Sukumar Bera vs The State Of West Bengal & Ors
2021 Latest Caselaw 4022 Cal

S/L 14
02.08.2021
Court. No. 19
GB
                              W.P.A. 12033 of 2021

                                  Sukumar Bera
                                        VS
                          The State of West Bengal & Ors.

                            (Through Video Conference)


                Mr. Aniruddha Chatterjee,
                Mr. Kushal Chatterjee,
                Mr. Aditya Mondal.
                                                     ... for the Petitioner.

                Mr. Jaydip Kar,
                Mr. Billwadal Bhattacharyya,
                Mr. Anish Kumar Mukhjeree.
                                                    ... for the Respondent no.3.

Mr. Pratick Dhar, Mr. R. Pattanayak, Ms. Cardina Roy.

... for the Respondent No.6 to 12.

Mr. Anirban Mitra, Mr. Srijan Nayak, Ms. Rituparna Maitra.

... for the State.

The writ petition has been filed by one of the Directors

of the Board of the Contai Cooperative Bank Limited.

At the outset Mr. Dhar, learned senior advocate

appearing on behalf of the requisitionists, the respondent

nos.6 to 12 raise the point of maintainability of the writ

petition. According to Mr. Dhar, the writ petitioner lacks the

locus to file the writ petition. The impugned notice dated

July 22, 2021 is for the removal of the Chairman of the Board

of Directors. It is contended that the writ petitioner is not the

Chairman and not likely to be affected by any resolution that

may be passed at the meeting to be held on August 3, 2021 at

4.00 p.m. According to Mr. Dhar, the person aggrieved

would be the Chairman himself. The Chairman has chosen to

stay away from the Court even though a notice was served

upon him. Thus, Mr. Dhar submits that this writ petition

should be dismissed as the same is not maintainable at the

instance of a third party not likely to be affected by the

impugned resolution.

Mr. Jaydip Kar, learned Senior Advocate for the bank

and Mr. Aniruddha Chatterjee, learned Advocate for the

petitioner submit that the petitioner has the right to

challenge any decision of the Board of which he is one of the

directors.

First, the Court decides the point of maintainability of

the writ petition at the instance of the writ petitioner.

Admittedly, the petitioner is one of the directors of the

Board. The decision cited by Mr. Dhar in the matter of Lufta

Begum and Anr. -versus- State of West Bengal and Ors.

reported in 2006 SCC OnLine CAL 538, is not applicable in

the facts of this case, inasmuch as, in the decision of Lufta

Begum (supra), this Court held that once the Pradhan had

been removed, but had not approached this Court, it meant

that the Pradhan had accepted his removal and a writ

petition filed by a member after the removal of the Pradhan,

without the Pradhan throwing any challenge to such

removal, would be of no consequence. In this case, one of the

directors filed the writ petition challenging a requisition

brought by the other members of the Board. According to the

writ petitioner, the requisition was brought in violation of the

provisions of Rule 51(3) of the West Bengal Cooperative

Societies Rules, 2011.

This writ petition thus stands on a different footing.

The petitioner as one of the directors, approached this Court

alleging infraction/violation of law and rules by other

members of the Board, in calling the meeting for removal of

the Chairman. I am of the view that the writ petition is

maintainable. It would have been a different situation had

the motion for removal of the Chairman been carried

through. In such a situation, the person aggrieved by the

removal would have to challenge the process of removal.

The contention of the petitioner is that the notice

impugned before this Court dated July 22, 2021, suffers from

two major defects. One that the notice was issued in violation

of the order of this Court. It is urged that an Hon'ble Division

Bench of this Court passed an order in MAT 120 of 2021,

directing that the composition of the Board of the Contai Co-

operative Bank, should remain as it was, prior to the issuance

of a notice dated January 8, 2021, by the State Government.

Mr. Pratick Dhar, learned Senior Advocate for the

respondents Nos. 6 to 12 submits that the expression 'Board'

has been defined to mean the Board of Directors or the

governing body of the bank and the composition of the Board

of Directors will not change, even if the Chairman is removed

in accordance with law.

According to Mr. Chatterjee, once the Division Bench

directed that the composition of the Board should not change

and should remain as it was prior to the issuance of the

notice dated January 8, 2021, no requisition meeting can be

held for removal of the Chairman. The Chairman shall

continue in office as long as the Division Bench's order

remains operative.

By a notice dated January 8, 2021, the State

Government nominated a member to the Board of Directors

of the bank, in exercise of power under Rule 34(2) of the

West Bengal Cooperative Societies Rules, 2011.

The arguments of the appellant/bank before the

Division Bench was that the Contai Cooperative Bank was a

Cooperative Credit Structure Entity and was guided by the

provisions of Chapter XIIIA of the West Bengal Cooperative

Societies Act, 2006 (hereinafter referred to as the said Act).

Chapter XIII-A deals with special provisions

applicable to Co-operative Credit Structure Entities. Section

134A provides that the provisions of chapter XIII-A shall

have overriding effect over anything contrary or inconsistent

in the said Act or Rules. Section 134B deals with the

definition of Co-operative Credit Structure Entities. The bank

contended that it came within the said definition. Section

134C(2) provides that the bank shall have autonomy in

certain cases. The relevant portion is quoted below:-

"(2) A Co-operative Credit Structure Entity shall have autonomy in all financial and internal administrative matters including the following areas:-

(a) interest rates on deposits and loans;

(b) borrowing and investments;

(c) loan policies and individual loan decisions;

(d) personnel policy, staffing, recruitment, posting and compensation to staff;

(e) internal control systems, appointment of auditors and compensation for the audit:"

Thus, having considered these provisions of law, the

Division Bench arrived at a prima facie conclusion that the

State Government not having been able to prove subscription

to the share capital of the bank, would not be entitled to send

a nominee to the Board and the Board of the bank would

remain, as it was prior to the decision of the State

Government to send the nominee.

The question was whether the provisions of Section

32(1)(b) of the said Act shall have any application in view of

Section 134A of the said Act. Section 32(1)(b) is quoted

below:-

"(b) where the State Government has-

(i) subscribed to the share capital of a Co-operative society; or

(ii) guaranteed the principal and interest in respect of debentures issued by a Co-operative society; or

(iii) guaranteed the principal and interest in respect of loans and advances to the Co-operative society; or

(iv) assisted the Co-operative society with loans and grants out of its own fund, the State Government or any authority specified by it may nominate one person on the board or change them or fill up any casual vacancy of a nominated member;"

The Hon'ble Division Bench came to a prima facie

finding that in the absence of any proof that any of the

conditions set out above had been fulfilled or in the absence

of proof that the share capital had been subscribed by the

State Government, the State Government was jurisdictionally

barred from appointing a nominee to the Board of Directors

of the bank. The Division Bench referred to Sections 134(A),

134(B) and 134(C). Thus, the Division Bench was of the

opinion that the State Government should be injuncted from

nominating any person in the Board of the bank and passed

an order directing that the composition of the Board of

Directors would be as was existing before January 8, 2021,

that is, before the nomination was made by the State

Government.

Section 32 of the said Act provides for management of

the co-operative societies. Thus the manner in which the

Board of Directors will be elected has been prescribed by law.

The composition of the Board would be as per Section

32(1)(a). In the facts of the appeal, the Division Bench

directed that the composition of the Board would remain as

it was.

What had fallen for the decision before the Division

Bench was whether the State Government was entitled to

have a nominee or representation in the Board and in that

context the Division Bench held that the composition of the

Board would not change, which meant that the State

Government would not have the right to put a nominee in the

Board of the bank in terms of the Section 32(1)(b).

A judgment is a precedence for what it decides. The

judgment cannot be read as a statute and must be read as a

whole. A meaningful reading of the entire decision of the

Division Bench would show that the direction to maintain

the composition of the Board would mean that the

representation of the State Government in the Board was

stayed by the Division Bench. The compensation of the Board

as prescribed under Section 32(1)(a) ought not to change as

per the order of the Division Bench.

The right of the members to bring a requisition

against the Chairman of the Board under Rule 51 of the West

Bengal Co-operative Societies Rules, 2011 is not affected by

the decision of the Division Bench, with respect. The

Chairman is a member of the Board of Directors elected in

terms of Rule 36 of the Rules of 2011. He will continue to be

a Director even if he is removed as a Chairman. A Chairman

is elected by the members of the Board and can enjoy the

position as a Chairman as long as he has the confidence of

the members who have elected him. The function of the

Chairman, inter alia, is to preside over the meetings of the

Board and as such, even if the Chairman is removed from the

office, the essential composition of the Board will not change.

Thus, the first point raised by Mr. Chatterjee that any

requisition meeting brought by the Board of Directors for

removal of the Chairman would amount to violation of the

order of the Hon'ble Division Bench, with due respect, is not

accepted.

Now the court proceeds to decide on the validity of the

impugned notice dated July 22, 2021, by which the Board

fixed August 3, 2021 for holding the meeting for removal of

the Chairman by invoking the provisions of Rule 51(3) of the

Rules of 2011.

The Chairman is an office-bearer of the Board elected

under Rule 36 of the said Rules. According to Rule 45(2) of

the said rules an office-bearer may be removed from office by

a resolution of the Board at a meeting specially convened for

the purpose. A special meeting of the Board is convened

under Rule 51 of the Rules. Rule 51 is quoted below:-

"51. Requisition meeting of Board.- (1) One third of the Directors may requisition a special meeting of the Board by giving seven clear working day's notice. (2) The requisition shall specify the object of the meeting and shall be signed by the Directors requisitioning and shall be delivered at the office of the society.

(3) If the Secretary or any other person performing the duties of the Secretary does not convene the meeting within seven clear working days from the date of receipt of the requisition, a notice of seven clear working days signed by the Directors requisitioning specifying the object and the date, time and place of the meeting shall be sent to all the Directors and accordingly the meeting shall be held. The Secretary or the person performing the duties of the Secretary or the Chief Executive in whatever name is called or any person under whose custody the books, documents papers etc. in respect of the meetings or the Board are kept, shall place those books documents etc. in the requisition meeting.

(4) At such requisition meeting no business other than that specified in the requisition shall be transacted and if there is no quorum within half-an-hour from the time appointed, the meeting shall stand dissolved."

The petitioner brought the requisition on July 5, 2021.

The secretary issued a notice dated July 9, 2021 convening a

meeting on July 20, 2021. This was beyond seven clear

working days. Such notice was challenged before this Court

by a writ petition being WPA 11663 of 2021. As the meeting

was cancelled by the secretary on July 19, 2021, the writ

petition was disposed of on July 20, 2021, but without any

decision on the merits or the maintainability of the writ

petition.

Being aggrieved by the cancellation of the requisition

meeting, the requisitioinists, who are represented by Mr.

Dhar issued the notice on July 22, 2021, for holding the

meeting for removal of the Chairman on August 3, 2021 on

the ground that the secretary had failed to convene the

meeting and the requisitionists could convene the meeting

upon giving seven days notice.

In this case, the secretary cancelled the meeting by

holding that the members were divided on the issue, leaving

the rest to the discretion of the directors. Rule 51(3) provides

that if the secretary does not convene the meeting within

seven clear working days from date of receipt of the

requisition, a notice of seven clear working days signed by

the directors shall be sent to the directors and the meeting

shall be held. In the meantime, almost a month has lapsed

from the date of requisition. The requisition was brought, the

secretary issued a notice to convene the meeting on July 20,

2021, the secretary failed to convene the meeting within

seven clear working days. Thereafter, the meeting was

cancelled. There are procedural irregularities. The

requisitionists did not challenge the order of cancellation but

instead sought to revive the cancelled requisition dated July

5, 2021 by fixing August 3, 2021 as the date for holding the

meeting for removal of the director. The time period

prescribed under Rule 51(3) had already expired even when

the meeting was called by the secretary. Mr. Jaydip Kar,

learned Advocate submits that the requisition cannot be kept

alive beyond the period prescribed by the rules.

It is true that the Board/requisitionists cannot be

deprived of their rights prescribed by the statute. The

institution should run on democratic principles. The

Chairman is elected by the members of the Board. The Board

can remove the Chairman in accordance with law. The entire

matter has been handled in such a way by the secretary that

the right of the Board under the law, to remove the Chairman

has been denied.

Under such circumstances, this writ petition is

disposed of by setting aside the requisition and the notice

subsequently issued by the requisitionists dated July 22,

2021 without deciding the merits of the claims and counter-

claims of the parties. The requisitionists shall have the liberty

to bring fresh requisition in terms of the provisions of the

statute and the said requisition shall be reached to its logical

conclusion in terms of the provisions of the West Bengal

Cooperative Societies Act, 2006 and Rules framed

thereunder, by adhering to the time frame prescribed by law.

The writ petition is disposed of.

There will be no order as to costs.

All the parties are directed to act on the basis of the

server copy of this order.

(Shampa Sarkar, J.)