1 W.P.No.9274/2015 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE23D DAY OF MARCH2015BEFORE R THE HON’BLE MR. JUSTICE H.G.RAMESH WRIT PETITION NO.9274/2015 (CS-EL/M) BETWEEN:
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3. BELTHANGADI TALUK RUBBER BELEGAR MARAT & SAMSKARN SAHAKAR SANGAT NIYAMIT UJRE, DHAKSHINA KANNADA REPRESENTED BY ITS PRESIDENT SRI SHRIDAR G BHIDE SRI SHRIDAR G BHIDE S/O G.N.BHINDE AGED ABOUT59YEARS R/A BHINDE HOUSE MUNDAJE BELTHANGADI TALUK DHAKSHINA KANNADA N PADMANABH S/O M KESHAV VICE PRESIDENT AGED ABOUT77YEARS MANINJE HOUSE, KUKKALA BELTHANGADI TALUK DHAKSHINA KANNADA ... PETITIONERS (BY SRI JAYAKUMAR S PATIL, SENIOR ADVOCATE) AND:
1. STATE OF KARNATAKA VIDHANA SOUDHA BANGALORE – 560 001 REPRESENTED BY ITS CHIEF SECRETARY2W.P.No.9274/2015 THE REGISTRAR OF CO-OPERATIVE SOCIETIES ALI ASKER ROAD BANGALORE – 560 052 THE PRINCIPAL SECRETARY STATE OF KARNATAKA DEPARTMENT OF CO-OPERATION M S BUILDING BANGALORE – 560 001 2.
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5. (BY SRI M KESHAVA REDDY, ADVOCATE FOR R4; SRI THARANATH POOJARY, AGA FOR R1 TO3&
5) THE STATE CO-OPERATIVE ELECTION AUTHORITY3D FLOOR, SHANTHI NAGAR T.T.M.C. ‘A’ BLOCK SHANTHI NAGAR BANGALORE – 27 REPRESENTED BY ITS SECRETARY THE DEPUTY REGISTRAR OF CO-OPERATIVE SOCIETY/ DISTRICT ELECTION OFFICER DAKSHINA KANNADA DISTRICT MANGALORE – 577 820 ... RESPONDENTS WP FILED UNDER ARTICLES226& 227 OF THE CONSTITUTION OF INDIA PRAYING TO STRIKE DOWN PROVISIONS OF SECTION39(2) AND SECTION28(5) OF C.S.ACT AS BEING UNCONSTITUTIONAL AND UNWORKABLE AND ETC. WP COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER
H.G.RAMESH, J.
(Oral):
1. In this writ petition, petitioners are inter alia challenging the constitutional validity of Sections 39-A(2) and 28-A(5) of the Karnataka Co-operative Societies Act, 3 W.P.No.9274/2015 1959 (‘the State Act’ for short). Petitioner No.1 is a Secondary Society (‘the Society’ for short).
2. Sub-section (5) of Section 28-A and sub-section (2) of Section 39-A of the State Act read as follows:
28. A(5). If the new board is not constituted under Section 29-A, on the date of expiry of the term of office of the board or if the elections are not held within the time-limits specified in Section 39-A, the Registrar or any other officer within whose jurisdiction the society is situated and who is authorized by the Registrar, shall be deemed to have assumed charge as Administrator and he shall, or all purposes function as such board of management. The Administrator shall, subject to the control of the Registrar, exercise all the powers and perform all the functions of the board of the co- operative society or any office bearer of the co-operative society and take all such actions as may be required, in the interest of the co-operative society: Provided that the Registrar shall appoint an administrator to a Co-operative Society or each of the Co-operative Societies formed after amalgamation or reorganization or division in accordance with Section 14 for a period of three months and the administrator so appointed shall arrange for holding elections to a board of such Co-operative Society or Societies as the case may be.” 39-A(2). The general elections of the members of the boards of the co-operative societies shall be held in four stages as under: (a) the elections in respect of primary Co-operative societies shall be held in the first stage; (b) the elections in respect of secondary Co-operative Societies shall be held in the second stage; (c) the elections in respect of federal Co-operative Societies shall be held in the third stage; (d) the elections in respect of Apex Co-operative Societies shall be held in the fourth stage. Provided that the co-operative election commission may start the preparatory work for the preparation of the 3. 4 W.P.No.9274/2015 electoral rolls for and the conduct of the elections during the last six months prior to the expiry of the term of office of the board of a co-operative society.” I have heard Sri Jayakumar S Patil, learned Senior Counsel appearing for the petitioners, Sri M.Keshava Reddy, learned counsel appearing for respondent no.4 and Sri Tharanath Poojary, learned Additional Government Advocate appearing for respondent nos.1 to 3 & 5.
4. The matter requires consideration. Issue Rule. ORDER
ON INTERIM PRAYER5 I have heard the learned counsel on both sides with regard to interim prayer. Petitioners want this Court to restrain the Registrar or any other Officer to assume charge as Administrator of petitioner no.1-Society on expiry of the term of the existing Board.
6. Sri Jayakumar S Patil, learned Senior Counsel referred to Article 243ZK of the Constitution of India and submitted that as per the said Article, it is mandatory to hold election to the Board of Directors before expiry of the term of the existing Board so as to ensure that the newly elected 5 W.P.No.9274/2015 members of the Board assume office immediately on the expiry of the term of office of the members of the outgoing Board. He submitted that the State Act does not provide for holding of election to the Board of Directors before expiry of the term of the existing Board. Factually also, election is not scheduled to be held before expiry of the term of the existing Board. Therefore, he submitted that, in view of Article 243ZK of the Constitution, the existing Board of the Society shall have to be continued till the newly elected Board assumes office.
7. Sri M.Keshava Reddy, learned counsel appearing for respondent no.4–Co-operative Election Authority, opposed the interim prayer. He submitted that continuation of the existing Board will be violative of clause (2) of Article 243ZJ of the Constitution as it is likely to result in extension of the term of the Board beyond five years. He further submitted that, under the existing provisions of the State Act, it is impossible to hold elections to the Boards of Secondary, Federal & Apex Societies before expiry of the term of the 6 existing Boards. He specifically referred to Section 21 of W.P.No.9274/2015 the State Act.
8. Learned Additional Government Advocate appearing for the State also opposed the interim prayer and relied on the following judgments:
1. Special reference No.1 of 2002 (AIR2003SC87 2. State of Maharashtra v. Jalgaon Municipal Council (AIR2003SC1659 3. Kishansing Tomar v. Municipal Corpn. of the City of Ahmedabad [(2006)8 SCC352 4. P.R.Ramesh v. State of Karnataka (DB) [2011(2) Kar.L.J.
529]..
9. On the above contentions, the only question that needs to be considered is as to whether, on the facts of the case, the existing Board of the Society shall have to be continued in office till the newly elected Board assumes office, in view of Article 243ZK of the Constitution?.
10. To examine the above question, it is relevant to refer to Articles 243ZJ, 243ZK, 243ZL and 243ZT of the Constitution, which read as follows:
243. J.
Number and term of members of board and its office bearers.―(1) The board shall consist of such number of directors as may be provided by the Legislature of a State, by law:
7. W.P.No.9274/2015 Provided that the maximum number of directors of a co-operative society shall not exceed twenty-one: Provided further that the Legislature of a State shall, by law, provide for the reservation of one seat for the Scheduled Castes or the Scheduled Tribes and two seats for women on board of every co-operative society consisting of individuals as members and having members from such class or category of persons. (2) The term of office of elected members of the board and its office-bearers shall be five years from the date of election and the term of office-bearers shall be coterminous with the term of the board: Provided that the board may fill a casual vacancy on the board by nomination out of the same class of members in respect of which the casual vacancy has arisen, if the term of office of the board is less than half of its original term. (3) The Legislature of a State shall, by law, make provisions for co-option of persons to be members of the board having experience in the field of banking, management, finance or specialization in any other field relating to the objects and activities undertaken by the co-operative society, as members of the board of such society: Provided that the number of such co-opted members shall not exceed two in addition to twenty-one directors specified in the first proviso to clause (1): Provided further that such co-opted members shall not have the right to vote in any election of the co- operative society in their capacity as such member or to be eligible to be elected as office-bearers of the board: Provided also that the functional directors of a co-operative society shall also be the members of the board and such members shall be excluded for the purpose of counting the total number of directors specified in the first proviso to clause (1). 243ZK. Election of members of board.―(1) Notwithstanding anything contained in any law made by the Legislature of a State, the election of a board shall be conducted before the expiry of the term of the board so as to ensure that the newly elected members of the board assume office immediately on the expiry of the term of the office of members of the outgoing board. (2) The superintendence, direction and control of the preparation of electoral rolls for, and the conduct of, all elections to a co-operative society shall vest in such an authority or body, as may be provided by the Legislature of a State, by law:
8. W.P.No.9274/2015 Provided that the Legislature of a State may, by law, provide for the procedure and guidelines for the conduct of such election. and interim management.― 243ZL. Supersession and suspension of board (1) Notwithstanding anything contained in any law for the time being in force, no board shall be superseded or kept under suspension for a period exceeding six months: kept under suspension in case― Provided that the board may be superseded or (i) of its persistent default; or (ii) of negligence in the performance of its duties; or (iii) the board has committed any act prejudicial to the interests of the co-operative society or its members; or (iv) there is a stalement in the constitution or functions of the board; or (v) the authority or body as provided by the Legislature of a State, by law, under clause (2) of article 243ZK, has failed to conduct elections in accordance with the provisions of the State Act: Provided further that the board 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 by the Government: Provided also 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 also that in case of a co-operative society, other than a multi-State co-operative society, carrying on the business of banking, the provisions of this clause shall have the effect as if for the words “six months”, the words “one year” had been substituted. (2) In case of supersession of a board, the administrator appointed to manage the affairs of such co-operative society shall arrange for conduct of elections within the period specified in clause (1) and handover the management to the elected board. (3) The Legislature of a State may, by law, make provisions for the conditions of service of the administrator. 9 W.P.No.9274/2015 243ZT. Continuance of existing laws.― Notwithstanding anything in this Part, any provision of any law relating to co-operative societies in force in a State immediately before the commencement of the Constitution (Ninety-seventh Amendment) Act, 2011, which is inconsistent with the provisions of this Part, shall continue to be in force until amended or repealed by a competent Legislature or other competent authority or until from such commencement, whichever is less. the expiration of one year (Emphasis supplied) 11. The object of Part IXB of the Constitution, which is inserted by the Constitution (Ninety-Seventh Amendment) Act, 2011 which came into force on 15th February 2012, is to provide for autonomous functioning, democratic member- control and uninterrupted professional management of Co-operative Societies by the body elected to administer the Society without any interference by the State or any other agency.
12. The purpose and object of Article 243ZK of the Constitution is to ensure continuity of management by the Board. For this purpose, holding of election to the Board before expiry of the term of the existing Board is made mandatory under Article 243ZK. This is evident on a plain reading of the Article. This is to ensure that the newly elected members of the Board will assume office 10 W.P.No.9274/2015 immediately on expiry of the term of the outgoing Board without giving scope for any other body to interfere in the management of the Society.
13. As could be seen from Article 243ZT, it provided one year’s time to make appropriate amendments to the existing State law relating to Co-operative Societies so as to bring it in conformity with the provisions of Part IXB of the Constitution. However, the State Act has not been fully amended to bring it in conformity with the provisions of Part IXB of the Constitution, though three years are over since Part IXB of the Constitution has come into force.
14. In the present case, it is not the case of the respondents that the petitioner-Society has committed any default, preventing holding of election to the Board before expiry of the term of the existing Board.
15. The provisions of the State Act do not actually provide for holding of election to the Boards of Secondary, Federal & Apex Societies before expiry of the term of the existing Boards. The election is also not scheduled to be held before 11 W.P.No.9274/2015 expiry of their term. This is not disputed by the learned counsel appearing for the Co-operative Election Authority.
16. None of the judgments relied on by the learned Additional Government Advocate were rendered in the context of part IXB of the Constitution. Even otherwise, they are of no relevance to interpret Article 243ZK of the Constitution.
17. The contention that continuance of the existing Board is violative of clause (2) of Article 243ZJ of the Constitution cannot be accepted on the facts of the case. In my opinion, a conjoint reading of the three Articles namely, 243ZJ, 243ZK & 243ZL will show that the term of the Board is five years from the date the members of the Board assume office. However, if the State law does not conform to Article 243ZK of the Constitution and does not provide for holding of election before expiry of the term of the Board, the term of the existing Board shall have to be continued till the newly elected Board assumes office. Any view to the contrary will defeat the purpose and object of Part IXB of the Constitution. This Court is duty bound to uphold the 12 W.P.No.9274/2015 provisions of the Constitution. I may add that Article 243ZL(1)(v) will not come into play in the absence of State law conforming to Article 243ZK of the Constitution.
18. As the provisions of the State Act do not conform to Article 243ZK of the Constitution, inasmuch as they do not actually provide for holding of elections to the Boards of Secondary, Federal & Apex Societies, before expiry of the term of the existing Boards, the existing Boards shall have to be continued, till the newly elected Boards assume office.
19. Default on the part of the State in not enacting law to hold election to the Board before expiry of the term of the existing Board cannot be allowed to result in the State or its Officers interfering with the management of the Society. As stated above, non-holding of election to the Board before expiry of the term of the existing Board is not due to any default of the petitioner-Society.
20. All the observations made above are only for the purpose of considering the interim prayer and shall not be 13 construed as expressing any opinion finally on the merits of W.P.No.9274/2015 the matter. In view of the above, I make the following interim 21. order: The existing Board of Directors of petitioner no.1- Society shall continue in office till the newly elected members of the Board assume office. Sd/- JUDGE hkh.