B.S. Vishwanathan vs Union Of India
1998 Latest Caselaw 815 Del

ORDER

Arun Kumar, J.

1. This order will dispose of two applications, one moved by the petitioner for interim relief during the pendency of the writ petition and the other moved by the Indian Labour Coop. Society Limited for vacation of the ex parte interim order passed in favour of the petitioner.

2. The petitioner has challenged the provisions of section 29(3) of the Multi-State Coop. Societies Act (hereinafter referred to as the Act) as being ultra vires the Act and the Constitution of India. The petitioner claims to be a person having vast experience of more than thirty years in the cooperative sector, particularly in the field of rural agricultural credit. He has been a Director of the Karnataka State Agricultural & Rural Development Bank (hereinafter referred to as the 'Karnataka Bank') for the last more than thirty years. The Karnataka State Agricultural and Rural Development Bank is a member of respondent Nos. 3, 4 and 5. These respondents are Multi-State Cooperative Societies under the said Act. For the last about eight years the petitioner claims to be the President of the Karnataka Bank. The petitioner had also been elected as a delegate of the Karnataka Bank to represent it in the multi-State Cooperative Societies, like respondents 3 to 5. Respondents 3 to 5 have their own bye-laws. They have their respective governing bodies which elect President and other office bearers. The petitioner was elected as President of respondent No.3, the National Cooperative Union of India and Chairman of respondent No.5, the Cooperative Bank of India.

3. Prior to 1984 the Cooperative Societies registered under the provisions of Cooperative Societies Acts in the respective States but having operation in States other than where they were registered, were governed by the provisions of the Multi Unit Cooperative Societies Act 1942. The Multi State Cooperative Societies Act 1984 was enacted with the ostensible purpose to consolidate cooperative societies with objects not confined to one state and serving the interests of members in more than one state.

4. In the present writ petition the petitioner has challenged Section 29(3) of the Act. Section 29 is reproduced as under:-

Section 29:

General body, its constitution, powers and functions-

(1) The general body of a multi-State cooperative society shall consist of all the members of such society:

Provided that where the bye-laws of a multi-State cooperative society provided for the constitution of a smaller body consisting of delegates of members of the society elected or selected in accordance with such bye-laws, that smaller body shall exercise such powers of the general body as may be prescribed or as may be specified in the bye laws of the society.

(2) Subject to the provisions of this Act, the rules and the bye-laws, the ultimate authority of a multi-State cooperative society shall vest in the general body of its members:

Provided that nothing contained in this sub-section shall affect the exercise by the board or any officer of a multi-State cooperative society of any power conferred on such board or such officer by this Act or the rules or the bye-laws.

(3) Where in any meeting of the general body or the board of a multi-State cooperative society, a cooperative society or another multi-State cooperative society is to be represented, such cooperative society or multi-State cooperative society shall be represented in such meeting only through the Chairman or the Chief Executive of such cooperative society or other multi-State cooperative society, as the case may be, and where there is no board or such cooperative society or other multi-State cooperative society, for whatever reasons, through the administrator, by whatever name called, of such cooperative society or other multi-State cooperative society.

5. Thus sub-section (3) fetters the right of the members of a Society to elect any of its members as delegate to represent it in a Multi-State Cooperative Society. The provision restricts the representation to Chairman or the Chief Executive of a Cooperative Society and if there is no Board of a Cooperative Society, the representation is restricted to the Administrator. In other words it means that an ordinary delegate of a Cooperative Society cannot represent it in the Multi-State Cooperative Society, the representation has to be through the Chairman or the Chief Executive or the Administrator as the case may be. The petitioner is adversely affected by the provision because he has ceased to be the President or the Chief Executive of the Karnataka Bank and in view of Section 29(3) he cannot represent the said Bank even though he may be otherwise elected a delegate by the Bank for this purpose.

6. By an ex parte interim order dated 14th May 1998 this Court had stayed the said provision so far as it concerns the petitioner. The learned counsel for the petitioner has brought to our notice various interim orders passed by different High Courts in this country staying the aforesaid provision of the Act. He urged that the representation should not be restricted to the Chairman or the Chief Executive of a Society. It is a matter of choice of the members of a Cooperative Society to decide who should represent them in a Multi-State Cooperative Society and this choice should not be fettered.

7. On the other hand the learned counsel for the Indian Labour Cooperative Society who had applied for intervention in this petition submitted that the present writ petition is mala fide inasmuch as the same was filed in order to get over the judgment of the Karnataka High Court whereby the petitioner was disqualified from being the President of the Karnataka Bank. He elaborated this by stating that the petitioner in his capacity as President of the Karnataka Bank became a delegate of the Bank to the NCUI, respondent No.3. The continuance of the petitioner as President of the Karnataka Bank was challenged in the Karnataka High Court on the ground that he could not remain President for more than two terms in view of the provisions of the Karnataka State Cooperative Societies Act. The challenge was upheld by a Single Judge of the said High Court and, therefore, the petitioner ceased to be the President of the Bank. The provision of Section 29(3) of the Multi State Cooperative Societies Act creates a hurdle in the way of the petitioner in representing the Karnataka Bank because he has ceased to be President of the said Bank. The present petition has been filed by the petitioner to challenge Section 29(3) of the Act. The learned counsel further submitted that in all fairness the petitioner should have disclosed these facts before this Court. It was further stated that Section 29(3) had a laudable object and the operation of the said provision ought not be stayed. The learned counsel also relied on a judgment of this Court in C.M.No.2053/95 in C.W.2455/85 whereby an interim order permitting an ordinary member to represent a State Society in a multi-State Cooperative Society was vacated.

8. We have given our careful consideration to the rival contentions. So far as reliance placed on the judgment of this Court is concerned it is to be noted that the said judgment is based on its own peculiar facts. The petitioner who had been granted interim stay in the said case continued to represent the Madhya Pradesh State Cooperative Marketing Federation Limited on the Board of a Multi State Cooperative Society by virtue of the stay order of the Court. The judgment of this Court relied upon by the learned counsel for the applicant in C.M.7315/98 shows that the M.P.Federation understood the order of this Court to mean that the petitioner in the said case had to be allowed to represent the said Federation so long as the writ petition was pending. This was an incorrect interpretation of the order. In the stay order it was clear that the said petitioner could continue on the Board of the Multi State Cooperative Society so long as he remained the elected delegate of the Federation. The Federation could always terminate this status of delegate. The Federation interpreted this order to mean that the said petitioner had to be continued as a representative. This Court realising this fallacy on the part of the Federation vacated the interim stay.

9. Next is the question of disclosure of the judgment of the Karnataka High Court in this petition by the petitioner. The learned counsel for the petitioner submitted that the Karnataka judgment related to disqualification about being the President of the Society for more than two terms, whereas the present petition contains challenge to the provision contained in Section 29(3) of the Act. Secondly, he submitted that the judgment of the learned Single Judge of the Karnataka High Court was subject matter of an appeal preferred against the said judgment which was stated to be pending. Thirdly, the learned counsel submitted that by an amendment carried out in the Karnataka State Cooperative Societies Act, the disqualification about not being allowed to be President for more than two terms had been done away with. Be that as it may, as a matter of narration of facts we feel that the petitioner ought to have disclosed the fact about the judgment of the Karnataka High Court. But we do not consider the non-disclosure to be fatal to the case of the petitioner for grant of interim stay.

10. Coming to the merits of the matter prima facie we are of the view that the right of a Cooperative Society to choose its representative for representing it on a Multi State Cooperative Society should not be fettered. It is well recognised that in a cooperative society the view of the majority prevails. If the general body of a society decides to choose a particular person to represent it in the Multi State Cooperative Society, it should be free to do so. Our prima facie view gains support from the fact that the provision contained in Section 29(3) of the Act has been stayed by some of the other High Courts in this country.

11. It has also been brought to our notice that the Govt. has accepted the proposal for amendment of certain provisions of the Act including provisions of Section 29(3) and for this purpose a Bill had been introduced in the last Parliament. In view of the dissolution of the said Parliament the Bill also lapsed.

12. The ex parte interim order dated 14th May, 1998 is confirmed. C.M.5795 of 1998 is allowed in above terms. C.M. No.7315 of 1998 is dismissed. Both the applications stand disposed of.