Punjab-Haryana High Court
Rajinder Kumar Malhotra vs Registrar Cooperative Societies ... on 3 May, 2024
Author: Sanjeev Prakash Sharma
Bench: Sanjeev Prakash Sharma
Neutral Citation No:=2024:PHHC:061733-DB
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
2024:PHHC:061733-DB
CWP-23406-2016 (O&M)
Reserved on : 01.05.2024
Date of Decision: 03.05.2024.
Rajinder Kumar Malhotra ...Petitioner
Vs.
The Registrar, CO-operative Societies, Punjab and others ...Respondents
CWP-37078-2019
Sukhdev Singh ...Petitioner
Vs.
State of Punjab and others ...Respondents
CORAM: HON'BLE MR. JUSTICE SANJEEV PRAKASH SHARMA
HON'BLE MRS. JUSTICE SUKHVINDER KAUR
Present: Mr. Dharam Vir Sharma, Sr. Advocate with
Ms. Shivani Sharma, Advocate and
Ms. Pooja Yadav, Advocate for the petitioner.
in CWP-23406-2016.
Mr. Shivam Malik, Advocate and
Mr. Edward Augustine George Masih, Advocate
for the petitioner in CWP-37078-2019.
Mr. Arjun Sheoran, DAG, Punjab.
Mr. N.S. Vashist, Advocate for respondent Nos.2 to 4
in both cases.
***
SANJEEV PRAKASH SHARMA, J.(Oral)
1. Learned Senior Counsel appearing on behalf of the petitioners
submit that the amendment made in the Punjab State Cooperative Financing
Institutions Service (Common Cadre) Rules, 1970-71 (for short 'the Rules,
1970-1971'), on 29.11.2010 and the subsequent action taken on the basis of
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such amendment is illegal and contrary to the provisions of the Punjab
Co-operative Societies Act, 1961 (for short 'the Act, 1961') and the Punjab
Co-operative Societies Rules, 1963 (for short 'the Rules, 1963), framed
thereunder.
2. Learned counsel submits that Section 84-A of the Act, 1961
empowers the apex body to constitute a common cadre to make rules for
regulation of recruitment and conditions of service of such employees. He
submits that the apex body of the bank is not a committee of the Co-operative
Society but is to be understood in terms of explanation appended to Section
15A of the Act, 1961. It is submitted that the impugned amendment made
vide notification dated 29.11.2010 by the Registrar is illegal and unjustified.
The Registrar, Co-operative Societies, Punjab, had appointed himself as an
Administrator of the Punjab State Cooperative Banking and while acting as
an Administrator, he passed resolution dated 29.11.2010, for amending the
rules 2.1(a), 2.1(b), 2.4(b), 2.5(b), 2.5 (c), 2.8 (b), 2.8 (c), 2.9 (a), 2.9 (c) and
rule 1.4 (a) and 1.5 of the Rules, 1970-1971 and thereafter while holding the
office as a Registrar, he approved his own proposal thereby amending the
Rules, 1970-1971, by issuing letter dated 29.11.2010.
3. Learned counsel submit that thus, he has become a Judge of his
own cause and that apart he submits that the order/letter dated 29.11.2010,
could not have been issued nor rules could have been amended by invoking
the provisions of Section 84A of the Act, 1961 and Rule 28 of the Rules,
1963. Learned counsel submit that the impugned action is without
jurisdiction and there is no authority available with the Administrator to
amend the rules nor could he have made recommendations for amending the
rules. It is further submitted that the amendment made in the Rules, 1970-
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1971, has resulted in taking away powers of the Administrative Committee of
the bank and empowering the Managing Director of all the powers relating to
the employees of the bank including appointment, promotion and removal of
the employees or common cadre. Learned counsel has also relied on the
judgment of Hon'ble the Supreme Court in case of K. Shantharaj and another
vs. M.L. Nagaraja and others 1997 (6) SCC 37.
4. Learned counsel have taken this Court to the various provisions
of the Act, 1961 and the Rules, 1970-1971, to which we shall refer to later, in
support of their submissions.
5. Learned counsel appearing in the connected petition also invited
attention to the provisions of the Act and submit that virtually the amendment
is of the bye-laws of the society and such an amendment in the bye-laws of
the society could have only been done in terms of Rules 9 and 10 of the
Rules, 1963.
6. Per contra, learned counsel appearing for the State has
supported the order passed and submitted that the order of amendment by the
Registrar is in conformity with the provisions of Section 84A and Section 85
(2) (xxxviii) of the Act, 1961 as well as Rule 28 of the Rules, 1963. A
conjoint reading of Section 85 (2) (xxxviii) and Rule 28, would reflect that
the Registrar is empowered to decide or determine the qualifications and
conditions of service subject to which any person may be employed by a Co-
operative Society and he would, therefore, also be empowered to make
amendment in the said qualifications and conditions of service. The order
passed by the Registrar impugned in the present petition, therefore, does not
warrant interference.
7. We have considered the submissions.
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8. Before we advert to the facts of the case, it would be apposite to
quote certain provisions of the Act, 1961 and the same read as under:-
Section 2:
Definitions
(b) "committee" means the governing body of a co-operative
society, by whatever name called, to which the management of
the affairs of the society is entrusted;
(c) "co-operative society" means a society registered or deemed
to be registered under this Act.
Section 15A.
15 A. Restrictions on individuals in becoming members of
certain co-operative societies.
(1) No individual shall be admitted as member of a central or
apex society unless such a society has been exempted by the
Registrar in this behalf, by a general or special order.
(2) The Central and apex societies having individuals as
members on the date of commencement of the Punjab Co-
operative Societies (Amendment) Act, 1969, shall retire the
shares of such individuals within a period of three years of such
commencement in the prescribed manner.
EXPLANATION - For the purpose of this section, section 26,
section 26-B and section 84-A:-
(a) "primary society" means a co-operative society whose
membership consists exclusively of individuals ;
(b) "central society" means a co-operative society whose
membership includes primary societies;
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(c) "apex society" means a co-operative society whose
membership includes central societies.
SECTION - 23.
Final authority in a co-operative society :-
(1) The final authority in a co-operative society shall vest in the
general body of members;
1[---]
[(1-A) Notwithstanding anything in sub-section (1), where a co-
operative society consists of not less than one thousand or such
greater number of members as may be prescribed, the society
may provide in its bye-laws for the constitution of a smaller
general body designated as the representative general body, to
be designated as the representative general body, to be elected in
the prescribed manner for a term of not more than five years,
consisting of such number of members of the society and to
exercise all or such of the powers of the general body as may be
specified in the bye-laws and thereupon any reference in this Act
to the general body or meeting thereof shall be construed as a
reference to the representative general body or its meetings.
Provided that the representative general body shall not alter any
provision in the bye-laws relating shall not alter any provision in
the bye laws relating to its constitution or powers.
Provided further that not less than twenty percent of the total
members of the co-operative society may requisition a meeting
of the general body for re-constitution of the smaller general
body. On receipt of such requisition, the committee shall call a
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meeting of the general body not later than one month from the
date of receipt of such requisition. If in such a meeting of the
general body, it is decided by a majority of members present and
voting to reconstitute majority of members present and voting to
reconstitute the smaller general body, then the election to such
smaller general body shall be held within forty five days thereof.
Section 26.
Election and nomination of members of committees.
26 (1-D).
Where any committee has ceased to hold office and no
committee has been constituted in accordance with the
provisions of this Act and rules and bye-laws made thereunder,
the Registrar may, by an order in writing appoint a Government
employee as an Administrator for such period as may, from time
to time, be specified in the order and the Administrator shall,
before the expiry of the period of his appointment, arrange for
the constitution of new committee in accordance with the
provisions of this Act and rules and bye-laws made thereunder.
26 (1-E).
The provisions of sub-section (3) and sub-section (4) of section
27 shall apply to the Administrator appointed under sub-section
(1-D) as if the Administrator had been appointed under that
section.
Section 27.
Removal or suspension of committee or member thereof :-
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If, in the opinion of the Registrar, a committee or any member of
a committee persistently makes default or is negligent in the
performance of the duties imposed on it or him by this Act or the
rules or bye-laws made thereunder, or commits any act which is
prejudicial to interests of the society or its members, or makes
default in the implementation of production or development
programmes undertaken by the co-operative society, or there is
stalemate in the constitution or function of the committee the
Registrar may, after giving the committee or the member, as the
case may be, a reasonable opportunity to state its or his
objections, if any, by order in writing, -
(a) remove the committee, and appoint a Government servant
as an administrator, to manage the affairs of the society
for a period not exceeding six months as the society for a
period not exceeding six months, as may be specified in
the order ; and
(b) remove the member and get the vacancy filled up through
election for the remaining period of the outgoing member,
according to the provisions of this, according to the
provisions of this Act and rules and bye-laws made there
under.
Provided that the committee of any such co-operative society
shall not be superseded or kept under suspension where there is
no Government shareholding or loan or financial assistance or
any guarantee given by the Government:
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Provided further that in case of a co-operative society carrying
on the business of banking, the provisions of the Banking
Regulation Act, 1949 (10 of 1949) shall also apply :
Provided further that in case of a cooperative society carrying on
the business of banking, the period of six months mentioned in
clause (a) shall be one year.
Section 84.
84-A. Constitution of common cadre of employees of certain
societies:-
(1) An apex society may suo moto, and when required to do so
by the Registrar, shall constitute a common cadre of all or
specified class of employees in the service of that society or in
the service of the central societies which are members of the
apex society or in the service of the primary societies which are
members of the apex society or the aforesaid societies.
(2) When a common cadre is constituted under sub-section (1)
the apex society shall make rules for the regulation of
recruitment and the conditions of service of such employees
with the prior approval of the Registrar.
85. Rules.
(1) The Government may, for any co-operative society or class
of such societies, make rules to carry out the purposes of this
Act purposes of this Act.
(2) In particular, and without prejudice to the generality of the
foregoing power, such rules may provide for all or any of the
following matters, namely -
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85 (2) (xxxviii)
Qualifications for members of the committee and employees of a
society or class of societies and the conditions of service subject
to which persons may be employed by societies.
9. It is also appropriate to quote some relevant rules of the Rules,
1963, which read as under:-
Rule 9.
Amendment of Bye-Laws:-
Subject to the provision of section 10 and rule 8 a Co-op.
Society may from time to time amend its bye-laws.
Rule 10.
Resolution For Amendment :-
No amendment under rule 9 shall be carried out save in
accordance with a resolution passed at a general meeting of the
co-operative society of which due notice of the intention to
discuss the amendments has been given;
Provided that no such resolution shall be valid unless it is passed
by a majority of members present at the general meeting at
which not less than two-third of members for the time being of
the co-operative society are present.
Provided further that model bye-laws for amendments
previously approved by the Registrar by a majority at an
ordinary general meeting.
Rule 11.
Application to Registrar for Registration of Amendment:-
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Three copies of the amendment adopted by the co-operative
society under rule 10, signed by two officers of the co-op.
Society duly authorized by the general meeting in this behalf,
shall be submitted to the Registrar along-with an application for
registration duly signed as aforesaid. Such copies of the
amendments shall be accompanied by the certificate signed by
any one of the above two officers of the co-operative society to
the effect that the provisions of rule 10 have been complied
with.
Rule 28.
Qualifications and Conditions of Service Of Employees:-
(1)- The qualifications and conditions of services subject to
which any person may be employed by a co-operative society or
a class of Co-operative societies shall be such as may be
determined by the Registrar from time to time.
(2) Where the Registrar is of the opinion that it is necessary or
expedient so to do, he may by order, for reasons to be recorded
in writing relax the provisions of this rule with respect to any
Co-operative societies to such extent as he may consider
proper."
10. From the perusal of the aforesaid provisions of the Act, 1961
and the Rules, 1963, it is apparent that the power contained in Rule 84-A (1
& 2) i.e. of forming a common cadre of all or specified class of employees
and making rules/regulations for recruitment and conditions of services of the
employees, vest with the apex society of the bank and the same shall be
brought into force with the prior approval of the Registrar.
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11. An administrator can be appointed where any Committee of the
society or apex society ceased to hold office and such Administrator who is
to be a government employee, would be appointed by the Registrar for such
period and the Administrator shall arrange for constitution of a new
committee in terms of the rules and bye-laws and the Administrator would
not be entitled to function for a tenure more than one year and he would have
the powers as that of the Committee in terms of Section 26 (1-E) of the Act,
1961. The apex society has been defined as a cooperative society whose
membership includes central societies and the final authority in a
co-operative society vests with the general body of the members. Thus, a
conjoint reading of all the provisions would, therefore, result only in one
conclusion that the apex body represents the general body of the members
and is more than a committee/board of the society. In cases where an
Administrator has been appointed in place of board/committee, such an
Administrator would not have the powers akin to that of an apex society.
Therefore, the Administrator could not be empowered either to amend the
bye-laws or frame rules for the regulation of recruitments and conditions of
service in terms of Section 84-A (2) of the Act, 1961.
12. In the present case, we find a unique situation, wherein, the
Registrar appointed himself as an Administrator of the bank and in dual
capacity firstly he recommended the amendment in the rules and thereafter
acting as a Registrar, he approved the same, while the scheme of the Act
empowers the Registrar to be the final approving authority and even Rule 28
of the Rules, empowers the Registrar to approve the rules which are framed
by the apex society in terms of Section 84-A (2) of the Act, 1961, however,
the scheme nowhere allows the Registrar himself to frame or amend the rules
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of the society on his own. In our opinion, such a course adopted by the
Registrar is alien to the provisions of the Act, 1961 and Rules, 1963. It is a
case of colourable exercise of power by the Registrar. We also find that the
amendment proposed and approved by the Registrar has resulted in wresting
away the powers available with the apex society and shifting it to the
Managing Director, who is an IAS Officer.
13. The very ethos of the cooperative movement is based on the
anvil of the role of members of the society in managing their own affairs. The
petitioner, who is one of the members of the society has, therefore, rightly
taken up the matter challenging the said exercise of power by the Registrar.
14. The doctrine of necessities would have no application in the
facts of the present case as an Administrator cannot be allowed to take policy
decisions. Snatching the powers of apex body and transferring the same to
the Managing Director with regard to framing rules of the cooperative society
amounts to taking policy decisions. It is known that the Registrar and the
Managing Director are IAS Officers while the powers have been provided to
the cooperative society itself through its apex body to take decision and
frame rules relating to its employees.
15. The provisions as quoted above are nothing but part of the
Constitutional provisions as envisaged under Article 243ZL. It would be
apposite to quote the provisions of Article 243ZL(2) of the Constitution
which provides as under:-
"Article 243ZL(2).
"In case of supersession of a board, the administrator appointed
to manage the affairs of such cooperative society shall arrange
for conduct of elections within the period specified n clause (1)
and handover the management to the election board."
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16. In K. Shantharaj's case (supra), Hon'ble the Supreme Court was
examining the judgment passed by the Division Bench of the Karnataka High
Court and observed that the Administrator can only exercise all or any of the
functions of the committee and can only exercise powers to conduct elections
and he was not entitled to roll on new members.
17. Thus, we find that the concept as envisaged by Hon'ble the
Supreme Court in K. Shantharaj's case (supra) has been incorporated in the
Constitution. The Registrar, therefore, could not have rested in himself the
powers of the Cooperative Bank or with the Managing Director.
18. Learned counsel for the respondents has relied on a judgment
passed by a Coordinate Bench in Ragh Mohinder Singh vs. State of Punjab,
1998(4) SCT 654, in support of his contention that the Registrar has powers
to make amendment in the rules on the recommendations of the
Administrator of the bank.
19. However, we find that in the present case, the Registrar himself
become the Administrator and made recommendations and the same person
while holding the post of Registrar, has approved the said amendment. We
have already held such power of exercise as colourable exercise and not bona
fide. In fact the Court has not considered the definition of 'Apex Society' and
the definition of 'Committee' as defined under explanation (c) to Section 15A
(2) and Section 2(b) respectively. The 'committee' means only the governing
body to whom the society entrusted the management of the affairs of the
society and the 'Apex Society' means a Co-operative Society whose
membership includes central societies. Thus, it is a conglomerate of various
societies, and therefore, only the general body of such conglomerate can take
a decision to frame bye-laws and rules which of course have to be approved
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by the Registrar. The government servant who is appointed as an
Administrator, cannot be allowed to make amendment in the rules, more so,
of a nature which take away the very concept of cooperative movement, as
provided under Article 243ZH read with Part IXB inserted by the
Constitution Ninety-seventh (Amendment) Act, 2021, w.e.f. 15.02.2012.
20. In view of our findings, we quash the amendments made in the
rules by the Administrator and approved by the Registrar, who was one and
the same person.
However, the challenge made by the respective petitioners with
regard to departmental action taken by the respondents, the same has not
examined, as learned counsel for the petitioner(s) does not press the same and
prays to allow the petitioner to make a challenge to the same before the
learned Single Judge, if need so arises.
21. The writ petitions are accordingly allowed in part. The
petitioners would be at liberty to avail legal remedies available to them with
regard to departmental action taken by the respondents.
22. All pending misc. application(s) also stand disposed of.
(SANJEEV PRAKASH SHARMA)
JUDGE
(SUKHVINDER KAUR)
JUDGE
03.05.2024.
rajesh
1. Whether speaking/reasoned? : Yes
2. Whether reportable? : Yes
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