Case Note & Summary
The dispute concerns the appointment of two directors to the Board of the Goa Urban Co-operative Bank, a large scheduled bank, by the Registrar of Co-operative Societies under Section 67A of the Goa Co-operative Societies Act, 2001. The term of the Board had ended in December 2016 and elections were held on 9 May 2017, resulting in the election of nine directors. Two posts remained vacant as no nominations were filed. On 29 May 2017, the Registrar, exercising suo motu power, appointed Ms. Sonia Sidharth Kunkolienkar and Mr. Prabha Dulo Gawde to fill the vacancies. One of the elected directors, Anil N. Naik Gaunekar, filed the writ petition challenging the appointment order and later amended the petition to challenge the constitutional validity of Section 67A, alleging that it violates the principles of autonomous functioning and democratic member control guaranteed under Article 243ZI of the Constitution. The petitioner contended that the appointments were made without notice and that both appointees were not qualified for the posts; further, they had political connections and the appointments would alter the control dynamics of the bank as the elected directors were divided into two groups. The respondents raised objections regarding locus standi and availability of alternate remedy. The Division Bench issued Rule on 24 June 2017 and stayed the impugned order, appointing a former judge as ex-officio Chairman as an interim measure. During final hearing, the court examined the constitutional and statutory framework governing co-operative societies, emphasizing that co-operatives are founded on democratic governance and must be free from unnecessary state interference. The court noted the need to avoid constitutional adjudication if the matter could be decided on other grounds and to attempt to read down provisions to save them. The judgment text, as provided, does not contain the final operative order.
Headnote
A) Co-operative Societies - Democratic Governance - Principle that co-operatives must function democratically and with minimal state interference - Constitution of India, Articles 19(1)(c), 43B, 243ZI; Goa Co-operative Societies Act, 2001 - The court observed that a co-operative is founded on the principle of democratic governance and should be encouraged to function democratically, referring to constitutional provisions, directive principles, and national policy, as also the Statement of Objects and Reasons of the 97th Constitutional Amendment. (Paras 16-19) B) Writ Jurisdiction - Locus Standi - An elected director has standing to challenge appointment of directors by Registrar as it directly affects his participation in the board and alters control dynamics - Constitution of India, Article 226 - The court rejected the contention that the petitioner lacked locus, holding that as a director he is directly interested in the composition of the board and the legality of appointments, and thus entitled to seek certiorari. (Para 15) C) Constitutional Validity - Courts should avoid deciding constitutional questions if case can be decided on other grounds; attempt may be made to read down a provision - Constitution of India - The court stated that generally, unless necessary, it may not adjudicate on questions of law which may have broader ramifications, and that decisions on constitutional validity are to be eschewed if the case can be decided on lesser points; further, if a provision is challenged as unconstitutional, an attempt should be made to read it down to be in consonance with the constitutional principles. (Para 10) D) Registrar's Power under Section 67A - Exercise of power must be consistent with democratic member control; appointment of unqualified directors may be a colourable exercise of power - Goa Co-operative Societies Act, 2001, Section 67A - The court noted that the Registrar had suo motu appointed two directors to fill vacancies without proper scrutiny, and that both appointees were not qualified for the posts, indicating a possible colourable exercise of power; the court also observed that the appointments would substantially alter control dynamics in the bank. (Paras 2, 6, 8)
Issue of Consideration
Whether the Registrar's order appointing two directors is valid; and whether Section 67A of the Goa Co-operative Societies Act, 2001 is constitutionally valid.
Final Decision
Decision not clearly stated
Law Points
- Legal points not extracted
- co-operative societies must function on democratic principles
- autonomous functioning with minimal state interference
- courts should avoid deciding constitutional questions if case can be decided on other grounds
- attempt should be made to read down a provision to save its constitutionality
- locus standi of a director to challenge appointments affecting board dynamics
