Supreme Court Allows Appellant in Co-operative Society Managing Committee Term Case — State's Order Reducing Term Set Aside. Election in Section 14(10) Includes Nomination, and Term Commences from Beginning of Co-operative Year in Which Nominations Are Made, Not Ballot, Under Bihar Co-operative Societies Act, 1935.

Case Note & Summary

The case concerned the term of office of the Managing Committee of a co-operative society registered under the Bihar Co-operative Societies Act, 1935 and the Bihar Co-operative Societies Rules, 1959. The appellant, Dinesh Prasad Yadav, was an elected member of the Managing Committee of the Kaithar District Central Co-operative Bank along with respondents 5 to 12. They were elected by ballot on January 20, 1991 under Rule 21A of the Rules. The State Government, being a major shareholder in the share capital of the Bank, had the right to nominate up to one-third of the total members of the Managing Committee, including the Chairman. However, the State Government made its nominations only on March 2, 1993. Until that date, the Managing Committee was not permitted to function because under Rule 22(2) of the Rules, the constitution of the Managing Committee was not treated as complete until both elected and nominated members were finalized. Shortly after the committee started functioning, the State Government by order dated March 5, 1993 informed the committee that its term would expire on March 31, 1993. The State Government, relying on the first proviso to Section 14(10) of the Act, took the view that the term of office was deemed to have commenced from the beginning of the co-operative year in which the ballot elections were held—April 1, 1990—and therefore would end on March 31, 1993 after three co-operative years. This meant the Managing Committee would effectively serve only about three weeks. The appellant and other members challenged the order in writ petition before the Patna High Court. The High Court dismissed the writ petition on March 2, 1994, following its earlier judgment in Bihar State Handloom Weavers Union & Ors. v. State of Bihar & Ors., CWJC No. 6543 of 1993. The High Court held that due to laches of the executive, nominated members were deprived of full term, but the legislative mandate of three co-operative years could not be extended. Aggrieved, the appellant approached the Supreme Court by special leave. The appellant contended that the Managing Committee had a three-year term which could not be reduced by an isolated reading of the first proviso to Section 14(10), rendering Rule 22(2) otiose; the provisions should be interpreted harmoniously; alternatively, the State's interpretation was arbitrary and unsustainable. The Supreme Court examined the relevant provisions and held that the expression 'election' in the first proviso to Section 14(10) was not defined in the Act and had to be given its ordinary meaning. Dictionary meanings showed that election means selection by vote or even otherwise, including nomination. The Court therefore held that the expression 'elections' in the proviso was used in a broader sense, covering both election by ballot and choice by nomination. This interpretation made Rule 22(2) workable. Section 14(2) of the Act vested management in a Managing Committee constituted in accordance with the Rules, and Rule 22(2) made clear that the constitution of the Committee was complete only when both ballot elections and nominations were finalized. The Court observed that to fulfill the avowed object of the Act and to encourage the co-operative movement, the Managing Committee should be given its full tenure of three co-operative years. It could not be the intention of the legislature to allow the State Government to reduce the term to three weeks. Consequently, the Supreme Court allowed the appeal, set aside the High Court order and the State Government order dated March 5, 1993, and directed that the Managing Committee was entitled to its full term of three co-operative years to be counted from the beginning of the co-operative year in which nominations were made, i.e., till March 31, 1995.

Headnote

Issue of Consideration

Final Decision

Appeal allowed; impugned High Court order and State Government order dated March 5, 1993 set aside; Managing Committee entitled to full three co-operative years from beginning of co-operative year in which nominations were made, i.e., till March 31, 1995.

Law Points