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Interpretation of Section 31(5) of Delhi Coop Societies Act 1972

Two terms Interpretation in The High Court of Delhi Civil Writ No. 2010/91 14th November, 1991

Suresh Chand Jain & others through Mr. R.P.Bansal, Sr. Advocate with Mr. Sanjay Poddar & Mr. R.S.T. Advocates 

Versus

Lt. Governor of Delhi & others through Mr. Kirti Uppal, for respondents 1&2
Mr. C.J.Gupta for respondent 4 & 5
Mr. Ramesh Chandra with
Mr. Mahipal for respondent No. 6
Mr. Mukul Rohtgi for the applicant, in C.M.4578/91
The Hon’ble Mr. Justice D.P. Wadhwa
The Hon’ble Mr. Justice D.K. Jain 

Interpretation of Two Terms Bar on office Bearers under Sec. 31(5) aD.P.WADHWA J.(CIVIL)7

This petition under Article 226 of the Constitution has been filed seeking writ of mandamus directing the second respondent, Assistant Registrar of Cooperative Societies and Returning Officer to conduct election of the Board of Directors of Jai Lakshmi Cooperative Bank ltd. as per law and a further direction to him to accept of the nomination papers of petitions 1 and 2 for the posts of Chairman and Director of the Bank. Yet another direction sought is that nomination papers filed by respondents 3 to 5 for the posts of Directors be rejected.

The tank is a Society registered under the Delhi Cooperative Societies Act 1972 (for brevity the Act) and for the purpose of election and nomination of its board of Directors is governed by the provisions of Section 31 of the Act. This Board of the bank is Committee as defined in clause (b) of Section 2 of the Act. The Committee has been defined in clause (b) of section 2 of the Act meaning the governing body of a cooperative society, by whatever name called, to which the management of the affairs of the society is entrusted. The Board of Directors comprises of 11 members. If reference is made to Bye-law 22 of the Bye-laws of the Society, all the Directors shall be elected in the general meeting. Out of these 11 Directors, one is to be elected as Chairman, the other Vice-Chairman, the third Secretary and the fourth as Treasurer. There is some controversy if the Secretary and Treasurer are to be elected by the general Body or if they are to be elected by the Board itself.

There are three petitioner and six respondents Petitioner No. 1 field his nomination paper for the post of Chairman and petitioner No. 2 for the post of Director. The third petitioner is a member of the Society. He, however, did not file his nomination for any post. The first respondent is Lt. Governor of Delhi, the second respondent is the Returning Officer and also working as Asstt. Registrar in the office of the Registrar Cooperative Societies and respondent 3, 4 and 5 are the members of the Society. Whose nomination to the post of Director is being challenged. Respondent no. 6 was added by an order of this Court to a subsequent stage and he is also a member of the Society. The nomination paper of this respondent was however, accepted for the post of Chairman.

The Returning Officer, respondent No.2 issued programme of election to the Board of Directors of the Society. This is Annexure ‘P.1’ to the writ petition. After the list of valid nominations was displayed, petitioner 1 and 2 did not find their names. They made inquired and were told that the first petitioner was ineligible on account of Rule 59(b) read with Rule 61(b) of the Rules framed under the Act. Thereafter it appears that only respondent No. 6 was left in the field for the post of Chairman. This led to the filing of the present writ petition. After notice to show cause as to why rule nisi be not issued was given, the respondents field their respective answers to show cause notice. By order dated 28-6-91 Rule D.B. was issued. The election which was scheduled to be held for 30-6-9 1 was allowed to be so held’ except it was ordered that the result shall not be declared till further orders. Thereafter certain interim orders were made restraining disbursement of loans by certain office bearers of the bank which is effected put restraint of the bank itself. This made the bank of file an application (C.M.45578/91) seeking modification of this order. 

Respondent No. 2 in his affidavit has submitted that his interpretation of Section 31(5) is correct and that petitioner No. 1 was ineligible to contest for the post of Chairman. As regards petitioner No. 2 it is not disputed that he is a party to a contract of lease of the property where the bank if situated being one of the lessort thereof. Respondent No. 2 has further state that when he came to know that respondents 3, 4 & 5 were also ineligible to stand for election under rule 59(k) of the Rules, he has since delete their names from the valid list of nominations. 

Relevant provisions referred to are as under:

Section 31(5) :

“Notwithstanding anything contained in Act, a person shall be disquali­fied for election as, for being, the president, vice-president. Chairman, vice-chairman, managing director, secretary, join secretary or treasurer of a committee -

(a) if he has held any such office on that committee during two consecutive terms, whether full or part:

(b) if he holds any such office on a committee of another co-operative society of the same type;

(c) if he holds any such office on the committee of three or more cc-operative societies of a different type or different types;

Provided that nothing contained in this sub-section shall be deemed to disqualify any such person for election as or for being, a delegate of a society or a member of another committee.

Explanation 1, Where any person holding any person holding any office as aforesaid at the commencement, shall for the purpose of this sub­section be deemed to have held that office for one term before such election.

Explanation 2, A person who has ceased to hold any such office as aforesaid continuously for the one full term shall again be qualified for election to any of those offices.”

It is any admitted case that the first petitioner was earlier holding the post of Secretary and then as Vice-Chairman for two consecutive years and for a short period as Chairman. The Chairman had since resigned. The dispute revolves on the interpretation of the word “any such office” appearing in clause (a) of sub-section (5) of Section 31. The respondents contend that this will apply to whatever post a member held consecutively for two terms, for example, whether as chairman for both the terms or as Chairman once and any other post for the other term. The petitioners say that this interpretation is not correct and that this provision would not debar the first petitioner for being nominated for the post of Chairman. He say bar will as noted above the interpretation given by the second respondent, who is the Assistant Registrar of the Co-operative Societies, is in agreement with what has been put by the other respondent. We, however, find ourselves, In agreement with the interpretation so put by the petitioner. In our view If the interpretation as suggested by the respondent Is correct, then Instead of the words “any such office” the words should have been “any of such offices”. In normal circumstances every member has a light to contest any post for any number of terms. This sub-section puts a bar on that right. We do not think we should blockade that right to such a limit as to debar the member from contesting the post which he did not hold consecutively for two terms. A bare reading of whole of sub-section (5) of section 31, as noted above, leads us to this very conclusion. A person to be disqualified for election to a post must have held that very post consecutively for two terms, whether full or part. An argument was also raised that this sub-section will apply only to those posts for which the election was also raised that this sub-section will apply only to those post for which election is held by the general body. It was contended that the Secretary and Treasurer were elected by the Board of Directors of the bank and not by the general body. This lead us to see the various bye-laws of the Society. Under Bye-law 19 the duties of general body are also to elect, Suspend or remove Directors including a Chairman and Vice-Chairman, It was therefore, submitted by the respondent that it would show that only Chairman and vice-chairman and other Directors were to be elected and not that Secretary and treasurer was also be elected. Bye-law 22 is however, quite specified which says that all the Directors shall be elected in the General Body Meeting and Four of them will be designated as Director-Chairman, Director-Vice Chairman, Director-Secretary and Director Treasurer. Option was however, given to these office bearers not to use the word “Director’ along with their names of office. Under Bye-law 24 of the Board of Director exercise all powers of the bank except those reserved for general body. Reference was then made by the respondent to clause 24 and 25 of this bye-law where the Board of Directors has been given the power to appoint Treasure and Secretary and one or more Joint Secretaries used in these clause would refers to Director ­Secretary and Director-Treasurers mentioned in bye-law 22 of the Bye-laws. We, therefore, again do not find ourselves In agreement with the interpretation sought to be put by the respondents. In our view, therefore, the nomination papers of the first petitioner were wrongly rejected and he has been deprived of his right to stand election for the post of Chairman.

As regards the second petitioner we do not think much can be said by the petitioners as Rule 59(b) read with Rule 61(b) is quite specific which debars a person for being eligible for election as a member of the Committee if he has directly or indirectly any interest In any contract to which the co-operative society is a party and the terms “contract” also includes granting of lease of the property of the society. Relevant portion of Rule 59(b) and 61(b) are as under: 

Rule 59(b):

“No Person shall be eligible for election as a member of the Committee if

He has, directly or indirect any interest in any contract to which the co­operative is a party except in transaction made with the co-operative society as a member in accordance with the objects of the as stated in the bye-laws.”

Rule 61(b):

“Without prejudice to the provisions of the bye-lays, no officer of a co­operative society shall have an interest directly or indirectly, otherwise than as such officer:

In any property sold for purchased or leased by or the society.”

We, therefore, find that the nomination paper of the second petition was rightly rejected.

In the counter affidavit the second respondent has said that after he come to know that respondents 3,4 & 5 could not stand for election he has since deleted their names from the list of valid nominations. This is because of Rule 59(k) which is as under.

Rule 59(k)

“He has not completed minimum period of six months from the date of acquiring membership of the society in case of an urban cooperative bank.” 

On the account the petitioner, therefore, cannot be said to have any grievance. However, this was subject matter of comments by Mr. Gupta learned counsel appearing for respondents 3 and 5. He said once names of respondents 3 to 5 were shown in the list of valid nominations, their names could not have been deleted and this has let to an error setting the whole process of election at naught Mr. Gupta, however, could not dispute that respondents 3 to 5 could not stand for election as per Rule 59(k) of the Rules. If Mr. Gupta has nay grievance he can have a separate remedy in law but his cannot be made subject matter of present controversies between the parties.

Two preliminary objections was also raised by Mr. Rarnesh Chandra learned counsel for respondent No. 6. These were that the present petition was premature in as much as the election process was not yet over and further that alternative remedy under sub-section (7) of Section 31 of the Act was available to the petitioners. He referred to a few judgments of the courts to support his view. Under sub-section (7) of Section 31 any dispute relating of election of members of any committee of a co-operative society mentioned ;n sub-section (1) shall be referred to the Lieutenant Governor whose decision thereon shall be final. Reference is also made to bye-law 55 of the Bye-laws which mentions that in case of any dispute about the meaning or interpretation of any provision of Co-operative Societies Act, Rules, and these bye-laws, the decision of the Registrar shall be final. Mr. Chandra, therefore, contends that the subject mater of the controversy in the present writ petition should have been referred to the Lt. Governor and Registrar Cooperative societies for their decisions. We have given our careful consideration to these submissions. In normal circumstances we would have certainly agreed with these, but in the facts in this case, that stage to our mind, is over after Rule D.B. was issued and the matter having been heard at length by us. It is not the submission of anyone that this Court lacks jurisdiction in the matter. We are, therefore, not inclined to accept the submission at the stage, though we are quite adverse to our interference in the matters.

We allow the writ petition and quash the order holding the nomination of the first petitioner to be invalid. With the result the whole process of election as set in motion by Annexure P-i has to be set aside.That, however, does not conclude the matter. We feel, in circumstances of the case, we have to give further directions, particularly, in view of an application made by the bank for various of our earlier orders whereby we in effect put restraint on the bank of disbursing any loan etc. to the members. The contention of Mr. Ramesh Chandra is that if the restraint orders are removed, it is possible that loans might be disbursed to those members to whom the present management is quite close, thus effecting the free and proper conduct of the elections.

Considering all the points submitted before us we issue the following direc­tions: 

1. The election process in accordance with terms stated above shall be completed with six week from today.}

2. The election shall be held in terms of Bye-law 22 of the Bye-law are because of the view which we have taken aforementioned the election shall be of the 7 Directors and that of Director-Chairman. Director Vice-Chairman. Director-Secre­tary and Director Treasurer. 

3. The list of valid members entitled to vote and file nominations shall be same as that existed on 10-6-91 when annexure ‘p-1’ was issued. 

4. Board of Directors, we are told, constitutions a loan committee for disburse­ment of loan to the members. Aggarwal, Director and shall be chaired by Mr. O.P. Gupta (Tel7-40785) a former Official Liquidator attached to this Court, who has since retired as Director Company Law and Affairs. Govt. of India, New Delhi. As to whom the loan is to be disbursed shall be decided by the Committee and in case of any assistance. The Committee shall function only till the election are held and results declared. Thereafter it will cease of function and now committee in terms of bye-law shall come into being. All the pending application which had been sanctioned earlier but loans could not be disbursed on account of orders of this court shall also be considered a fresh by the committee now constituted by us. The Chairman will get his fee of Rs 5,500/- per month for a period of two months, which shall be exclusive, of other expenses which be might have to incur. The fee and expenses to the Chairman shall be payable by the bank. 

The writ petition is allowed in these terms. Interim orders made earlier shall stand vacated. The rule is made absolute. There will, however, be not order as to costs.
Copy of this order be given to Mr. Kirti Uppal counsel for respondents 1 & 2 as well as to Ms. Amrita Sanghi, council for the bank and also to Mr. O.P. Gupta.

Sd/-           Sd/­-
D.K.Jain   D.P.Wadhwa
Judge        Judge

Note: Two term bar applies on the same office. Rotation of offices are permissible

Last Updated Date :- 21-06-2018

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