Surendra R. and Others vs V. Srinivasa Prasad and Others

H.G. Ramesh, J.

Petitioners are Sri B.V. Malla Reddy, Sri D.R. Gopinath and their supporting members. They are before this Court seeking to quash the decisions taken by the General Body as it is contrary under Section 21 of the Karnataka Souharda Sahakari Act, 1997 (for short ''the Act'') and also contending that respondent No. 2 has not followed the principle rules, to quash the order dated 9-3-2012 passed by the Karnataka Appellate Tribunal, to quash the consequential Special General Body Meeting report dated 17-4-2011 and also to quash the order dated 10-3-2011 passed by respondent No. 3 and sought for other reliefs.

Petitioners claim to be members of respondent No. 2 - Sreenidhi Souharda Sahakara Bank Niyamitha and contend that there is violation of Section 21 of the Act and also the Special General Body meeting report dated 17-4-2011 prepared and passed by respondent No. 2 by dismissing the appeals of Sri B.V. Malla Reddy and Sri D.R. Gopinath, confirming the resolution dated 30-12-2010 passed by the Board of respondent No. 2 - Bank.

Sri B.V. Malla Reddy and Sri D.R. Gopinath are the promoter and founder members of respondent No. 2 - Bank which is established in the year 1998 at Girinagar and registered under the Karnataka Co-operative Societies Act and subsequently, registered under the Karnataka Souharda Sahakari Act, 1997. They have introduced more than 590 members to respondent No. 2 - Bank and the said members have subscribed to the share capital and many of them are having deposits with respondent No. 2 - Bank. Many of the said members have also borrowed loans from respondent No. 2 - Bank. Since Sri B.V. Malla Reddy and Sri D.R. Gopinath are the promoters of respondent No. 2 - Bank, they were taken to the Board of respondent No. 2 - Bank unanimously as special invitees and they were holding the post of Directors and Sri B.V. Malla Reddy was elected thrice continuously as the President of respondent No. 2 - Bank. Sri B.V. Malla Reddy resigned to the post of Director and also President in the month of December 2007. However, he continued to be a member till 30-12-2010 when the Board of the Bank by passing a resolution allegedly removed him and Sri D.R. Gopinath from their membership, arbitrarily and illegally stating that other members and Directors have nurtured enmity and accordingly, they have caused a charge-sheet/notice making several allegations, for which Sri B.V. Malla Reddy requested certain clarification as to whether the said letter is to be taken as Articles of charges/show-cause notice and if it is to be taken as Articles of charges, it should accompany by all documents which the Board wants to reply upon to substantiate the charges against them. But, the Board has not clarified and not furnished any documents in support of the allegations made against him. Thereafter, they have submitted their detailed reply on 29-12-2010 stating that the Board is determined to remove their membership and they have no confidence in the Board that the matter will be decided judicially and requested to hold an enquiry. It is also contended that the Board without serving the said reply to all the members at least 15 days in advance, as required under the bye-laws, proceeded to pass a resolution on the very next day, i.e. on 30-12-2010 removing the petitioners from the primary membership of respondent No. 2 - Bank. The resolution dated 30-12-2010 was intimated to the petitioners only on 14-1-2011. It is submitted that the Board of Directors have never understood the principles of co-operation and the object with which respondent No. 2 - Bank has been established and further did not understand in a right perspective manner that the provisions of the bye-laws framed under Section 10 of the Act for removal of the membership are not exhaustive and not sufficient and the procedure has not been judicially followed and requires to give reasonable opportunity to hear them keeping in mind the principles of natural justice. The petitioners questioned the illegal resolution dated 30-12-2010 by filing a dispute before respondent No. 3 under Section 39 of the Act. However, on the preliminary objections by respondent No. 2 on the maintainability, respondent No. 3 rejected the dispute on 10-3-2011 as not maintainable. Being aggrieved by the said order, petitioners preferred appeals before the Karnataka Appellate Tribunal which also came to be dismissed on 9-3-2012. Petitioners filed W.P. No. 9627/2011 and W.P. No. 9628/2011 for quashing the provision of Section 21 of the Act as ultra-vires of the Constitution and also for quashing the resolution dated 30-12-2010 passed by respondent No. 2 vide subject No. 14, removing the petitioners from the primary membership of respondent No. 2 - Bank. In the said writ petitions, emergent notice was ordered. However, no interim order was granted. Against which, appeals were preferred in W.A. No. 1901/2011 and W.A. No. 1902/2011. The Division Bench of this Court disposed of the appeals holding that the appellants/petitioners have a remedy to prefer an appeal against the order dated 30-12-2010 and liberty was given to them to file an appeal before the General Body. Petitioners preferred appeals before the General Body of respondent No. 2 - Bank. Pursuant to the said appeals filed, respondent No. 2 - Bank has called the Special General Body meeting to be held on 17-4-2011 to decide the appeals. Respondent No. 2 - Bank has sent notice to the members of the Bank including the members who are not eligible to cast their vote in the Special General Body meeting and respondent No. 2 - Bank has not supplied the appeal memo and relevant documents to its members. It is submitted that as per bye-law 23.4(2) of the Bank, the members who have not completed 18 months from the date of admission of their membership are not eligible to cast their vote in the General Body Meetings. However, on 17-4-2011, respondent No. 2 - Bank has not provided the secret ballet papers to give their opinion on the appeal, the Board of the Directors have created galata in the said Special General Body Meeting and have prepared illegal report dated 17-4-2011 and in the said report they have stated that 90% of the members have given consent to confirm the resolution dated 30-12-2010 which is illegal and the same is under challenge.

Heard the learned counsel for the petitioners, the learned Additional Government Advocate for respondents 1 and 3 and the learned counsel for respondent No. 2.

Learned counsel for the respondents submitted that as per the direction of the Division Bench of this Court, petitioners preferred an appeal before the Special General Body of respondent No. 2 - Bank. Meeting was fixed on 17-4-2011 and decision has been taken on the ground that 90% of voters have supported the resolution of respondent No. 2 - Bank and 10% of voters supported the petitioners. There is no irregularity and it is as per the directions of this Court. Accordingly, sought to dismiss the petitions.

It is noticed that pursuant to the order passed by the Division Bench of this Court, the Special General Body meeting has been fixed and notice is issued and after members casting their vote, resolution has been taken place. In the resolution, what is being noted is that 90% of the members supported respondent No. 2 - Bank and 10% of the members to the petitioners. According to the petitioners, with regard to procedure is concerned, before issuing notice list of eligible members to cast their vote has to be prepared, i.e. the members who have completed 18 months from the date of admission of their membership.

In that view of the matter, respondent No. 2 - Bank is directed to prepare the list of voters who are eligible as on today and those who have not completed 18 months from the date of admission of their membership shall not be allowed to participate. The Board of respondent No. 2 to fix a particular date for General Body meeting and in that, petitioners case shall be re-considered either to do or undo the resolution dated 31-12-2010. Accordingly, petitions are disposed of.