PETITIONER: DINESH PRASAD YADAV Vs. RESPONDENT: THE STATE OF BIHAR & ORS. DATE OF JUDGMENT13/01/1995 BENCH: KULDIP SINGH (J) BENCH: KULDIP SINGH (J) HANSARIA B.L. (J) CITATION: 1995 SCC Supl. (1) 340 JT 1995 (2) 45 1995 SCALE (1)153 ACT: HEADNOTE: JUDGMENT:
1. The term of office of the members ,of the Managing
Committee of a society registered under the Bihar Co-
operative Societies Act, 1935 (the ‘Act’) and the Bihar Co-
operative Societies Rules, 1959 (the Rules) is three “co-
operative years”. The State Government, under the Act, has
a right to nominate – depending upon its share in the share-
capital of the society certain number of members to the
Managing Committee of a society. The question for
consideration is whether the three-year term of the Managing
Committee is to be counted from the beginning of the coop-
erative year’ in which the elections by ballot are held or
from the ‘co-operative year’ when the nominations are made
by the State Government?
2. Before stating the necessary facts, it would be useful
to examine the relevant provisions of the Act and the Rules.
These are Sections 2(bb), 2(e), 14(2), 14(4), 14(9) and the
first proviso to Section 14(10) reading as under:-
“2(bb) “Cooperative year’ means a year
beginning with the 1st April and ending on the
3 1st March/
2(1) ‘Managing Committee’ means the committee
of management or other body to whom the
management of the affairs of a registered
society is entrusted.
14(2) The management of registered society
shall be vested in a managing committee
constituted in accordance with the rules:
14(4) Notwithstanding anything contained in
any provision of this Act, the rules framed
thereunder or the bye-laws of any registered
society where the State Government has —
(a) subscribed directly to the share capital
of a registered,.society; or
(b) assisted indirectly in the formation or
augmentation of the share capital of a
registered society; or
(c) given loans or made advances to a
registered society or guaranteed the repayment
of principal and payment of interest on
debentures issued by a registered society for
or guaranteed the repayment of principal and
payment of interest on loan or advances to a
registered society;
in that case the State Government shall have
the right to nominate on the Managing
Committee of such registered society not more
than two persons one of whom shall be a
Government servant, but the said Government
servant shall have no right to vote in the
election of the office bearers of the
registered society;
Provided that notwithstanding the
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foregoing provisions contained in Sub-sections
4(a),(b) and (c)
(i) Where the share of the State Government in
the share capital of such registered society
exceeds thirty per cent but does not exceed
fifty per cent, the State Government shall
have the right to nominate upto one third of
the total number of the members of the
Managing Committee including the Chairman; and
such right once accrued shall continue until
the share of the State Government in the share
capital of the registered society goes down to
less than twenty five per cent;
ii) Where the share of the State Government
in the share capital of such registered
society exceeds fifty per cent, but does not
exceed sixty per cent of the total share
capital of the registered society, the State
Government shall have the right to nominate
such number of members of the Managing
Committee including the Chairman, as is
nearest upto one-half of the total, and such
right once accrued shall continue until the
share of the State Government in the share
capital of the registered society goes down to
less than forty five per cent;
iii)Where the share of the State Government in
the share capital of such registered society
exceeds sixty per cent, the State Government
shall have the right. to nominate upto two-
thirds of total number of members of the
Managing Committee including the Chairman, and
such right once accrued shall continue until
the share of the State Government in the share
capital of the registered society goes down to
less than fifty five per cent;
Provided that notwithstanding anything
contained in proviso (i), (ii) and (iii) of
sub-section (4), the State Government shall
not nominate Chairman and other members of the
Managing Committee if the share capital
subscribed to by the State Government in a
registered society is less than fifteen lakhs
of rupees;
Provided further that where the bye-laws of a
registered society so provide the State
Government or the Registrar, as the case may
be, may nominate more than two third members
including office bearers of the Managing
Committee on such terms and conditions as may
be prescribed in the bye-laws;
14(9) Notwithstanding anything contained in
the rules or bye-laws of a registered society,
the term of the members and the office-bearers
of the Managing Committee of a registered
society shall be three co-operative years, and
they shall continue to hold office after
expiry of their term till the elections are
held or for nine months from the close of the
co-operative year, whichever is earlier;
14(10)……………..
Provided that irrespective of the date when
the election is so held the term of the
members and the office-bearers of the Managing
Committee shall be deemed to have commenced
from the beginning of the co-operative year in
which the elections are held:
…………………………………………….
Rules 2(xvi), 21A, 22(1) and 22(2) of the Rules which are
relevant are reproduced hereunder:
“2(xvi) ‘Election’ means election, in accordance with these
Co-operative Society;
21 -A Notwithstanding any rule and bye laws
of any society the election of the members of
the Managing Committee,
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office-bearers thereof and the delegates of
the society shall be held in a Special General
Meeting according to rule 20(2)(a) to (c).
22. Managing Committee —
(1) Subject to nominations by the State
Government and/or the Registrar of such number
of members to the Managing Committee as
prescribed in the Act, Rules and bye-laws of a
registered society, the Managing Committee of
the society shall be constituted:
Provided that the election of the members of
the Managing Committee and office-bearers
thereof shall be held in accordance with the
procedure laid down in Rule 21 -B to 21 -X.
(2) The members of the Managing Committee
and the Office-bearers shall be deemed to have
taken over charge immediately after the
constitution of the Managing Committee:
Provided that the constitution of the Managing
Committee shall not be treated as complete
unless and until the members thereof have been
duty elected and/or nominated by the authority
empowered to do so under the Act, Rules and
the Byelaws of the Society.
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3. Dinesh Prasad Yadav, the appellant, was
a member of the Managing Committee of the
Kaithar District Central Co-operative bank
(the ‘Bank’) along with respondents 5 to 12.
They were elected as such by votes on January
20, 1991 under Rule 21A of the Rules. The
State Government being a major shareholder in
the share capital of the Bank it has the right
to nominate upto one-third of the total member
of the Managing Committee of the Bank,
including the Chairman. Though the elections
by way of ballot were held on January 20,
1991, the State Government made the
nominations to the Managing Committee of the
Bank as late as March 2, 1993. It is not
disputed that the Managing Committee was not
permitted to function till March 2, 1993 on
the ground that it got constituted under Rule
22 of the Rules only after the nominations
were made by the State Government.
4. The Managing Committee of the Bank
had hardly started functioning when by the
Order dated March 5, 1993, the State
Government informed the Committee that itsterm
was to expire on March 31, 1993. The State
Government, on the basis of the opinion
obtained from the law department and the
Advocate General of the State, came to the
conclusion that the elections having been held
on January 20, 1991, the term of office of the
Managing Committee under the first proviso to
Section 14(10) of the Act would be deemed to
have commenced from April 1, 1990 (beginning
of the co-operative year) and would come to an
end on March 31, 1993 (end of the third co-
operative year).
5. The appellant and respondents 5 to 12
challenged the order of the State Government
dated March 5, 1993 by way of a writ petition
before the Patna High Court. A Division Bench
of the High Court following its earlier
judgment in Bihar State Handloon Weavers Union
& Ors. v. State of Bihar & Ors., CWJC No. 6543
of 1993 and connected matters decided on
February 10, 1994, dismissed the writ petition
by the impugned order dated March 2, 1994. In
Bihar State Handloom Weavers case the High
Court proceeded on the following reasoning:-
“No doubt, in some of the cases, due to
49
laches and inaction of the executive, certain
members who are so nominated by the State
Government under the provisions of subsection
(4) of Section 14 are deprived to hold office
for full term or three co-operative years, but
due to such inaction and laches of the
executive, the mandate of legislature, fixing
a tenure of three cooperative years,
commencing from the beginning of the
cooperative year, in which election was held,
cannot be extended. On the other hand, there
is no provision under the Act and Rules to
show that the term of the elected members and
office bearers, which is three co-operative
years, can be extended, except in the member
prescribed under subsections (9) and (10) of
Section 14.”
This appeal, by way of special leave, is against the
impugned order of the High Court. The appellant has also
challenged the correctness of the High Court judgment in
Bihar State Handloom Weavers case.
6. Sri Sunil Gupta, learned counsel appearing for the
appellant, has vehemently contended that the Managing
Committee constituted under the Act and the Rules has three-
year term in office and the same cannot be reduced by giving
an isolated meaning to the first proviso to Section 14(10)
of the Act thereby rendering the provisions of Rule 22(2) of
the Rules as otiose. He further contended that various
provisions of the Act and the Rules are to be harmoniously
interpreted to give purposeful meaning to the said
provisions. In the alternative the learned counsel con-
tended that the provisions of the Act which permit the State
Government to reduce the office term of the Managing
Committee from three years to three weeks, as happened here,
are wholly arbitrary and cannot be sustained in the eyes of
law.
7. The provisions of the Act and the Rules, quoted above,
clearly indicate that the scheme of the Act gives wide
powers to the State Government to control those societies in
which it has considerably contributed towards the share
capital. The State Government can nominate even upto two-
third of the total members of the Managing Committee
including the Chairman. It would, therefore, be in tune
with the scheme of the Act to hold that the Managing
Committee cannot assume office till the time the nominations
are made by the State Government. Proviso to Rule 22(2) of
the Rules rightly provides that the Managing Committee shall
not be treated as complete unless the members thereof have
been duly elected and/or nominated by the authority
empowered to do so under the Act, Rules and bye-laws of the
Society.
8. The expression ‘election’ has not been defined under
the Act. In the absence of any definition by the
legislature we have to follow the ordinary meaning given to
the said expression. Collins English Dictionary defines
‘election’ as under:
“The selection by vote of a person or persons
from among candidates for a position, esp. a
political office. The act or an instance of
choosing.
Webester Comprehensive Dictionary, International Edn., gives
the following meaning to the expression ‘election’:
“The selection of a person or persons for
office as by ballot. A choice, as between
alternatives, choice in general.”
9. The expression ‘election’, therefore, means selection
of a person by vote or even otherwise. When a person is
nomi-
50
nated by way of selection on the basis of a given criteria
from amongst several persons, then in the broader sense he
is elected to the office. We are of the view that the
expression ‘elections’, in the first proviso to Section
14(10) of the Act, has been used in the broader sense. It
includes election by ballot as well as the choice by nomina-
tion. This interpretation would make Rule 22(2) of the
Rules workable. Section 14(2) of the Act vests the
management of a registered society in a Managing Committee
constituted in accordance with the Rules. Section 14(4)
further provides that even upto two-third members of the
Managing Committee can be nominated. Sub-section (8) of
Section 14 further imposes bar on the members of the
Managing Committee for re-election after they have held two
consecutive terms. Rule 22(2) read with Section 14(2) of
the Act makes it abundantly clear that constitution of the
Managing Committee is to be treated as complete only when
the elections by ballot as well as the nominations are
finalised. Even otherwise, to fulfill the avowed object of
the Act and to encourage and promote the co-operative
movement in the State, it is necessary that the Managing
Committee as constituted under Rule 22(2) of the Rules
should be given its full tenure of three co-operative years.
Having-provided for three years’ term in office to the
Managing Committee of a Society, it could not be the
intention of the legislature to leave it to the State
Government to reduce the same to as short a period as three
weeks, which would be a mockery. We, therefore, hold that
in the first proviso to Section 14(10) the expression ‘the
co-operative year in which elections are held’ means not
only the elections by way of ballot, but also the
nominations under the Act. The net result is that the term
of the Managing Committee under the Act and the Rules is to
commence from the beginning of the co-operative year in
which the nominations by the State Government are completed
and the Managing Committee is constituted in terms of Rules
22(2) of the Rules.
10. Although the expression ‘election’ has been defined
under the Rules, but the said definition has been
specifically confined to the election in accordance with the
Rules. The election under Rules 21B21X is only by way of
ballot. There is no provision for nominations under the
Rules. therefore, the definition of ‘election’ under Rule
2(xvi) read with Rules 21B to 21X only means the election as
provided under the Rules by way of ballot. The expression
‘election’ as defined under the Rules has to be interpreted
in the context of the Rules and would not, therefore, go
contrary to the interpretation given by us to the said
expression in the context of the provisions of the Act.
11. Ordinarily, in view of the interpretation given by us
to the relevant provisions of the Act and the Rules, we
should have directed that the Managing Committee of the Bank
whose election was completed in March, 1993 be put back in
office and given a three year term from April 1, 1992, but
on the facts and circumstances of this case, we are not
inclined to do so. After the impugned order of the High
Court, fresh elections to the Managing Committee of the Bank
have taken place on July 5, 1994. The General Body of the
Bank having elected fresh members to the Managing Committee
of the Bank, it would not be in the interest of justice to
set aside the same. Even if we give relief to the
appellant, the old Committee gets tenure
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only upto March 31, 1995. We do not wish to reverse the
process to give benefit to the appellant only for a short
period.
12. We allow the appeal in the above terms and set aside
the impugned order of the High Court. We further hold that
the judgment of the Patna High Court in CWJC No. 2297 of
1993 (R) does not lay down the correct law. The appellant
shall be entitled to costs which we quantify as Rs. 15,000/-
to be paid by the State Government.
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