member present at the meeting to propose amendments to the resolutions without observingthe formalities regarding the notice etc., underthe rules and the by-laws, In support of this proposition, he drew our attention to a passage in paragraph 599 in 5 Halsbury's Laws of England,2nd Edn. where it is laid down:

'Any amendment fairly arising on a resolution!

which is specified in the notice of meeting and within the scope of the notice may be proposed and passed at the meeting and a Chairman has no right of refuse of put such an amendment. It is usual for a resolution or an amended resolution to be moved by one voter and seconded by another but if the chairman chooses he can put it to the vote without these formalities.'

10. It is undoubtedly true that If the amendment was within the scope of the- notice and theresolution, it could be moved without furthernotice. But the question really is whether theamendment proposed was within the scope of theresolution or not. Crew on the 'Procedure atMeeting', 8th Edn., at pages 49, 50 and 51 discusses this -matter At page .49, it is pointed, out,'Amendments generally seek to do one or moreof the following things:(1) to omit certain words,(2) to omit certain words and insert others(3) to insert certain words.'At page 50, the following proposition is laiddown, -

'An amendment (1) must not merely negative the motion. A person wishing to move such an amendment can achieve the same result by voting against it.

(2) Should if the standing orders so provide be formally moved and seconded;

(3) must come strictly within the scope of the notice. convening the meeting.

Amendments substantially altering the. Motion cannot usually be put without proper notice.' At page 61, he quotes,

'How is it possible for the court to know how many share-holders abstained from attending the meeting, being satisfied that the arrangement, as it was proposed, was advantageous to them, and being quite content to exercise no voice about it -- '(Clinch v. Financial Corporation',. (1868) 5 Eq 450 (A) ). Any amendment without notice which substantially alters the motion of which notice is required is Out of - order, as is also any amendment which is merely obstructive or dilatory.

If the amendment, therefore, brings about a substantial' alteration in the motion before the house, it must comply with the formalities regarding notice. In the present case the amendment, that it was a substitution of one date for the other, was a serious one and was intended to retrospectively alter the existing by-law 22 (c) by cutting down the period of three years during which the elected directors are entitled to hold office, to two years. It requires, as was held by Rajagopala Aiyangar J., twenty days' notice, as the mover of amendment, it was admitted, was not ft member of the Board. Under R. 24 already cited; no resolution shall be valid unless notice of the amendment proposed has been given in accordance with the by-laws. By-law 50 provides the period of notice in the case of amendments. The amendment, therefore, proposed at the meeting violated the rule and the by-law. The registration, therefore of the by-law, which was passed contrary to the rule and the by-law, was invalid.

The Registrar does not seem to have applied his mind, as he was bound to do, to this aspect of the matter and considered it on its merits. The registration is also invalid on this ground Where an officer entrusted with, the discharge of 'quasi' Judicial functions fails and neglects to do his duty, and omits to apply his mind to the matter . before him, and performs an act contrary to the rule and the by-law, such an act is illegal and without Jurisdiction.' This Court is bound to interfere by issuing a writ to set right such matters which are without jurisdiction.

11. The learned Advocate-General, however, strongly' pressed that when once fee by-law was registered by the Registrar, even if the by-law was passed in violation of the rules and the by laws, the registration is conclusive evidence, and therefore this Court has no Jurisdiction to interfere by way of writ to quash the registration. In support of this he relied upon the language of Section 12 (3) of the Act, which reads as follows: 'When the Registrar registers an amendment of the by-laws of a registered society, he shall Issue to the society a copy of the amendment certified by him, which shall be' conclusive evidence that the same Is duly registered.' The learned Judge, Rajagopala Aiyangar J., was of opinion that the conclusiveness enunciated in the section is not restricted to the fact that it was duly registered, but goes further to an anterior stage of the registration so as to preclude any enquiry regarding the validity of the passing of the by-law at the meeting. Whether this position in view of the language of Section 12 (3) of the Act Is correct or not, it is unnecessary for us to consider it.

Assuming that the registration is conclusiveevidence that it was duly registered would it takeaway the Jurisdiction of this Court conferred uponit under Article 326 of the Constitution? The learned Advocate-General seriously maintained that thatwas the result, but 'we are unable to agree. Itis unnecessary to refer to many decisions andconsider the other citations by the learned Advocate-General as we are of opinion that this matter is really' concluded by the recent decision ofthe Supreme Court in -- 'Raj Krushha Bose v.Binod', : [1954]1SCR913 ; where Itwas laid down as follows:

'Our, power to make such an order was not questioned but it was said that when the legislature states that the orders of a. Tribunal under an Act like the one here shall be conclusive and final (Section 105), then we should not; interfere. It is sufficient to say that the powers, conferred on us by Art. 136 of the Constitution and on the High Courts under Art. 226 cannot be taken away or whittled down by the Legislature so long as these powers remain, our discretion and that of the High Courts is unfettered.' A Legislature can enact a law subject to the provisions of the Constitution and the existing laws, which were continued by the Constitution, would prevail only in so far as they are not Inconsistent with the provisions of the Constitution.

If the language of Section 12(3) of the Act has the effect of taking away the statutory jurisdiction conferred upon us under Article of the Constitution, that law must yield place to the Constitution.

12. We do not think, that the language of sub-Section (3) of Section 12 of the Act has the effect contended for by the learned Advocate-General. In the view, therefore, we take in this case, it is unnecessary to consider the question elaborately dealt with by the learned Judge regarding the conclusiveness of the registration under Section 12 (S): of the Act. It follows that the registration by the Registrar of the amendment cannot be sustained and wag without jurisdiction. The appeal must be allowed, the order of the learned Judge must be set aside, and the writ must be issued quashing the registration of the by-law by the Registrar of Co-operative Societies. As the appellant has succeeded, he is entitled to his costs here and in the Court below from the first respondent. Counsel's fee Rs. 250 in each Court. (Costs of the Bank should come out of -its funds).


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