Preetpal Belchandan vs State of Chhattisgarh and Others

Prashant Kumar Mishra, J.

These 3 writ petitions have been preferred by the respective petitioners seeking following reliefs:---

(i) WP (C) No. 656/2013 has been preferred by the President of Board of Directors of District Co-operative Central Bank Limited, Durg seeking direction to the respondents to conduct election of the Co-operative Society and complete the same through the returning officer or through the State Election Commission; not to invoke powers under S. 49 of the CG Co-operative Societies At, 1960 (hereinafter referred to as ''the Act'') and in the meanwhile, the petitioner-Board should be continued to function in the light of provisions contained in S. 53(14)(iii) of the Act (as amended).

(ii) In WP (C) No. 949/2013, the petitioner, President of Raipur Zila Sahkari Sangh Maryadit, has prayed for quashment of the order dated 27-6-2013 (Annexure-P/6) whereby the Deputy Registrar, Co-operative Societies, Raipur has invoked the provisions contained in S. 49(8) of the Act to declare that on account of completion of their elected term, the Board of Directors of the Society have deemed to vacate the office and the powers of the Board have vested in the Registrar. The petitioner has also prayed for direction to the Election Commission to hold the election to constitute new Management Committee and allow the present Board to function until new elections are held.

(iii) WP (C) No. 530/2014 has been preferred by Renuka Nagrik Sahkari Bank Maryadit seeking issuance of writ to restrain the Registrar from superseding the petitioner-society for default of the State Election Commission to hold the elections and further to direct the State Election Commission to hold the elections.

Thus, in substance, these 3 writ petitions involve common issue and questions of law as to whether after completion of their term of office for which they were elected, the respective Board of Directors/Managing Committee of the Society would vacate their office by virtue of S. 49(8) of the Act or by virtue of provisions contained in S. 53(14)(iii) of the Act, the Board of Directors deserve to be allowed to continue. The other issue is with regard to issuance of direction to the State Election Commission to hold election of the Managing Body/Board of Directors of the petitioner-societies.

Indisputably, pursuant to incorporation of Part-DCB in the Constitution, by the Constitution (97th Amendment) Act, 2011 with effect from 15-2-2012, the State Legislature brought out an amendment entrusting superintendent, directions and control of preparation of electoral rolls for, and conduct of, all elections to the Co-operative Society, to the State Election Commission. The said amendment came into force on 13-2-2013. In WP (C) No. 487/2013 and 2 more connected writ petitions, the single Bench of this Court directed the State Election Commission to take over conduct of election of co-operative societies and complete the same as expeditiously as possible. However, the State Election Commission has challenged the said order by preferring WA No. 364/2013, which is pending before the Division Bench.

In the meanwhile, the Governor of Chhattisgarh has promulgated an ordinance namely, Chhattisgarh Co-operative Societies (Amendment) Ordinance, 2014, which has become operational from the date of publication in the Official Gazette i.e. 30-9-2014. Section 5 of the said ordinance substitutes S. 50-B of the Principal Act and the new provision enjoins constitution of State Co-operative Election Commission, which shall have power of superintendent, direction and control of the preparation of electoral rolls for, and the conduct of, all elections to a Co-operative Society under the provisions of the Act and the Rules made thereunder. Thus, the relief seeking direction to the State Election Commission has been rendered infructuous because under the amended provisions incorporated in the Principal Act by the Amendment Ordinance, 2014, conduct of election has now been entrusted to State Co-operative Election Commission. Accordingly, in the absence of any challenge to the constitutional validity of the Chhattisgarh Co-operative Societies (Amendment) Ordinance, 2014, this particular relief is rejected as having become infructuous. However, it is expected of the newly formed State Co-operative Election Commission to conduct the election within reasonable time.

The only issue remaining for consideration is whether in the facts and circumstances of the case, after completion of their term of office for which they were elected, the respective Board of Directors/Managing Committee of the Society would vacate their office by virtue of S. 49(8) of the Act or by virtue of provisions contained in S. 53(14)(iii) of the Act, the Board of Directors deserve to be allowed to continue.

Admittedly, the Board of Directors of the societies which the petitioners represent have completed the term of their office for which they were elected. When the Board of Directors completed their term and in the meanwhile, elections have not been held, the consequences have been provided under S. 49(8) of the Act. The said provision is reproduced hereunder:---

"49(8). Notwithstanding anything contained in this Act or Rules made thereunder the election of a board shall be conducted before the expiry of the term of the board. If the elections are not held before the expiry of the term or board of society ceases to function due to the order of any Court or otherwise all the members of the board shall be deemed to have vacated their seats and the powers of the board shall be deemed to have been vested in the Registrar and the State Election Commission shall hold elections within six months, or twelve months in case of the Co-operative Banks:

Provided that the Registrar may authorize any officer to exercise the powers of the board vested in him under this sub-section and the officer so authorized shall exercise such powers from the date of such authorization."

A cautious reading of the provisions contained in S. 49(8), as quoted above, makes it explicit that when the elections are not held before the expiry of the term, all the members of the Board shall be deemed to have vacated their seats and the powers of the Board shall be deemed to have vested in the Registrar, therefore, legislative mandate is absolutely clear that upon expiry of the term they have to vacate the office and a mandamus or writ of prohibition directing the Registrar not to exercise the power of the Board would be contrary to the provisions of the Act.

In Union of India and Another Vs. Kirloskar Pneumatic Company Limited, , it has been held that a writ cannot be issued directing the competent authority to act contrary to the provisions of law. It has been held in para 10 thus:---

"10............................................................................................................................Yet the question is whether it is permissible for the High Court to direct the authorities under the Act to act contrary to the aforesaid statutory provision. We do not think it is, even while acting under Art. 226 of the Constitution. The power conferred by Arts. 226/227 is designed to effectuate the law, to enforce the rule of law and to ensure that the several authorities and organs of the State act in accordance with law. It cannot be invoked for directing the authorities to act contrary to law. In particular, the customs authorities, who are the creatures of the Customs Act, cannot be directed to ignore or act contrary to S. 27, whether before or after amendment. May be the High Court or a Civil Court is not bound by the said provisions but the authorities under the Act are. Nor can there be any question of the High Court clothing the authorities with its power under Art. 226 or the power of a Civil Court. No such delegation or conferment can ever be conceived."

Thus, the relief prayed for by the petitioner to the contrary cannot be allowed and the prayer seeking restrain order against the Registrar deserves to be and is hereby rejected.

The other limb of argument is to the effect that the Registrar cannot invoke the provisions of S. 49(8) of the Act because under S. 53(14) of the Act, such power is available to the Registrar only when the concerned society has Government shareholding or loan or financial assistance of any guarantee by the Government. It is urged that since the petitioner-society has no Government shareholding or loan or financial assistance of any guarantee by the Government, the provisions contained in S. 53(14) of the Act would not apply and as such, the Registrar would not have any power to supersede the Board/Managing Committee.

Section 53 of the Act begins with heading Supersession of Board. The eventuality or contingency, the occurrence of which, would necessitate supersession of the Board is provided in S. 53(1). The said contingency provides that when the Board of Society--

"(a) is negligent in the performance of the duties imposed on it by or under this Act or bye-laws of the society or by any lawful order passed by the Registrar or is unwilling to perform such duties; or

(b) commits acts which are prejudicial to the interests of the society or its members; or

(c) violates the provisions of this Act or the rules made thereunder or bye-laws of the society or any order passed by the Registrar.

Sub-section (2) of S. 53 provides for opportunity of hearing before supersession of the Board whereas, sub-section (4) makes a provision for powers of the person appointed by the Registrar to manage affairs of the society. Sub-section (5) speaks about remuneration payable to the person or persons so appointed whereas, sub-section (6) enjoins the person or persons so appointed to arrange constitution of new Board before the expiry of the period or their appointment. In cases where occasion of supersession under sub-section (1) is in respect of a financing bank or a society indebted to financing bank, sub-section (7) mandates that the Registrar shall consult the respective bank or financing bank. When there is difference of opinion between the general body of the society and the person or persons appointed under sub-section (1), in respect of any matter, sub-section (8) provides that the matter may be referred to the Registrar for decision. Under sub-section (9), it is provided that proceeding concerning supersession would not affect the power of Registrar to direct winding up of the society whereas, sub-section (10) provides that during the period between issuance of notice and passing order of supersession, the Board may be directed to function under the supervision and approval of such authority specified by the Registrar. Sub-section (11) gives power to the Registrar to remove the Board in certain eventualities, whereas sub-section (12) provides that when the Board of a society is superseded, notwithstanding anything contained in the Act, such members of the Board shall not be eligible to contest the election/nomination for 7 years.

Sub-section (14) of S. 53 of the Act, with which we are concerned in these petitions, is reproduced hereunder for ready reference:---

"(14) Where in the opinion of the Registrar--

(i) the board of co-operative society is in persistent default, or negligent in the performance of its duties and has committed any act prejudicial to the interest of the co-operative societies or its member; or

(ii) there is stalemate in the constitution or functions of the board; or

(iii) the State Election Commission has failed to conduct election as per the Act, such board may be superseded or kept under suspension and the Registrar shall proceed to appoint administrator.

Provided further that the board of any such co-operative societies shall not be superseded or kept under suspension where there is no Government shareholding or loan or financial assistance of any guarantee by the Government."

What sub-section (14) provides for is different kinds of situations, in addition to what has been provided under sub-section (1), when the Board may be proceeded for supersession. However, this particular sub-section does not apply where by the concerned society has no Government shareholding or loan or financial assistance of any guarantee by the Government. When all the 3 provisions namely, S. 49(8), S. 53(1) and S. 53(14) are read in juxtaposition, the distinct features would emerge inasmuch as S. 53(1) would operate with respect to all kinds of societies whereas S. 53(14) can be invoked only when a society is having Government shareholding or loan or financial assistance, but the result of exercise of power under both the provisions is that the body is superseded. The word "supersession of the body" is indicative of the situation that the society has not completed its elected term, but it otherwise suffers contingencies or situations which warrant its supersession before the expiry of the term. Whereas, S. 49(8) operates when a society has completed its elected term in the office. Since in the present case, there is no dispute that all the petitioners-societies have already completed their term, it is not a case where they have been superseded by invoking S. 53(1) or S. 53(14), but since there is no remainder of the term of their office, as they have completed the elected term they have been declared deemed to have vacated their seats by virtue of S. 49(8) of the Act.

The petitioners have also argued that taking over of the management of the Board by the Registrar is illegal because by virtue of S. 53(14) of the Act, they could not have been superseded and an officer could not have been appointed to manage the affairs of the Board of the society.

In view of the above, this Court is of the opinion that S. 53(14) of the Act has no application in the case of the petitioners, but the reasoning for such non-application of S. 53(14) of the Act is entirely different. As discussed above, S. 53(14) of the Act is attracted only when the Board is superseded and not when the Board has completed its elected term. When the Registrar invokes S. 49(8) and authorizes any officer to exercise powers of the Board, it does so because the society has completed its term and not because the society has been superseded. For the foregoing, the petitioners have not made out any case for interference. The writ petitions sans substratum, they deserve to be and are hereby dismissed.