Ratnagiri Jillah Sahakari Bank ... vs State Of Maharashtra And Ors.
2003 Latest Caselaw 779 Bom

JUDGMENT

S.J. Vazifdar J.

1. Petitioner No. 1 is a registered trade union. petitioner Nos. 2 & 3 are employees of and are also employee directors on the board of directors of Respondent No. 4, the Ratnagiri District Central Co-operative Bank Ltd. selected/nominated by petitioner No. 1 in accordance with the provisions of Section 73BB of the Maharashtra Co-operative Societies Act 1960 (hereinafter the said Act). Respondent No. 2 is the Commissioner for Co-operation and Registrar, cooperative societies. Respondent No. 3 is the District Deputy Registrar. Respondent No. 5 is a member of the Industrial Court.

2. The petition involves the interpretation of Section 73BB of the Act. The petitioners seek a Writ of Mandamus directing respondent Nos. 1, 2 and 3 to take appropriate steps for implementation of the provisions of Section 73BB of the act in its true spirit and intent which according to them requires the appointment of persons appointed under Section 73BB not merely on the board of directors/managing committee of the bank but also on the sub-committees constituted from amongst the directors. It is not necessary for us to consider the challenge to the impugned order passed by the industrial Court as the proceeding adopted by the petitioners before the Industrial Court involves the same question. Our decision on the main question will therefore also govern the outcome of the proceedings before the Industrial Court.

3. Section 73BB of the Act reads as under:-

"73-BB Reservation of seats for employees on committees of certain societies.-

(1) On the Committee of such society or class of societies as the State Government may, by general or special order, direct where the number of permanent salaries employees of the society is 25 or more-

(a) if the number of members of the committee thereof is 11 or less - one seat; and

(b) if the number of such members is 12 or more one additional seat for every 10 members over and above the first 11 members,

shall be reserved for such employees. The seats so reserved shall be filled by selection made by the recognised union or unions and where there is no union at all or where there is a dispute in relation to such issues including whether a union is recognised or not, then the seats so reserved shall be filled by an election by such employees from amongst themselves in the prescribed manner. Any person selected or elected as a member of the committee to any reserved seat shall not be entitled to be elected as an officer of such society or to vote at any election of officers.

(2) No employee who is under suspension shall be eligible for being selected or elected or for being continued as a member under Sub-section (1).

(3) Subject to the provisions of Sub-section (2) the term of a member representing the employees shall be co-terminus with the term of the committee as provided under bye-laws of the society and after every fresh election of the members of the committee a fresh selection or election, as the case may be, of a member under Sub-section (1) shall be necessary."

4. Article 43 A was inserted in Part IV of the Constitution of India by the Constitution (42nd Amendment) Act 1976 that requires the State to take steps by suitable legislation or otherwise to secure the participation of workers in the management of undertakings, establishments or other organizations in any industry. Mr. Bukhari, the learned counsel appearing on behalf of the petitioners, submitted that Article 43A is the first active step towards socialism in India after the addition of the word socialist in the preamble by the 42nd Amendment Act. The scheme of Article 43A is that though the ownership might belong either to a private individual or to the State, the workers engaged in a particular industry or enterprise, shall by legislation be given a share in the management thereof. The right to participation in the management of an industry or undertaking, besides the right to work, it is hoped will ensure better and more production without which national development would be an impossibility under modern conditions. Workers would no longer be hired labourers but shall have an interest in the success of the enterprises and would have a share in its profits. It is unnecessary for us to set out in detail the object underlying Section 73BB. It has been dealt with in some detail by a Division Bench of this court in Saraswat Co-op. Bank Ltd. v. P.G. Korane -

In consonance with the above directive principles the Act was amended and Section 73BB was inserted by Act 3 of 1974 providing for workers participation in management Clause 15 of the Statement of Objects and Reasons states:-

"New Section 73BB is being inserted with a view to enabling the employees of certain societies to have their representatives on the managing committee's of their societies. This will ensure labour participation in the management particularly in large and medium scale industrial cooperative societies."

5. The bye-laws of a society may and often do provide for the formation of sub-committee from amongst the directors/members of the committee of management and the delegation of the powers, functions and duties of the board of directors/managing committee to such sub-committees. Bye-law 35 (15) of the bye-laws of the 4th respondent bank includes in the powers and duties of the board the right to appoint sub-committees and advisory committees and to delegate powers to them if necessary. For instance Clause 38 provides: "The Board may delegate to a sub-committee, the Chairman, the Vice-Chairman or the Manager any of the powers mentioned in the schedule approved by the Registrar." Under Clause 40-A. "The Board of Directors shall appoint an "Executive Committee" consisting of not less than Five and are not more than Seven Directors including the Chairman and the Vice-Chairman and may delegate to it all or any of the powers specified in Bye-law No. 35. The Executive Committee shall meet as often as may be necessary but at least once in a month. Three of the Directors present at the meeting shall form a quorum."

6. Mr. Bukhari submitted that in exercise of such powers under the bye-laws the Board of Directors/Managing Committee of a society may delegate important functions concerning the management of the society to such sub-committees. If the employees representative appointed under Section 73BB are not included on such sub-committees the entire purpose underlying Section 73BB would stand frustrated and defeated. He submitted therefore that a purposive interpretation ought to be placed by the Court on Section 73BB by holding that the right conferred under Section 73BB would include the right of such employees to be nominated as members of the sub-committees constituted by the Board of Directors. We are unable to agree with the submission.

7. The plain language of Section 73BB does not warrant such an interpretation. The reservation for an employee under Section 73BB is "on the committee" of such society. The use of the singular "committee" makes this clear. There is nothing in the section that requires the reservation of a seat on every sub-committee for an employee. Mr. Bukhari relied upon the use of the plural "committees" in the heading to the section which reads: " Reservation of seats for employees on committees of certain societies." The argument misses the point that it was necessary to use the plural "committees" here as it was in conjunction with the word "societies" in plural and not the word "society" in the singular.

8. Section 2(7) of the Act defines "Committee" as under:-

"Committee" means the Committee of management or board of directors or other directing body, by whatever name called, in which the management of the affairs of a society is vested under Section 73."

Emphasising the words "by whatever name called" Mr. Bukhari submitted that the term "committee" used in Section 73BB would therefore include within its ambit sub-committees. We are unable to agree. The use of the expression "by whatever name called" relates to the managing committee/board of directors and not to sub-committees thereof. The board of directors/managing committee may well be referred to by societies with a different nomenclature such as for instance "Board of Managers." If the intention was to include sub-committees within the meaning of the expression "committees," the language of the section would have been entirely different. It would have explicitly so provided. It is clear therefore that the term "Committee" both in Section 2(7) and in Section 73BB relates only to the Managing Committee/Board of Directors and not to any sub-committees constituted by the Managing Committee/Board of Directors.

9. Mr. Bukhari then relied upon Section 73(1) which reads as under:-

"The management of every society shall vest in a committee, constituted in accordance with this Act, the rules and bye-laws which shall exercise such powers and power from such duties as may be conferred or imposed respectively by this Act, the rules and the bye-laws."

Mr. Bukhari submitted that Section 73(1) therefore referred to a committee constituted even in accordance with bye-laws; that sub-committees are constituted pursuant to the bye-laws and that therefore the term committee included within its ambit sub-committees. We are unable to accept this argument either. The use of the expression "a committee" is important and in fact decisive. If the intention of the legislature was to vest the management of societies in various sub-committees in addition to the managing committee/Board of Directors, the language would have been different and would have expressly so provided. That this contention is unfounded is also clear from Section 73G(3) which provides that sub-committees are subordinate to the committee of management elected by the general body of members of the society. The reference in Section 73 to a committee constituted in accordance not only with the act and the rules but also in accordance with the bye-laws was necessary as more often than not the bye-laws contain detailed provisions relating to the manner in which the committee of management/board of directors is to be appointed. For instance in the present case bye-law No. 32 of the bye-laws of respondent No. 4 contains detailed provisions as to the total number of directors, the number of directors representing a particular class of persons, industry or business, the source and number of nominee directors, the qualifications necessary for a person to be entitled to be a director and the rules in accordance with which elections are to be held for the appointment of directors. Thus the board of respondent No. 4 consisting of 27 directors would be constituted in accordance with not only the Act and the rules made thereunder, but also in accordance with the bye-laws. It is in this context that Section 73(1) provides that the management of every society shall vest in the committee constituted in accordance with the Act, the rules made thereunder and the bye-laws. Section 73 by no stretch of imagination includes within its ambit sub-committees constituted from within the managing committee.

10. To accept Mr. Bukhari's contention would require our rewriting Section 73BB. It is, at least in this case, impermissible for us to do so. We would in fact have to substantially rewrite Section 73BB, drastically altering the entire tenor and purport of the section, for the plain language, it cannot be disputed, does not suggest what the petitioners contend it does. The legislature was aware and conscious of the system of sub-committees being constituted by the board of directors/committee of members of a society from amongst themselves and delegating their powers to such subcommittees. Section 73G(3) in fact expressly refers to sub-committees. It reads as under :-

"73G (3) Notwithstanding anything in the bye-laws of any society, only the committee of management shall be elected by a general body of members of the society; and all other committees authorised by or under the bye-laws may be constituted only by electing or appointing the persons from among the persons who are members of the committee of management, and all such committees shall be sub-committees of the committee of management, and shall be subordinated to it."(emphasis supplied)

It is clear therefore that if the legislature intended the appointment of employees appointed under Section 73BB to be appointed on the sub-committees of societies as well it would have so provided. In doing so it would also have provided for a variety of other consequential and incidental aspects, which it has not. It has not done so consciously. We do not find any omission in the Act. As observed by the Supreme Court in Union of India v. Hansoli Devi - : "But before any words are read to repair an omission in the Act, it should be possible to state with certainty that these words would have been inserted by the draughtsman and approved by the legislature had their attention being drawn to the omission before the Bill had passed into a law." What we have stated above in fact indicates that the legislature was aware of the system of the formation of sub-committees and despite that did not mandate a representation on them to such employees appointed under Section 73BB of the Act. This being so there is no question of the court being called upon to fill any omission.

11. Mr. Nargolkar the learned counsel appearing for respondent numbers 1, 2 and 3 submitted, not without force that where the legislature intended to provide representation on sub-committees it did so expressly. He invited our attention to Section 5A and the Section 30 of the Bombay Provincial Municipal Corporation Act, 1949. Section 5A provides that in the seats to be filled in by election in the corporation, there shall be seats reserved for persons belonging to the Scheduled Castes, Scheduled Tribes, Backward Class of citizens and women, as may be determined by the State Election Commissioner. Section 30 provides that the Corporation may from time to time appoint out of its own body, Special Committees including the Women and Child Welfare Committee. Section 30 (1A) provides that on the Women and Child Welfare Committee not less than 75 percent of the members shall be from amongst women Councillors.

12. There is yet another factor that negates the petitioners case. Section 73B provides for the reservation of seats on committees of certain societies for scheduled castes, scheduled tribes, other backward classes, de-notified tribes, nomadic tribes, special backward classes and for members of weaker sections. Four seats are to be reserved, one for the members belonging to the scheduled castes or scheduled tribes, one for the members belonging to the other backward classes, one for the members belonging to the de-notified tribes (Vimukta Jatis), nomadic tribes or special backward classes and one for the members belonging to the weaker Section 73B(2) further provides that these seats shall, unless where the bye-laws of the society already provided for the reserved seats, be in addition to the strength of the members of the committee of such a society or class of societies. Under Section 73BBB there is a reservation of seats on the committee of a society for women to represent the women members. The number would depend upon the strength of the managing committee. Now if the petitioners contention is to be upheld, on a parity of reasoning persons appointed pursuant to Section 73B and Section 73BBB would also be entitled to be appointed to every sub-committee ipso facto. Nothing in the scheme of the Act in general and the aforesaid provisions in particular persuades us to take such a view. This would in fact require our rewriting the provisions of the Act even further. In fact if we were to accept the petitioners contention we would be entering the field of legislation which we clearly are not entitled to.

13. In Saraswat Co-op. Bank Ltd. v. P.G. Korane (supra) the Division Bench held that there cannot be employee participation in every form of activity (Paragraph 12). This would militate against Mr. Bukhari's submission. Faced with this Mr. Bukhari submitted that employees appointed under Section 73BB may be appointed only on certain sub-committees and not all. This submission would entail further legislation on the part of the Court. A question would necessarily arise as to on which sub-committees such employees should be appointed. There could possibly be innumerable sub-committees in various societies. The extent of the powers delegated to each of these sub-committees would vary. The court would necessarily be required in each case to decide whether such employees ought to be appointed on a particular sub-committee. We are of the opinion that the right to be appointed on a particular class of sub-committees would require legislation. Each time therefore the court would have to legislate and not merely adjudicate upon the matter. For this reason also we are unable to accept Mr. Bukhari's contention.

14. Mr. Bukhari submitted that it was necessary for such employees to be appointed at least on certain sub-committees to ensure that the management of societies is not carried on fraudulently to the detriment of all, the public, the members and in particular the employees whose livelihood depends on the efficient and honest management of societies. We are afraid that this aspect cannot be taken into consideration while interpreting the aforesaid provisions. If the purpose or aim of the legislature is to reserve seats for employees so that they may act as watchdogs for the society over the committee of management/board of directors it is for the legislature to enact the necessary provisions. Section 73BB gives a limited right to the employees mentioned therein viz. the right to participate in the management of the society. In any event if indeed the management of any society is being run fraudulently or dishonestly as a result of the acts of its sub-committees, the members as well as the members of the committee of management/board of directors, which will include an employee appointed under Section 73BB, are not without a remedy. The Act has several provisions to deal with such situations. In fact under Section 14 of the At if it appears to the Registrar that an amendment of the bye-laws of a society is necessary or desirable in the interests of such a society, he may call upon the society, to make the amendment. Thus if it is proved to the satisfaction of the Registrar that in the case of a given society the bye-law permitting the constitution of sub-committees is working oppressively and to the detriment of the society he may well require the society to make the necessary amendment deleting such a provision. This would have to be decided on a case to case basis.

15. Mr. Bukhari's submission that the management of a society could be completely taken away by the inclusion of bye-law 40-A from the committee of management/board of directors is equally unfounded. It is true that under bye-law 40A the board of directors is authorised to appoint an executive committee and to delegate to it all or any of the powers specified in bye-law No. 35. Even if such power were to be exercised it would not denude the board of directors of its powers. Section 73G(3) which we have reproduced earlier makes this clear by providing that the sub-committees of the committee of management shall be subordinate to the committee of management. Thus if any member of the committee of management/board of directors is dissatisfied with or has any reservation regarding the decision taken by a sub-committee it will be open to him to not only call for the records containing the details of the decision but also to take it up for consideration/reconsideration before the committee of management/board of directors. Mr. Bukhari submitted that in practice this may not often be possible as the decision of the sub-committees is often implemented forthwith and merely comes up for formal ratification by the committee of management. This is a matter of detail and working of the system that may be adopted by individual societies. Once again the remedy lies not in interpreting the provisions of the Act with a view to taking care of possible infractions but in taking recourse to the machinery provided under the Act for the same. In Union of India v. Huansoli Devi (supra) the Supreme Court's held that it is not permissible to add words into a statute which are not there is unless on a literal construction being given a part of the statute becomes meaningless. We have already observed that there is no omission on the part of the legislature. The "omission" alluded to by Mr Bukhari in any event does not render Section 73BB meaningless.

16. Mr. Bukhari relied upon paragraph 9 of the judgment of the Supreme court in Babaji Kondaji Garad v. Nasik Merchants Coop. Bank Ltd., which we reproduce -

"9. The Act was enacted in 1960 and it repealed the Bombay Co-operative Societies Act, 1925. Section 73 provides for the vesting of the management of every society in a committee to be constituted in accordance with the Act, the rules and the bye-laws. At the commencement of the Act, there was no provision for reservation of seats in favour of the members of the Scheduled Castes and the Scheduled Tribes and the weaker section of the members. Section 73-B making reservation obligatory was introduced in the Act by Amending Act 27 of 1969. Why was this specific amendment made? The working of the Act must have disclosed a sorry state of affairs that even though the co-operative movement was expanding by leaps and bounds, the members of the Scheduled Castes and Scheduled Tribes or the weaker section of the members of the society were not represented in the committee and had no opportunity to participate in the decision making process, laying down broad policies and management of the society. Article 43 of the Constitution set the goal that the State shall endeavour to promote cottage industries on an individual or co-operative basis in rural areas. In our onward march of economic independence, India was destined to be a co-operative commonwealth. Since independence, co-operative movement proliferated in all directions, its activities were diversified, more especially in the rural areas. Every activity of a person devoted to agriculture in the rural area is considerably influenced by the co-operative movement, such as seed distribution, credit, disposed of agricultural produce etc. The members of the Scheduled Castes and Scheduled Tribes predominantly in rural areas did not remain unaffected by the gigantic stride that the cooperative movement took. They were directly and substantially affected by it. In order to avoid that those who are affected by the movement in their vital day to day existence enjoy a second class status by being denied the opportunity to be represented in the management council, and decision making bodies, a provision like Section 73-B was introduced to ensure representation of such persons who in the absence of reservation may find it difficult to be elected to the committee in which the entire power of management vests. Absence of representation coupled with subjection to the dictates of the society would be antithesis of democratic process reducing such persons to serfdom. A co-operative society is to be governed by a committee elected by democratic process. This democratic process must permeate in filling in reserved seats otherwise the committee would not enjoy a representative character. One can draw light from the provisions contained in Part XVI of the Constitution and especially Articles 330 and 332 which provide for reservation of seats in the House of People and in the legislative Assembly of every state for the Scheduled Castes and the Scheduled Tribes. The felt necessities of the time and the historical perspective of class domination led to the constitutional guarantee of reservation so that India can truly be a sovereign socialist secular democratic republic. A republic is made up of men and institutions. That is why democratic institutions have to be set up by providing for election and to make the democratic institutions truly representative, reservation of seats for those who on account of their backwardness, exploitation and in just treatment both social and economic cannot obtain representation because of the class domination. This is the genesis of reservation. Therefore, any provision making for reservation must receive such construction as would advance the purpose and intendment underlying the provision making reservation and not thwart it. In the past a method of construction was used to extend a remedial statute called proceeding upon 'the equity of the statute'. In Hay v. Lord Provost of Perth Lord Westbury observed that the mode of construction known as 'the equity of the statute' was "very common with regard to our earlier statutes, and very consistent with the principle and manner according to which Acts of Parliament were at that time framed". Undoubtedly, nowadays this mode of construction has fallen into disuse. Even though the expression 'the equity of the statute' has fallen into disuse, it is still invoke in somewhat similar form in that if it is manifest that the principles of justice require something to be done which is not expressly provided for in an Act of Parliament, a court of justice will take into consideration the spirit and meaning of the Act apart from the words. In this context, one can recall the words of Jessel M.R. in Re Bethlem Hospital, that 'the equity of the statute' may as well mean "such a thing as construing an act according to its intent, though not according to its words" Alternatively,one can bring in Heydon's test more often noticed by this Court that in order to arrive at true intendment of a statute, the court should pose to itself the questions: (1) what was the situation prior to the provision under construction, (2) what mischief or defect was noticed before introducing the provision, (3) whether it was remedial and (4) the reason for the remedy. Applying this test, -the same result would follow inasmuch as looking to the position and the plight of Scheduled Castes and Scheduled Tribes and the weaker section of the members of the society, through they would be subject to the dictate of the society they had had no voice in the managerial councils and that to raise the stature and status of such persons so as to bring them on the footing of equality with other segments of the society, reservation was provided in the absence of which those in whose favour reservation was made could not get elected to the decision making bodies. While ascertaining the true cannon of construction applicable to Section 73-B, these aspects must stare into our face."

17. The judgment is of no assistance to the petitioners. In fact immediately following this paragraph the Supreme Court held in paragraph 10:-

"Before going in search of any external aids of construction, let us look at the language employed by the legislature because no canon of construction can be said to be more firmly established than this that the Legislature uses appropriate language to manifest its intention."

In fact the Supreme Court came to the conclusion that the plain language of Section 73B made it clear that the first and foremost pride of place is accorded to election of persons eligible to fill in reserved seats. It is the failure of the election machinery to fill in seats which would enable the concerned authority to fill in seats by appointment or co-option. The condition precedent to filling in reserved seats by appointment or co-option is holding of election and failure to elect such persons would permit resort to other methods of filling in the reserved seats.

Even if we were to apply the mode of construction of "the equity of the statute" we would not come to any other conclusion for part from the fact that the language of Section 73BB is clear we find that the intention of the legislature is carried out inspite of restricting the right of the employees appointed under Section 73BB to be on the board of directors and not also on the sub-committees. To reiterate, the intended participation of employees in the management of a society is not frustrated by their not being appointed on sub-committee's inter alia for the reason that sub-committee's are subordinated to the committee of management/board of directors.

18. Mr. Gorwadkar's reliance upon the judgment of the Supreme Court in Jeewanlal Ltd. v. Appellate Authority, in this regard is well founded. Justice A.P. Sen speaking for the court held :-

"11 In construing a social welfare legislation, the court should adopt a beneficent rule of construction; and if a section is capable of two constructions, that construction should be preferred which fulfils the policy of the Act, and is more beneficial to the persons in whose interest the Act has been passed. When, however, the language is plain and unambiguous, the Court must give effect to it whatever may be the consequence, for, in that case, the words of the statute speak the intention of the Legislature. When the language is explicit, its consequences are for the Legislature and not for the courts to consider. The argument of inconvenience and hardship is a dangerous one and is only admissible in construction where the meaning of the statute is obscure and there are two methods of construction. In their anxiety to advance beneficent purpose of legislation, the courts must not yield to the temptation of seeking ambiguity when there is none."

(emphasis supplied)

19. In M.P. Mineral Industry Association v. The Regional Labour Commissioner (Central), Jabalpur - the Supreme Court held in paragraph 11 as under:-

"(11) It is true that the provisions of the Minimum Wages Act are intended to achieve the objects of doing social justice to workmen employed in the scheduled employments by prescribing minimum rates of wages for them, and so in construing the said provisions the court should adopt what is sometimes described as a beneficial rule of construction. If the relevant words are capable of two constructions preference may be given to that construction which helps to sustain the validity of the impugned notification; but it is obvious that the occasion for showing preference for one construction rather than the other can legitimately arise only when two constructions are reasonably possible, not otherwise."

(emphasis supplied)

20. We have already observed that the language of Section 73BB is clear. A second construction is not reasonably possible. The occasion therefore for adopting a beneficial rule of construction does not arise.

21. Relying upon the sentence immediately before the explanation in Section 73BB Mr. Gorwadkar submitted that an employee appointed under Section 73BB cannot be elected as a member of a sub-committee. According to him a member of a sub-committee is an officer of such society in view of the definition of that term in Section 2(20). We refrain from deciding this point as we are in any event inclined to dismiss the petition for the reasons, given earlier.

In the circumstances the petition is dismissed. There shall be no orders to costs.