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P.S. Surulichamy Vs. S. Hari Jeggiappan and ors. - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtChennai High Court
Decided On
Reported in(1968)1MLJ258
AppellantP.S. Surulichamy
RespondentS. Hari Jeggiappan and ors.
Cases ReferredDurayappah v. Fernando and Ors.
Excerpt:
- .....october, 1966. it was further contended that there was no notice for the holding of the general body meeting for the election of the committee members. while in writ petition no. 2732 of 1966, the petitioner has prayed for the issue of writ of quo warranto against respondents 1 to 7 directing them to show cause on what authority they hold office as members of the committee and to restrain them from taking charge of office as members of the committee, in writ petition no. 2908 of i966, the petitioner has prayed for the issue of a writ of mandamus against the respondents directing them to admit the committee as on 2nd october, 1966 with the petitioners as the president and the other six persons mentioned in the petition as members of the committee.4. before dealing with the powers of an.....
Judgment:
ORDER

P.S. Kailasam, J.

1. Writ Petition No. 2732 of 1966 is filed for the issue of a writ of quo warranto to respondents 1 to 7 calling upon them to show cause on what authority they hold office as members of the committee in the Sillamarathupatti Co-operative Agricultural Bank, Ltd., Sillamarathupatti, Writ Petition No. 2908 of 1966 is filed for the issue of a writ of mandamus against the Sillamarathupatti Co-operative Agricultural Bank Ltd., directing the bank to admit the committee as on 2nd October, 1966, with the petitioner as the President and six others mentioned in the petition as members of the committee of the Bank. As the two writ petitions arise out of the same matter, they can be dealt with together.

2. The petitioner in the two writ petitions, and six others were elected to the committee of the Sillamarathupatti Co-operative Agricultural Bank, Ltd., in 1965 for a term of three years. As one-thord of the members of the committee had to retire on the 1st of July, 1966, lots were cast to determine the names under the provisions of Section 27(3)(a) of the Madras Co-operative Societies Act, LIII of 1961 (hereinafter called the Act). According to the lots cast, the then President of the Co-operative Society, Sri T.C.V. Muthiah Goundar and one Sri S. Palanichamy were to retire on the 1st of July, 1966. According to the petitioner, the out-going President did not take any step for convening a special meeting of the general body to elect two new members to the Committee, in the places of the two persons who had gone out on casting of lots. There were disputes between the petitioner and his supporters on the one side, and the third respondent on the other which resulted in the appointment of the tenth respondent as the enquiry officer under Section 65 of the Act by the Deputy Registrar of Co-operative Societies, Periakulam Taluk, the ninth respondent.

3. The tenth respondent issued a notice on 30th September, 1966, calling for special meeting of the general body to consider the question of re-electing new committee for the society. The notice was pasted at the registered office of the Society, and no individual notice was served on the members. The meeting took place on 3rd October, 1966. As to what took place in the meeting is a matter of controversy. Suffice it to say, that there was a record in the minutes book stating that there was a no-confidence resolution passed against the existing committee and that a new committee consisting of respondents 1 to 7 was elected to function as the committee The petitioner approached the Deputy Registrar and complained that the meeting was never held and that the recording in the minutes book was false. The ninth respondent declined to interfere stating that the petitioner may file an arbitration plaint under Section 73 of the Act. In this Writ Petition it is contended on behalf of the petitioner that the tenth respondent had no powers to call for a special meeting of the general body to elect a new committee and consequently the meeting held is illegal and void. He also submitted that no meeting in fact was conducted on 3rd October, 1966. It was further contended that there was no notice for the holding of the general body meeting for the election of the committee members. While in Writ Petition No. 2732 of 1966, the petitioner has prayed for the issue of writ of quo warranto against respondents 1 to 7 directing them to show cause on what authority they hold office as members of the committee and to restrain them from taking charge of office as members of the committee, in Writ Petition No. 2908 of I966, the petitioner has prayed for the issue of a writ of mandamus against the respondents directing them to admit the committee as on 2nd October, 1966 with the petitioners as the President and the other six persons mentioned in the petition as members of the committee.

4. Before dealing with the powers of an enquiry officer appointed under Section 65 of the Act, it is necessary to refer to some of the provisions of the Act (LIII of 1961) relating to the administration of co-operative societies. Chapter II deals with the registration of co-operative societies. Section 9 provides that if the Registrar is satisfied that the application for the registration of a society is in accordance with the provisions of this Act and the rules, and that the proposed bye-laws are not contrary to this Act or the rules or to co-operative principles and that the society will, in his opinion, work successfully, he may register the society and its bye--laws. Section 114 of the Act provides that every society which had been registered before the coming into force of Act LIII of 1961 shall be deemed to be registered under this Act, and its bye-laws so far as the same are not inconsistent with the express provisions of this Act, shall continue in force until altered or rescinded. The provisions of the bye-laws of the societies registered before the coming into force of this Act are preserved, unless they are inconsistent with the express provisions of the Act. Section 26 provides that subject to the provisions of this Act, the rules and the bye-laws, the ultimate authority of a registered society shall vest in the general body of its members. The proviso to the section enacts that this clause shall not affect the exercise by the committee or any officer of a registered society of any power conferred on such committee or such officer by this Act or the rules or the bye-laws. Section 26(2) provides that a general body meeting shall be held once in a year for the purposes mentioned in Clauses (a) to (e) of Section 26(2). Section 26(3) provides that the committee may, at any time, call a special general meeting of the registered society on requisition from the authorities specified in Clause (a) to Sub-section (3) of Section 26. The general body of a registered society is required to constitute a committee in accordance with the bye-laws and entrust the management of the society of such a committee. The term of office of the elected member of any committee constituted under the Act shall be three years. It is provided that one-third of the members elected to the committee will retire every year and an election will be conducted to fill up the places of the retiring members. Section 28(1) enumerates the disqualifications for being a member of the committee. Section 28(2) provides that a member of the committee shall cease to hold office subject to the disqualifications mentioned in the sub-section. The committee of the registered society can be superseded by the Registrar under Section 72 of the Act, when the society is not functioning properly or wilfully disobeys or wilfully fails to comply with any lawful order or direction issued by the Registrar under this Act or the Rules. Provision is made for winding up of the society by Section 85 of the Act. It will thus be seen that under the scheme of the Act, the general body is to elect the members for the committee and the term of office of an elected member of the committee shall be three years, subject to the provision of one-third of its members to retire annually. Power is given to the Registrar to supersede co-operative societies and for taking up winding up proceedings. There is no provision in the Act for passing any no-confidence motion against any of the members of the co-operative society. The powers of the general body is enumerated in Section 26(2) of the Act. But, it does not include power to remove the members of the committee.

5. Societies which were registered before the coming into force of Act LIII of 1961 are governed by the provisions of its bye-laws, so far as the same are not inconsistent with the express provisions of this Act. Sillumarathupatti co-operative Agricultural Bank, Ltd. was registered before this Act came into force and therefore the bye-laws of the society in so far as they are not inconsistent with the express provisions of the Act continue to be in force. The bye-laws of this society provide for removal of the Board of Directors. Bye-law 20(1) provides that all the members of the Board of Directors shall be elected at one and the same time for a specified period of three years and that it shall be competent to the general body to remove at any time any elected member of the Board of Directors and elect another in his place, and the member so elected shall hold office only for the unexpired portion of the original period. Bye-law 31 provides that the general body shall meet from time to time at least once a year to conduct the work of the bank, and that the general body shall not interfere with the actions of the Board of Directors done in the exercise of powers conferred on them by the bye--laws. Amongst other matters, the general body may conduct the election and removal of the Board of Directors. Bye-law 35 prescribes the procedure for giving notice regarding a general body meeting. It is also provided that any irregularity in the service of the notice shall not invalidate the proceedings. The general body shall be convened by a resolution of the Board of Directors. While under Section 26(2) of the Act, a general body meeting is to be held once in a year and special general body meeting is to be requisitioned in the manner provided in Section 26(3)(a), the bye-laws of the society provide for the general body to remove any elected member of the Board of Directors and to elect another in his place. The Board of Directors can be removed under bye-law 31. The power to remove a member of the committee or Board of Directors is provided in the bye-laws of the society, though it is not found in the provisions of the Act. As the bye-laws of the society were registered before 1961, they continue to be in force, unless they are shown to be inconsistent with the express provisions of the Act. The provisions relating to the removal of the members cannot be said to be invalid, as they can only be said to be additional provisions and cannot be said to be inconsistent with the provisions of the Act. Therefore, the bye-laws which empowers the general body of this society to remove any elected member or Board of Director or any 1 ember of the committee cannot be said to be invalid.

6. The question that remains to be considered is whether the general body meeting was properly convened and if so, whether the election of the new members could be conducted without observing the provisions of Rule 30 of the Madras co-operative Societies Rules, 1963. Section 65 of the Act empowers the Registrar to hold an enquiry by himself or to direct some person authorised by him in writing in this behalf to hold an enquiry into the constitution, working and financial condition of a registered society. The scope of the enquiry by the officer so directed is to enquire into the constitution, working and financial condition of the registered society. The Registrar or the person authorised by him is given powers which are enumerated in Sub-section (2) Clauses (a) to (d) of Section 65. After an enquiry, the Registrar is enjoined to communicate the result of the enquiry to the persons concerned. The Registrar is also empowered to direct any officer of the society to take such action as may be specified in the order to remedy the defects, if any, disclosed as a result of the enquiry. The powers that are conferred on the Registrar and the person authorised for the purpose of enquiry are to have free access to the books, accounts, documents, securities, cash and other properties belonging to, or in the custody of, the society and to summon any person in possession of, or responsible for the custody of any such books, accounts, documents, securities, cash or other properties to produce the same. They are also authorised to seize the books accounts and documents of the society for the purpose of the enquiry. They may summon any person and examine him on oath and direct him to produce books, accounts and documents in relation to the transactions of the society. The sub-section on which reliance is placed by the respondents as empowering the enquiring officer to call for a general body meeting is Sub-section (2), Clause (d) of Section 65 of the Act. Sub-section (2)(d)(i) reads as under:

He may, notwithstanding any rule or bye-law prescribing the period of notice for a general meeting of the society or for a meeting of the committee, require any officer or officers of the society to call a general meeting or a meeting of the committee at such time and place at the headquarters of the society or any branch thereof to consider such matters as may be specified by him and the provisions of Sub-clauses (i) and (ii) of Clause (b) of Sub-section (4) of Section 26 shall apply to any meeting called under this Sub-clause as if it were a meeting called in pursuance of a requisition under Clause (a) of Sub-section (3) of that section.

Sub-section (2)(d)(ii) of Section 65 may be extracted as under:

If the officer or officers of the society refuses or refuse or fails or fail to call such meeting or if in the opinion of the Registrar, there is no committee or officer or officers competent under this Act, the rules or the bye-laws to call such meeting or if there be a dispute regarding the competence of the committee, officer or officers to call such meeting the Registrar or the person authorised by him under Sub-section (1) shall have power to call the meeting himself and the provisions of Clause (b) of Sub-section (4) of Section 26 and Sub-section (5) of that section shall apply to such meeting as if it were a meeting called under Clause (a) of the said Sub-section (4).

Sub-section (2)(d)(i) empowers the enquiring officer to call a general meeting or a meeting of the committee at such time and place at the headquarters of the society or any branch thereof to consider such matters as may be specified by him. The power is conferred on the enquiring officer notwithstandng any rule or bye-law prescribing the period for a general meeting of the society. Clause (d)(i) of Sub-section (2) of Section 65 therefore dispenses with the requisite notice for a general body meeting which the enquiring officer requires an officer or the society to call for In the event of the officer of the society refusing or failing to call Such a meeting or if there is a dispute regarding the competence of the committee, the officer is empowered to call a general body meeting. The Registrar is also empowered to call a general body meeting, if there is no committee or officer or officers competent under this Act, the Rules or the bye-laws to call such a meeting.

7. The powers conferred on the Registrar or on the enquiring officer to call for a general body meeting under Sub-section (2)(d)(ii) are after the failure of the officer or officers of the society to call such a meeting required to be convened under Sub-section (2)(d)(i). It is admitted that in this case the enquiry officer did not require any officer or officer. of the society to call for a general body meeting as required in Section 65(2)(d)(i). The power of the enquiry officer flows from the refusal of the officers of the society to call such a meeting and when the enquiry officer had failed to require the officer or the officers of the society to call such a general meeting the enquiry officer will have no power to act under Sub-section (2)(d)(ii) The contention of the learned Counsel for the respondents that the provision is only directive in nature cannot be accepted.

8. It is submitted that the powers conferred on the Registrar and the person is authorised to conduct an enquiry are only for the purpose of holding an enouirv into the constitution, working and the financial conditions of the registered society and the proymons relating to the calling of a general body meeting can only be for any one of the purposes mentioned in the section, viz., for holding an enquiry into the constitution, working and financial condition of the registered society. The submission is that the calling of the meeting for the purpose of removal of the existing directors or for election of fresh directors is not for the purpose of holding an enquiry into the constitution, working and financial condition of the registered society. Section 65 read as a whole supports the contention of the petitioner. The scope of the enquiry is regarding the constitution, working and financial condition of the registered society. The power conferred in Sub-section (2), Clauses (a), (b) and (c) are intended to enable the officer to discharge his duty. Sub-section 2(d) can only be construed as the officer being conferred with a power to convene a general body meeting to enable, him to conduct the enquiry into the constitution, working and the financial condition of the registered society. After the enquiry is completed, the Registrar is required to communicate the result of the enquiry to the concerned authorities and he is also empowered to require the society to rectify the defects. The convening of a general body meeting for the purpose of removing or electing new members appears to be outside the scope of the enquiry contemplated under Section 65 of the Act. The powers of the general body include the approval of the budget for the ensuing years, the consideration of the audit report and the annual report and for submission of returns that may be prescribed by the State Government. These may be some of the purposes for which a general body meeting could be convened by the officer under Section 65 of the Act.

9. The election of the respondents is also questioned on the ground that Rule 30 of the Madras co-operative Societies Rules, 1963, which specify the procedure regarding the election of the members of the committee had not been complied with. Rule 30 prescribes the procedure for the election of members of the committee of a society not falling under Rule 29. It is admitted that Rule 29 is not applicable to the facts of this case and that the rule applicable is only Rule 30. Rule 30 requires that the election shall be held at a general meeting of the society specially convened for the purpose, for which not less than seven days clear notice shall be given to the members. The rule makes detailed provisions regarding the form of notice, the provision for nomination, scrutiny, counting of votes and declaration of result. Rule 30(6) requires that in the case of a contest, there shall be a poll. Rule 30(16) provides for the appointment of an election officer by the Registrar of co-operative Societies. Section 27(4) of Act LIII of 1961 provides that the election of members of the committee shall be by ballot in such manner as may be prescribed, provided that a casual vacancy shall be filled in the manner specified in the rules or the bye-laws. While Rule 30 prescribes the procedure, the bye-law is silent about it. While bye-law 20(1) empowers to general body to remove any elected member of the Board of Directors and elect another in his place, the procedure for such an election is not given in the said bye-laws. So also bye-law 31(1) empowers the general body to elect the Board of Directors; but the procedure for such an election and removal is not provided in it. Bye-law 35 prescribes that ordinarily three days' notice shall be given to members before a meeting of the general body is convened. As already pointed out, Section 27(4) provides that election of the members of the committee shall be by ballot, except in the case of filling up of casual vacancy which could be filled in the manner as may be specified in the rules or the bye-laws. As the bye-laws have not prescribed the procedure and as the rules have laid down the procedure, the election should be conducted in the manner prescribed in the rules. The mere fact that the bye-laws are continued under Section 114 of the Act, will not make Rule 30 inapplicable for such elections. Further, the bye-law only provides that ordinarily three days notice shall be given to members before a meeting of the general body is convened. But Rule 30 specifically provides that seven days' clear notice should be given for an election meeting. The requirements under the rules will have to be complied with. There being no conflict between the bye-laws and the rules, the bye-laws being silent about the procedure, the procedure prescribed by the Rules will have to De followed. As admittedly seven days' clear notice as required by the Rules, and the procedure laid down, have not been followed, even if the meeting had been validly convened, the election of the new members of the co-operative society would be invalid and opposed to law. In this view of the matter it is not necessary to consider the submission made by the learned Counsel for the petitioner that in fact no election was held on that day and that the respondent were declared elected on improper grounds.

10. Relying on Section 115 of the Act, learned Counsel for the respondents submitted that no act of the registered society shall be deemed to be invalid due to any defect o irregularity in the election. The submission is that even though it might be held that the enquiry officer was not empowered to convene a general body meeting an even though the rules relating to the elections had not been followed, as the election of the respondents was an act by the registered society, it shall be deemed to be valid as the defect and the irregularity in the election complained of cannot invalidate the election. This contention cannot be accepted as the meeting was convened b] a person who had no auhority to convene and without giving proper notice a required in the rules. The general body meeting convened will not be a properly convened general body meeting and the acts and omissions complained of will vitiate the entire proceedings, as they are not mere defects or irregularities in the election.

11. Mr. Venugopal, the learned Counsel for the respondents, submitted that even If all the points are found againts him on merits, the Writ Petition will have to be dismissed on the ground that a writ of quo warranto against the members of a cooperative society is not available, as the members of the committe cannot be said to be holding a public office. He further submitted that as the co-operative society is a registered society, the petitioner cannot mainatain a writ unless the writ was filed by the society or by the entire body of directors. The last contention was that the petitioner has a remedy by way of an appeal as provided for under the Act and this Court should not interfere in writ proceedings.

12. The objection to the issue of a writ of quo warranto on the ground that the; office of a member of a committee under the Madras co-operative Societies Act, 1961 is not a public office, need not be gone into, for, the relief asked for in Writ Petition No. 2908/66 is for the issue of writ of mandamus or such other writ as the Court may deem fit and proper against the respondents directing them to admit the petitioner and others mentioned in the petition as members to the office of the committee. Though in Writ Petition No. 2732 of 1966 the relief asked for is for the issue of writ quo warranto, the prayer is also for the issue of an appropriate writ or order. Though the prayer might have been for the issue of a writ of quo warranto or a writ of mandamus the Court is entitled to grant relief which is appropriate taking into consideration the facts of the case. On the facts, it is clear that the enquiry officer was not empowered to call for the general body meeting and that the general body meeting was not properly constituted and the proceedings of the general body is therefore liable to be quashed. The appropriate order will, therefore, be to quash the entire proceedings of the general body meeting. In this view of the matter, it is unnecessary to go into the question whether a writ of quo warranto should issue.

13. The next contention of the learned Counsel for the respondents Is that the petitioner cannot himself maintain a writ, and the co-operative society is a registered society and the petition should have been filed by the entire body of directors. In support of this contention, the learned Counsel relied on the decision in Durayappah v. Fernando and Ors. (1967) 2 All. E.R. 152. In the case cited the Minister of Local Government directed the Commissioner of Local Government to inquire into the allegations against the Jaffna Municipality. The Commissioner did not ask the Mayor of the Municipality any questions or give any opportunity to any of its members to express their views. He made his report, and the Minister directed the Municipal Council to be dissolved and superseded. The Mayor took up proceedings for quashing the order of the Government superseding the Municipal Council. It was held that though the order of the Minister could have been held void ab initio in an action by the Council, yet it was so voidable only at the election of the Council, and it was not a nullity. The Privy Council held that though the Mayor was not representing the Council in the proceedings and it was not shown that the Council could not have been the petitioner, he was not entitled to complain of the order and could not maintain the proceedings. The order that was complained was for the super-session of the Municipal Council. But the Council had not complained. Though the appellant was the Mayor at the time of the dissolution of the Council, it was held that he did not have any right to complain independently of the Council. The reason given was that the appellant must show that he is representing the Council or that by reason of circumstances, the Council could not have been the plaintiff. The Jaffna Municipal Council in that case was a corporate body having its own seal, and was capable of taking action. In this case, the society is registered under the co-operative Societies Act. The society is governed by the provisions of the Madras co-operative Societies Act. Further the co-operative Society has not been as a body dissolved or superseded. But in an election purported to have been held by the general body, the members of the society had been removed and new members had been elected. Any member of the society who had been removed, if aggrieved, is entitled to question the correctness of his removal in the election. The decision cited which related to the supersession of a Municipal Council, which is a corporate body, will have no application to the present case.

14. Lastly it was submitted that as the general body had passed a resolution removing the petitioner and others and electing the respondents, the petitioner should have pursued his remedies under the Madras co-operative Societies Act by preferring an appeal, and not approach this Court by way of writ proceedings. It is true that the petitioner has an alternative remedy. But that alternative remedy could not be had without great inconvenience and prejudice to the petitioner. The fact that an alternative remedy is available would not deprive this Court of its power to issue a writ. In this case, prima facie, the act of the enquiry officer in convening the general body meeting and the proceedings of the general body meeting are without jurisdiction and therefore the proceedings are invalid. Taking all these circumstances into consideration, I am satisfied that the relief by way of writ proceedings should not be denied to the petitioner.

15. In the result, the contentions of the learned Counsel for the respondents are rejected. The appropriate directions that should issue in the two writ petitions is that the enquiry officer had acted without jurisdiction in convening the general body meeting and that the proceedings of the meeting are not valid. In the result the proceedings are quashed. The writ petitions are accordingly allowed with costs against respondents 1 to 8. Counsel's fee Rs. 250 (consolidated).


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