Ranjit Sinh V. Patil And Ors. vs Collector And Ors.
2003 Latest Caselaw 1207 Bom

JUDGMENT

D.B. Bhosale, J.

1. Rule. Returnable forthwith. Mr. Sakhare, learned senior counsel, waives service for the respondents. Heard finally by consent of the parties.

2. This writ petition raises a short yet important question of law as to whether the number of "nominated members" of the Managing Committee can be counted for forming a quorum of the meeting of such Committee convened for electing its officers. This is particularly so since they are specifically excluded by the provisions of Section 27(9) of the Maharashtra Co-operative Societies Act, 1960 (for short, 'the Act') from voting at any election of the officers of such committee. Since an answer to this question does not involve any factual adjudication, a brief reference thereto would suffice.

3. Respondent No. 3 (for short, "the society") is a specified society within the meaning of Section 73-G of the Act. Elections of officers of the committee for the year 2003-04 were due and, therefore, the meeting of the directors was convened on 10-9-2003 by the election officer who was nominated by the Collector. At the said meeting, 9 directors out of 17 remained present. Out of 9 directors, one director was a nominee of the financing bank and remaining 8 were elected directors. The Tahsildar, Karveer, who was nominated by the Collector to hold elections of the officers of the committee, adjourned the meeting to 18-9-2003 at 2 p.m. holding that the nominated director could not be counted for forming quorum. While adjourning the meeting, the Tahsildar made it clear that on the adjourned date of the meeting, even if there was no quorum, the meeting would proceed to elect the Chairman and Vice-Chairman. On 10-9-2003, the Managing director of the society issued a formal notice of the meeting. It was specifically indicated in the notice "that in case the quorum was not available, the meeting of the only those directors who remain present would be held and in the meeting the Chairman and Vice Chairman would be elected". The petitioners have impugned this decision of the Tahsildar and the aforesaid noting appended to the notice of the meeting in the present writ petition. In other words, the decision to hold the meeting on the adjourned date and elect the Chairman and Vice-Chairman even if there was no quorum has been impugned in the writ petition.

4. This Court, on 18-9-2003, while issuing a notice for final disposal of the petition, in paragraph 5 of the order held thus :

"5. Insofar as, interim relief is concerned, the meeting shall be held at the appointed time and place today in the event of quorum is available and the parties would be bound by the decision taken therein. However, in the event there is no proper quorum, the meeting would proceed but the decision taken therein shall be kept in abeyance till the disposal of this petition. In other words, the meeting shall proceed as per the scheduled time without any adjournment unless it is for any other purpose if the numbers attending the meeting so desire."

5. In view of this order, the meeting was held as scheduled on 18-9-2003 when once again only 9 directors were present in the meeting, out of which one director was a nominee of the financial institution. The election officer conducted the elections as directed by this Court in its order dated 18-9-2003, but since he was of the view that nominated member could not be counted for forming the quorum, he did not declare the result thereof and kept it in abeyance. It is in this backdrop, by consent of the parties, the matter was heard for final disposal.

6. The learned counsel appearing for the parties submitted that this writ petition involves a substantial question of law of general importance and, therefore, I should decide the question as formulated in the first paragraph of the judgment. It is true that Mr. Kumbhakoni, learned counsel for the petitioners, in the alternative, submitted that since the respondent did not raise any objection to the Tahsildar for adjourning the meeting on the ground that the nominated member cannot be counted for forming the quorum, the petitioners cannot now contend that the nominated member can also be counted for forming the quorum. However, he fairly submitted that I should first address the principal issue involved in the writ petition and if the answer to that question is in affirmative, I need not consider his alternative submission.

7. Mr. Kumbhakoni, learned counsel for the petitioners, submitted that the requisite quorum for the meeting in issue was of 9 directors. The requisite number of directors were not present at both the aforesaid meetings. A nominee of the financing bank, who was present in the meeting, cannot be counted for forming the quorum as he was not entitled to vote at any such meeting convened under Section 144-Y(2) of the Act for electing the Chairman and Vice-Chairman. He invited my attention to the provisions of Section 27(9) of the Act which specifically excludes the nominee member from voting at any election of officers of the committee. He further submitted that the nominee director, who was present in the meeting, was not entitled to vote in the meeting convened for electing the Chairman and Vice-Chairman and, therefore, his presence cannot be stated to be necessary for transacting the business in the meeting. In other words, the meeting of the Board of Directors under Section 144-Y cannot be conducted without requisite quorum consisting of the directors who are entitled to vote or whose presence is necessary for transacting the business in such meeting. He further submitted that the Bye-laws do not contain any provision as to the manner of holding elections of the officers as contemplated under Section 144-Y of the Act and in the absence of any provisions in the Bye-laws the challenge to the decision of the election officer impugned in the present petition is unsustainable in Jaw. According to Mr. Kumbhakoni, quorum of 9 directors means a quorum of 9 directors who are competent to transact and vote on the business of the meeting called for electing Chairman and Vice-Chairman. In support of his submission, Mr. Kumbhakoni placed heavy reliance upon the Judgments of the Apex Court in The Punjab University, Chandigarh v. Vijay Singh Lamba and Ors., , Narayandas Shreeram Somani and Ors. v. Sangli Bank Ltd., and Needle Industries (India) Ltd. and Ors. v. Needle Industries Newey (India) Holding Ltd. and Ors. (1981) 3 SCC 233.

8. Mr. Sakhare, learned senior counsel for respondent No. 3, on the other hand, invited, my attention to the Bye-laws of the society to contend that Bye-law 12, which relates to constitution of Board of Directors and Bye-law 15 which provides quorum for the meeting of the Board of Directors, do not make any distinction between the elected and nominated members of the Board of Directors. In his submission, in the absence of specific Bye-laws governing the conduct of meeting as contemplated under Section 144-Y. Bye-laws 12 and 13 will have to be applied for conducting the meeting for electing officers of the committee. He submitted that a nominee member is also part of the composition of the Board of Directors. Even if nominee member is not entitled to vote in the meeting which is convened to elect the Chairman and Vice-Chairman, he in his own right, is entitled to attend the meeting and therefore, his presence can also be counted for the purpose of forming the quorum. Mr. Sakhare, learned senior counsel, in support of his submission placed heavy reliance upon the judgment of the Apex Court in Raees Ahmad v. State of U.P. and Ors., AIR 2000 SC 583.

9. Before I advert to the submissions advanced by the learned counsel appearing for the parties, it would be advantageous to make reference to the provisions of law which may be relevant for determination of the issue involved in the present petition. Chapter XI-A of the Act deals with the elections of the committees and officers of societies belonging to category specified in Section 73-G. Admittedly, the society fails in one of the categories enumerated under Section 73-G. The provisions of this Chapter provide the procedure for conducting elections of officers of the committee. However, Section 144-Y in the Chapter makes special provisions to elect officers of specified societies, such as respondent No. 3 society. This section applies only to elections of officers by members of the committee of societies belonging to the categories specified in Section 73-G. Sub-section (2) of Section 144-Y provides that when elections of the members of the committee became due, the election of the officer or officers of any such society shall be held as provided in its Bye-laws but any meeting of the committee for this purpose shall be presided over by the Collector or an officer nominated by him in this behalf. Sub-section (20) of Section 2 defines officer which includes Chairman and Vice-Chairman, Section 27 which deals with voting powers of members in Sub-section (9) thereof provides that no nominee of the Government or any financing bank on the committee of any society shall be entitled to vote at any election of officers of such committee. Section 2(7) defines "Committee" which means the committee of Management or Board of Directors in which the management of the affairs of a society is vested under Section 73 of the Act. Section 73 states that the management of every society shall vest in a committee, constituted in accordance with the Act the Rules and the Bye-laws, which shall exercise such powers and perform such duties as may be conferred or imposed respectively by the Act or the Rules or the Bye-laws. Section 73-G of the Act provides for conduct of elections to committees and of officers of certain societies and term of office of members of such committees. The categories mentioned therein consist of the society, i.e. respondent No. 3 in the present writ petition. Sub-section (2) of Section 73-G provides that when elections of all members of the committee of any such society is held at the same time, the members elected on the committee at such general election shall hold office for a period of five years from the date on which the first meeting is held. Sub-section (2A) of Section 73-G provides that the term of the office of the members who are nominated shall be coterminous with the terms of office of the elected members under Sub-section (1) notwithstanding the date of their nomination. It is, thus, clear that Section 73-G or any other provisions in the Act for that matter, except Section 27(9) do not make any distinction between elected and nominated members of the committee,

10. This takes me to consider the Bye-laws of the society. The Act or Rules framed thereunder, do not provide the procedure to conduct the election of officers of the committee except Section 144-Y of the Act. The Bye-laws of respondent No. 3 society also do not provide the procedure to conduct the election of respondent No. 3-society as contemplated under Section 144-Y. Under Bye-law 12 of the society constitution of the Board of Directors consists of 17 members out of which 15 are elected and 2 are nominated. Bye-law 13 provides functioning of the Board of Directors. Under Clause (2) of Bye-law 13 the quorum for the meeting of the Board of Directors is 9. Bye-law 20(5) provides that after every annual general meeting of the society, in the first meeting of the Board, election of the Chairman and Vice-Chairman has to be made. Bye-laws 12 and 13 do not make any distinction between elected and nominated members of the Board.

11. The term 'meeting' indicates a number of people having a common duty or function who have come together for any legal purpose or the transaction of business of common interest. It is an assemblage of the people. To be valid, every meeting must begin with the minimum number of persons fixed by the provisions of law, rules or Bye-laws. Such number is the irreducible minimum of the meeting. In that sense, quorum signifies the minimum number which is required to constitute a meeting or to continue the same to business or can validly transact its business. There would be no meeting if there be no quorum present. Obviously, therefore, if a member of a body is specifically excluded, from forming a quorum, his number cannot be taken into account to constitute a meeting. In the absence of quorum, the meeting lapses. In short, the quorum is the minimum number that is required to be constituted for any meeting and for want of quorum in law, there is no meeting. The Apex Court in Punjab University v. Vijaysingh Lamba (supra) has amplified the expression quorum to mean that "it denotes the minimum number of members of any body of persons whose presence is necessary in order to enable that body to transact its business validly so that its act may be lawful." This expression, in my opinion, does not make any distinction between a nominated and other members of the body.

12. Indubitably, the Act or the Rules framed thereunder do not provide quorum for holding a meeting for the purposes of electing a Chairman or Vice-Chairman. Sub-section (2) of Section 144-Y, though specifically provides that the election of officer or officers of the society shall be held as provided in its Bye-laws, the Bye-laws of respondent No. 3 society are silent in respect of the procedure to be followed for electing the Chairman or Vice-Chairman. Bye-laws 12 and 13 deals with the constitution of Board of Directors and its functioning, the provisions of Bye-laws 12 and 13 are general in nature. There are no provisions in the Bye-laws which independently deal with the meeting of the committee for electing officers. Clause (2) of Bye-law 13 while providing quorum for the meting of the committee does not make any distinction between elected and nominated members of the Board of directors.

13. Sub-section (9) of Section 27 of the Act specifically provides that no nominee of the government or any financing bank on the committee of any society shall be entitled to vote at any election of officer of such committee who holds the office by virtue of his election to that office. It is apparent that the only disqualification attached to the member nominated by the financing bank is that he is interdicted from voting at any election of officers, such as Chairman or Vice-Chairman of the committee. Keeping this provision in view, if Bye-laws 12 and 13 of the society are read they make distinctly clear that 9 members of the Board, of Directors would form quorum. They do not specify that the elected members only would be counted for forming a quorum. In the absence of specific Bye-laws providing procedure to be followed for electing the Chairman and Vice-Chairman or any other officers of the committee for that matter, I have no option but to take recourse to Bye-laws 12 and 13 of the society.

14. The Apex Court in the case of Raees Ahmad v. State of U.P. and Ors. (supra) was dealing with somewhat similar situation. It would be advantageous if paragraphs 2 to 5 of the judgment of the Apex Court are reproduced for better appreciation, which in my view squarely covers the present case. Paragraphs 2 to 5 of the Judgment of the Apex Court read thus :

"2. At the relevant time, the Nagar Panchayat, Jalalabad (the Municipality.) consisted of 21 members. Thus: one President and fifteen elected, two ex-officio and three nominated members. A no-confidence motion was moved against the President, the appellant, and thirteen members voted in support. The motion was held to have been carried on 14-10-1998 and this was challenged by the appellant in a writ petition before the High Court at Allahabad. The writ petition was dismissed on the basis that since the three nominated members could not vote, their number could not be taken into consideration for the purposes of the no-confidence motion and the two-third majority thereon had to be calculated by excluding them.

3. Section 87-A of the U. P. Municipalities Act, 1916 deals with a motion of no-confidence against the President. Sub-section (12) thereof reads :

"(12) The motion shall be deemed to have been carried only when it has been passed by a majority of two-third of the total number of members of the Municipality."

Section 9(D) of the said Act deals with the composition of a Municipality and states that it shall consist of a President, elected members, ex-officio members and nominated members. Nominated members are mentioned in Sub-clause (d) thereof and the proviso thereto states;

"Provided that the persons referred in Clause (d) shall not have the right to vote in the meetings of the Municipality."

4. It will be noticed that nominated members are part of the composition of the municipality and are referred to in the Statute as the nominated members thereof. For the purposes of finding whether a motion of no-confidence against the President has been carried, what has to be seen is whether it has been passed by "a majority of two-third of the total number of members of the Municipality. There can be no doubt, therefore, that, on a plain construction of the statute the number of the nominated members has to be taken into account in determining whether or not a motion of no-confidence against the President has been carried. 5. On behalf of the respondents emphasis is laid upon the proviso quoted above which states that nominated members shall not have the right to vote in the meetings of the Municipality. It is contended that inasmuch as the nominated members do not have the right to vote in the meetings of the Municipality, they should not be counted as part of the total numbers of the members of the Municipality, two-third of whose vote in favour is requisite for the passage of the motion of no-confidence. We find it difficult to accept this submission, given the plain words of the provisions quoted above. That nominated members may not vote does not imply that they cease to be members of the Municipality or that their number should be ignored in determining whether the President has lost the confidence of two-third of the members. So calculated, the vote of confidence against the President had not been carried as required."

It is thus clear that the writ petition was dismissed on the basis that since three nominated members could not vote, their number could not be taken into consideration for the purpose of no-confidence motion and two-third majority thereof had to be calculated by excluding them. The Apex Court while dealing with the case and considering the relevant provisions of the U. P. Municipality Act, the proviso to Sub-section 12 of Section 87 in particular held that the nominated members are the part of the composition of the Municipality and are referred to in the statute as nominated members thereof for the purpose of finding whether a motion of no-confidence against the President has been carried.

15. The provisions of the proviso to Section 87-A of the U. P. Municipality Act, 1960, in my opinion, are similar to those of Section 27(9) of the Act which also provides that the nominated members shall not have right to vote in the meeting convened for election of the Chairman or officers of the committee. There is no provision in the Act which excludes the presence of nominated members in the meeting convened for electing a Chairman and Vice-Chairman. Though the nominated members are not entitled to vote in the meeting, they have every right to attend the meeting and participate in the proceeding. That right is not barred by the provisions of the Act, Rules or the Bye-laws. The nominated members are not entitled to vote does not imply that they cease to be members of the Board of Directors. In other words, on plain construction of Sections 27(9), 144-Y and the Bye-laws, the number of nominated members cannot be ignored and they must be counted for forming a quorum.

16. Mr. Kumbhakoni, learned counsel for the petitioners, placed heavy reliance upon the judgment of the Apex Court in The Punjab University, Chandigarh v. Vijay Singh Lamba and Ors. (supra) to contend that number of the members of any body of persons whose presence is necessary in order to enable that body to transact, its business validly so that its acts may be lawful only could be counted for forming a quorum. The proposition relied upon by Mr. Kumbhakoni, in my opinion, would not affect the view taken by me in this petition. However, it would be advantageous to state the backdrop against which the Apex Court enunciated the aforesaid proposition. In the Punjab University, Chandigarh v. Vijay Singh Lamba and Ors., the constitution of the Standing Committee was of three members as appointed by the Syndicate of the University under Regulation 31 of the Punjab University Calendar, 1975 Volume II. The University under Regulation 31 passed a resolution that two members shall form the quorum for the meetings of the Standing Committee appointed under Regulation 31. In every one of the meetings, only two out of the three members of the Standing Committee were present and in view thereof, the decision of the Standing Committee was challenged before the High Court on the ground that the decisions were without jurisdiction inasmuch as all the three members of the Standing Committee had not taken part in the meetings in which the decision to disqualify the respondents was taken. The majority Judges of the High Court held that Regulation 32.1 "clearly negatives the fixation of a quorum and makes it incumbent that the decision must be taken by the full committee" for the reason that "in a way, this regulation fixes the quorum at the number of members originally appointed". This view of the majority Judges was negatived by the Apex Court in the case of the Punjab University, Chandigarh and while doing so made the following observations which were vehemently relied by the petitioners.

"'Quorum'-denotes the minimum member of members of any body of persons whose presence is necessary in order to enable that body to transact its business validly so that its acts may be lawful."

17. Presence of the nominated members in my opinion, is necessary in order to enable the body to transact its business validly to make the election of the Chairman and Vice Chairman legal. They have every right to attend such meeting and even participate in the proceedings though they are not entitled to Vote. The nominated members are also part of the composition of Board of Directors. Section 73G and 144-Y of the Act do not make any distinction between elected and nominated members insofar as their existence in the meeting called for electing officers of the committee. Even a plain reading of the words of the provisions of Section 27(9) referred to above do not imply that the nominated members cease to be members of the Board of directors for the purposes of electing Chairman and Vice-Chairman.

18. Other two judgments relied upon by Mr. Kumbhakoni, learned counsel for the petitioners, are under the provisions of the Companies Act. In Needle Industries (India) Ltd. and Ors. v. Needle Industries Newey (India) Holding Ltd. and Ors., and in Narayandas Shreeram Somani and Ors. v. Sangli Bank Ltd., , the Apex Court while dealing with the provision of Sections 287 and 300 of the Companies Act has held that a quorum of two directors means a quorum of two directors, who are competent to transact and vote on the business before the Board Section 167 of the Act declares that the provisions of the Companies Act, 1956 shall not apply to the society registered or duly registered under the Act. Keeping this in view, if Section 287, Sub-section (1)(B) of the Companies Act is examined, it specifically excludes the "interested directors" which means any directors whose presence cannot, by reason of Section 300, count for the purpose of forming a quorum at the meeting of the Board, at the time of the discussion or vote on any matter. Section 300 provides that interested directors cannot participate or vote in the Board proceedings. Such is not the case in the present petition and, therefore, the judgments relied upon by Mr. Kumbhakoni under the provision of the Companies Act would not have any application to the facts of the present case.

19. In the circumstances, I have no hesitation to hold that nominee members though are not entitled to vote at the election of officers of the committee, could be counted for forming quorum, inasmuch as they are part of composition of the Board of Directors and they have every right to attend such meetings and participate in the proceedings.

20. In the result, the writ petition is dismissed. Result of the elections of the Chairman and Vice-Chairman held in the meeting dated 18-9-2003 are directed to be declared forthwith.

Rule discharged.

21. Mr. Kumbhakoni, learned counsel for the petitioners, requests that the interim order passed on 18-9-2003 be continued for a period of four weeks. This request is opposed by Mr. Sakhare, learned senior counsel for the respondents. Mr. Kumbhakoni's request is rejected as it would not be proper to prevent elected officers of the society from assuming their duties.

Authenticated copy of this order may be made available to the parties.