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Howrah District Central Co-operative Bank Ltd. and ors. Vs. Sanat Kumar Dutta and ors. - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtKolkata High Court
Decided On
Case NumberF.M.A.T. No. 3270 of 1984
Judge
Reported inAIR1985Cal259,89CWN744
ActsWest Bengal Co-operative Societies Rules, 1974 - Rules 47(2), 43 and 51(2); ;West Bengal Co-operative Societies Act, 1973 - Section 23(1)
AppellantHowrah District Central Co-operative Bank Ltd. and ors.
RespondentSanat Kumar Dutta and ors.
Appellant AdvocateK.K. Moitra, ;A.K. Ghosh and ;Kamalendu Ghosh, Advs.;A.P. Chatterjee, Adv.
Respondent AdvocateSaktinath Mukherjee, ;Pradipta Roy, ;Gita Gupta, ;P.K. Chatterjee, ;Ranjan Mukherjee, ;P.S. Sengupta and ;R.N. Seal, Advs.
DispositionAppeal dismissed
Cases ReferredCity of Nagpur v. Ramchandra G. Modak
Excerpt:
- .....of the appellant, the executive officer has placed strong reliance upon rule 47(2)(ii) of the rules. rule 47 provides as follows : '47(1) a government officer, when deputed to the service of a co-operative society under section 24, shall be called the executive officer of the society. (2) subject to any condition to the contrarythat the state government may in anyparticular case think fit to impose, theexecutive officer shall be under the generalcontrol of the managing committee of thesociety and shall, in the conduct of the businessof the society, exercise the following powers,namely, : (i) have control over the salaried officers and employees of the society with power to sanction leave and to impose any punishment upon, or to suspend, any member thereof in terms of clause (h) of.....
Judgment:

M.M. Dutt, J.

1. The appellants, the Howrah District Co-operative Bank Ltd., hereinafter referred to as the 'said Bank' and its Executive Officer have preferred the appeal against the judgment and order dt. Nov. 13, 1984 of B. C. Basak J.

2. The Bagnan Thana Agricultural Primary Co-operative Society Ltd., hereinafter referred to as 'the said Society', is a Society registered in accordance with the provisions of the West Bengal Co-operative Societies Act, 1973, hereinafter referred to as 'the Act'. The said Society is a marketing Society within the meaning of Rule 2(3)(iv) of the West Bengal Co-operative Societies Rules, 1974, hereinafter referred to as 'the Rules'.

3. The said Society is affiliated to the said Bank as a member and shareholder thereof. The said Bank is a registered Co-operative Society and is also a Central Co-operative Bank within the meaning of Section 2(f) of the Act. It may be stated here that a Government Officer has been appointed the Executive Officer of the said Bank at the request of its managing committee under Section 24 of the Act.

4. By an order dt. Mar. 21, 1983, the Assistant Registrar of Co-operative Societies, Howrah dissolved and/or superseded the managing committee of the said Society and appointed a Board of Administrators. Being aggrieved by the order of supersession, the Directors of the said Society moved a writ petition before a learned single Judge of this Court on Mar. 23, 1983. The learned Judge issued a Rule Nisi and granted an interim stay of the order of supersession or dissolution of the managing committee.

5. The said Rule was ultimately disposed of by Monoj Kumar Mukherjee J. by his order dt. April 28, 1983. In the said order, the learned Judge directed, inter alia, that the impugned order dissolving the managing committee of the said Society would stand, but the Board of Administrators appointed thereunder should be replaced by two other joint administrators who were members of the Bar and were appointed by the learned Judge. Thereafter, it appears that the said joint administrators were subsequently replaced by Sri Mrinmoy Bagchi, Advocate, who was appointed the 'sole administrator' of the said Society by an order dt. Sept. 8, 1983 of B. C. Basak J.

6. Since the said Bank is a Central Cooperative Bank, the election of Directors of the said Bank for the purpose of constitution of the managing committee thereof is required to be held by convoking delegates of the cooperative societies which are affiliated to the said Bank as provided in Rule 21 of the Rules. The election of Directors or the constitution of the managing committee is held in the annual general meeting of the said Bank.

7. On the eve of the annual general meeting of the said Bank fixed on Nov. 18, 1984. the said Society which is affiliated to the said Bank sent Sri Siddhartha Sankar Bhattacharjee, its member and Chairman as its delegate.

8. The delegate of the said Society, Sri Siddhartha Sankar Bhattacharjee filed his nomination as a candidate for election to the post of a Director of the managing committee of the said Bank to be reconstituted at the annual general meeting. At the time of scrutiny of the nomination papers by the Election Officer appointed by the Assistant Registrar of Co-operative Societies. Howrah, one Ashit Hazra raised an objection against the eligibility of the said Siddhartha Sankar Bhattacharjee to stand as a candidate for election to the office of Director of the managing committee of the said Bank, on certain allegations which will be stated presently.

9. It was alleged, inter alia, that the said Siddhartha Sankar Bhattacharjee entered into a contract with the said Society by letting out his own premises to the said Society on a monthly rental basis. Further, it was alleged that he was the owner of a printing press, and he entered into contracts with the said Society for printing. Accordingly, it was alleged that in view of Section 23(4)(b) of the Act, he was not eligible for being chosen as a member of the managing committee of the said Bank inasmuch as he was concerned or had participated in the profits of the said contracts of tenancy and of printing.

10. The above allegations have been denied by Sri Kartick Majhi, the Secretary of the said Society in his affidavit affirmed on behalf of the said Society. The case of the said Society is that the premises of the said Siddhartha Sankar Bhattacharjee where the office-cum-shop of the said Society is situate is very spacious and is at the very heart of the sprawling market area of Bagnan. The said premises is an ideal place for any marketing Society. The said Siddhartha Sankar Bhattacharjee was persuaded by the managing committee to let out the said premises. The tenancy was granted by him in writing for three years up to Oct. 31, 1983. After the expiry of the term of three years, he would not renew the tenancy, but at the request of the Administrator he did not evict the said Society. He, however, by his letter dt. Jan. 2, 1984 requested the Administrator to vacate the premises by Jan. 31, 1984, unless he was assured by the Assistant Registrar of Co-operative Societies, Howrah that the letting would not be construed as concerning or participating in the profits of the said Society.

11. It is alleged, inter alia, that the Assistant Registrar of Co-operative Societies, Howrah remained silent and did not reply to the letter of the Administrator dt. Feb. 3, 1984 informing the former that the dislodgment of the said Society from the said premises would be ruinous. In the meantime, the annual general meeting of the said Society was held on Feb. 19, 1984 in which it was unanimously decided that the said premises was vital for the existence of the said Society, and that letting out the same was not concerning or taking part in the profits of the said Society. The Administrator was also requested to get the matter clarified from this Court. Accordingly, the Administrator submitted a report to B. C. Basak J. and prayed for clarification in the matter. The learned Judge by his order dt. Nov. 13, 1984 stayed the operation of the order of the Election Officer rejecting the nomination paper of Sri Siddhartha Sankar Bhattacharjee and fixed the matter on Nov. 16, 1984 for bearing.

12. The present appeal has been filed in the name of the said Bank, by its Executive Officer, who is also an appellant being appellant No. 2, against the said order dt. Nov. 13, 1984 passed by Basak J.

13. An application has been filed by the said Bank at the instance of its managing committee praying for the dismissal of the appeal filed by the Executive Officer in the name of the said Bank. In support of the prayer for the dismissal of the appeal, it has been, inter alia, stated in the application that the Executive Officer has not been directed and/or authorised by the managing committee or the Chairman of the said Bank to institute or prosecute the appeal. The managing committee of the said Bank has approved of the delegation of the said Sri Siddhartha Sankar Bhattacharjee and the list of delegates including the name of Sri Bhattacharjee was published by the Executive Officer on Oct. 10, 1984. The managing committee at its meeting held on Nov. 10, 1984 condemned the illegal action of the Election Officer in cancelling the nomination of the said Sri Siddhartha Sankar Bhattacharjee. In the annual general meeting of the said Bank held on Nov. 18, 1984, the general members also condemned the cancellation of the nomination of Sri Bhattacharjee by the Election Officer and the unauthorised filing of the appeal by the Executive Officer. It is, accordingly, contended that the appeal is not maintainable and should be dismissed.

14. The question that requires consideration is whether, in spite of the contrary decision of the managing committee and of the general members in the annual general meeting, the Executive Officer had authority to ignore the same and file the present appeal, and whether such appeal, at the instance of Executive Officer is maintainable in law.

15. In support of the maintainability of the appeal, Mr. Kashi Kanta Moitra, learned Counsel appearing on behalf of the appellant, the Executive Officer has placed strong reliance upon Rule 47(2)(ii) of the Rules. Rule 47 provides as follows :

'47(1) A Government Officer, when deputed to the service of a co-operative Society under Section 24, shall be called the Executive Officer of the Society.

(2) Subject to any condition to the contrarythat the State Government may in anyparticular case think fit to impose, theExecutive Officer shall be under the generalcontrol of the managing committee of theSociety and shall, in the conduct of the businessof the Society, exercise the following powers,namely, :

(i) have control over the salaried officers and employees of the Society with power to sanction leave and to impose any punishment upon, or to suspend, any member thereof in terms of Clause (h) of Sub-rule (2) of Rule 51 and Clause (i) of Sub-rule (2) of Rule 51 respectively;

(ii) institute, defend and conduct legal proceedings in Law Courts and other places and enter into compromise or arbitration with creditors and debtors of the Society.'

16. It is urged by Mr. Moitra, for the Executive Officer and also by Mr. A. P. Chatterjee, learned Senior Standing Counsel appearing for the State of West Bengal that while under the first part of Sub-rule (2) of R, 47 the Executive Officer is directed to be under the general control of the society, under the second part, the exercise of powers by the Executive Officer as specified in Clause (i) and (ii) of Sub-rule (2) is mandatory and independent of the general control of the managing committee. It is submitted that the first part and the second part of Sub-rule (2) are mutually exclusive In other words, the exercise of the power by the Executive Officer to institute, defend and conduct legal proceedings etc., is beyond the control of the managing committee. It is, accordingly, submitted by the learned Counsel that the present appeal preferred by the Executive Officer is quite maintainable notwithstanding the said decisions of the managing committee and of the general members in the annual general meeting,

17. In this connection, we may refer to two other Rules, namely, Rule 43(g) and Rule 51(2)(a) of the Rules, Rule 43 lays down the powers of the managing committee of a cooperative society including the power as contained in Clause (g) thereof, namely, inter alia, 'to institute, defend or compromise legal proceedings'. Under Rule 51(1). the managing committee of a Central Co-operative Bank shall appoint the manager of such Bank as its Chief Executive Officer. Thereafter, Rule 51(2)(a) provides as follows :

'The Chief Executive Officer..... shall, subject to the general control of the Chairman of the Society, have power-

(a) to institute or defend legal proceedings by, or on behalf of..... the Central Co-operative Bank.....'

18. Thus it appears that the managing committee of a Central Co-operative Bank has been conferred with power to institute, defend or compromise legal proceedings. A similar power has been conferred on the Chief Executive Officer subject, however, to the general control of the Chairman of the Society. It has been noticed already that under Rule 47(2)(ii), the Executive Officer can also exercise the power to institute, defend and conduct legal proceedings. The question that arises for our consideration in this appeal is whether the Executive Officer can by virtue of Rule 47(2)(ii) institute legal proceedings even, if necessary, by defying the decision, express or implied, of the managing committee or of the general members in the annual general meeting not to institute any particular legal proceedings.

19. Before considering the question, it should be borne in mind that a particular provision of a statute or the rules framed thereunder should not be interpreted in such a way as will create difficulties in the normal functioning of any institution in the exercise of powers by the authorities concerned. There can be no doubt that the Court should always be in favour of an interpretation that would be quite in harmony with the other provisions of a statute or the rules framed thereunder.

20. In Rule 47(2) of the Rules, the exercise of powers by the Executive Officer has not been expressly made subject to the general control of the managing committee, but the Executive Officer has been directed to be under the general control of the managing committee. If it is held that the exercise of powers by the Executive Officer to institute, defend and conduct legal proceedings etc., is not amenable, to the control of the managing committee, the position would be quite anomalous. The three authorities who have been conferred with the power to institute, defend and conduct legal proceedings are the managing committee, the Chief Executive Officer and the Executive Officer. If each of these authorities is held to be independent of the other in the exercise of power to institute legal proceedings then there may be constant conflicts among them over the propriety or otherwise of the exercise of such power in particular cases.

21. Under Section 23(1) of the Act, the management of every co-operative society shall vest in the managing committee constituted in accordance with the rules and bye-laws.

There can be no doubt that the institution of legal proceedings and all matters connected therewith are part and parcel of the management of a co-operative society, and so by virtue of Section 23( 1) of the Act the exercise of powers in respect of these matters vests in the managing committee as items of management. Therefore, of the three authorities, the managing committee is the highest authority in respect of all matters relating to the management including the matters as specified in Clause (ii) of Rule 47(2) of the Rules. 22. The rules framed under a statute must be in accordance with the provisions of a statute concerned. If any of the rules is repugnant to any provision of the Act under which it has been framed, it will have to be struck down as ultra vires the provision of the Act concerned. To hold that the exercise of powers by the Executive Officer of a cooperative society under Rule 47(2)(ii) of the Rules is beyond the Control of the managing committee, would be contrary to the provision of Section 23(1) of the Act rendering Rule 47(2)(ii) invalid. In our opinion, the exercise of power by the Executive Officer under Rule 47(2)(ii) of the Rules is subject to the general control of the managing committee. If the managing committee takes a decision in regard to the institution of any legal proceedings, wt ire of the view that neither the Chairman or the Chief Executive Officer, nor the Executive Officer is entitled to act against such decision of the managing committee.

23. It is, however, submitted by Mr. Moitra and Mr. Chatterjee that while it is true that under Section 23(1) of the Act, the management of every co-operative society vests in the managing committee thereof, Section 23(1) also lays down that the managing committee shall exercise such powers and perform such duties as may be conferred or imposed, respectively, by the Act, the rules and the bye-laws. It is submitted that as Rule 47(2)(ii) has not conferred the power on the managing committee but on the Executive Officer, the managing committee cannot exercise the said power. This contention overlooks the fact that the managing committee has also been conferred with similar power by Rule 43(g) of the Rules.

24. In our opinion, by providing in Section 23(1) that the managing committee 'shall exercise such powers and perform such duties as may be conferred or imposed, respectively, by this Act, the rules and the by-laws', it is not the intention of the legislature to curtail the power of management of the managing committee but such provision has been made for the convenience of management. A particular officer of a co-operative society may be conferred with certain powers of management, but that does not mean that the exercise of such power will be beyond the control of the managing committee in which the management vests. Moreover, under the first part of Rule 47(2), the Executive Officer shall be under the general control of the managing committee. We are unable to read the two parts of Rule 47(2) as mutually exclusive. We are of the view that apart from anything else, Rule 47(2) also does not admit of an interpretation to the effect that the exercise of power by the Executive Officer in regard to legal proceedings as specified in Clause (ii) is beyond the general or any control of the managing committee. Such an interpretation would in our opinion, lead to an anomalous situation.

25. At this stage, it will be profitable to refer to a decision of the Supreme Court in Corporation of the City of Nagpur v. Ramchandra G. Modak, : (1981)IILLJ6SC which has been relied upon by Mr. Partha Sen Gupta, learned Counsel appearing for the said Bank and/or the managing committee thereof. In that case, Section 59(3)(b) of the City of Nagpur Corporation Act, 1959 came up for interpretation before the Supreme Court. Section 59(3) (b) of the said Act, inter alia, provides that the entire executive power for the purpose of carrying out the provisions of the said Act vests in the Commissioner who shall also exercise supervision and control over the acts and precedings of ail municipal officers and servants. Fazal Ali, J. who delivered the judgment of the Court observed (Para 3) :

'Thus Clause (b) of Section 59(3) in express terms authorises and clothes the Municipal Commissioner with the power to exercise supervision and control over the acts of Municipal Officers and servants. It may be noticed that the said Clause (b) is preceded by the words 'vests in the Commissioner'. When the words 'control' and 'vests' are read together they are strong terms which convey an absolute control in the authority in order to effectuate the policy underlying the rules and makes the authority concerned the sole custodian of the control of the servants and officers of the Municipal Corporation.'

26. The principle of law laid down by the Supreme Court in Ramchandra's case (supra) is also applicable to the instant case. Here also, by virtue of Section 23(1) of the Act, the management vests in the managing committee of the co-operative society and under Rule 47(2)(ii), the Executive Officer shall be under the general control of the managing committee. In our opinion, Rule 47(2)(ii) of the Rules should be read along with Section 23(1) of the Act and, when so read, it becomes manifestly clear that in view of the word 'vests' in Section 23(1) of the Act and the words 'general control' in Rule 47(2)(ii), the managing committee of a cooperative society has absolute authority over the Executive Officer in respect of the exercise of powers by him as contained in Clause (ii) of Rule 47(2).

27. Apart from what has been stated above, it is inconceivable that the Executive Officer who is deputed for rendering assistance to the managing committee will be clothed with more powers than the managing committee.

28. On a proper construction of Rule 47(2) of the Rules, we hold that the exercise of power by the Executive Officer in respect of matters enumerated in Clause (ii) of Rule 47(2) is subject to the control of the managing committee. The Executive Officer has no authority to act in regard to the matters mentioned in Clause (ii) of Rule 47(2) of the Rules contrary to the decision, express or implied, of the managing committee.

29. In the instant case, it has been already noticed that in the annual general meeting of the said Bank held on Nov. 18, 1984, the general body of members strongly condemned the action of the Election Officer in cancelling the nomination of the said Sri Siddhartha Sankar Bhattacharjee. Mr. Saktinath Mukherjee, learned Counsel appearing on behalf of the said Society has drawn our attention to Section 20 of the Act. Sub-section (1) of Section 20 provides that the final authority of every co-operative society shall vest in the general body of members in general meeting. Therefore, the decision of the general body of members in the said annual general meeting held on Nov. 18, 1984 was final and conclusive, and the Executive Officer had no authority to ignore the same and file the instant appeal.

30. We, therefore, hold that the instant appeal, which has been preferred by the Executive Officer in disregard of the decision of the managing committee of the said Bank, is not maintainable and is liable to be dismissed.

31. Before we part with this appeal we may refer to a short point raised by Mr. Moitra for the Executive Officer. It is submitted by the learned Counsel that the dispute over the question of the cancellation of the nomination of the said Siddhartha Sankar Bhattacharjee cannot be decided on a writ application, but the same can only be decided on a reference to the Registrar of Co-operative Societies, West Bengal as provided in Section 86 of the Act. In view of the said decision in the annual general meeting held on Nov. 18, 1984 and the provision of Section 20(1) of the Act, it is doubtful whether Section 86 is attracted. Further, as there is no dispute between the said Siddhartha Sankar Bhattacharjee and the said Bank, it is also doubtful about the applicability of Section 86 of the Act. We do not, however, propose to finally adjudicate upon the point inasmuch as it has been found by us that the appeal is not maintainable at the instance of the Executive Officer of the said Bank.

32. For the reasons aforesaid, the application of the said Bank is allowed and the appeal is dismissed as not maintainable. There will, however, be no order for costs. All interim orders passed by this Court are vacated.

Paritosh Kumar Mukherjee, J.

33. I agree.


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