Paramjit Singh vs State of Punjab

A.L Bahri, J. (Oral)

Challenge in this writ petition filed by Paramjit Singh and others, employees of Punjab State Cooperative Agricultural Development Bank Ltd., Chandigarh, is to the order dated July 9, 1991 Annexure P/5, passed by the Registrar, Cooperative Societies, Punjab, Chandigarh, vide which the Registrar modified the decision taken by the Board of Directors of the Punjab State Agricultural Development Bank Limited, Chandigarh. Copy of the decision is Annexure P/5. The Board of Directors had taken a decision in view of the healthy financial condition of the Cooperative Society to grant two months, gross salary as incentive to its workers, subject to certain conditions. When the matter went to the Registrar, he imposed a condition that this amount of incentive would be paid after deducting the amount of bonus already paid to the workers, which was to the extent of 20% of the profits. The contention of learned counsel for the petitioners is two fold: firstly that the Registrar had no jurisdiction to sit over the decision of the Board of Directors, as contained in Annexure P/5, which is a final authority under Section 23(1) of the Punjab Societies Act. This contention is devoid of merit. Where finances are involved, Section 41 of Act would come into play, which reads as under :

"41. Funds not to be divided by way of profit No part of the funds of the Cooperative Society shall be divided by way of bonus or dividend or otherwise among its members :

Provided that after at least onetenth of the net profits in any year have been carried to the reserve fund, payments from the remainder of such profits and from any profits of past years available for distribution may be made among the members to such extent and under such conditions as may be prescribed by the rules or byelaws.

Rule 35 of the Punjab Cooperative Societies Rules, 1963 reads as under:

"35. Payment of dividend or bonus. (Section 41 and 85(2) (xxiv) (1) in a Cooperative Society the dividend shall exceed 10 per cent per annum of paid up sharecapital.

In a Cooperative Society with unlimited liability no divident bonus shall be paid until a period of five years has elapsed from the date of registration.

No dividend shall be paid by the Cooperative Society while any claim due from the Cooperative Society to a depositor or lender remains unsatisfied.

The Registrar may, by a general or special order, direct that a Cooperative Society shall not pay dividend or shall pay dividend at a reduced rate so long as it receives loans and deposits from non members."

Loans and deposits from nonmembers."

Reading of the rule in the section reproduced above makes it abundantly clear that it is the Registrar who either by a general or a special order can direct payment of incentive to the workers of the Cooperative Society as per decision of the Board of Directors to reduce it. In the present case, when the decision of the Board of Directors Annexure P/5 was sent to the Registrar for approval, he passed by order Annexure P/6, in a way reducing the incentive by the amount of bonus, which had already been paid.

Learned counsel for the petitioners has further argued that since Registrar was also a member of the Board which took the decision, he did not get recorded his dissent therein. The Registrar would be bound by the resolution passed by the Board of Directors. It is further argued that if some members had dissent, the matter was to be referred to the State Government under Section 26(4) of the Act and in that eventuality the decision of the State Government would have been final. Again in this contention cannot be accepted. The Registrar, an authority under the Act, has independent power under. Rule 35, read with Section 41 of the Act, as produced above, to have control over the funds the Cooperative Society. The decision of the Board of Directors of a Cooperative Society could be approved or modified by the Registrar. Section (4) of the Act did not come into play in the circumstances of the present case as there was no dissent in passing resolution. By the Board of Directors and the matter did not go to the State Government.

Finding no merit in this writ petition, the same is dismissed.