* THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN + WRIT PETITION No.21022 OF 2009 % Dated 16-09-2010 # LIC Employees Mutually Aided co-operative Housing Building Society Ltd., Hyderabad …. Petitioner Vs. $ D.V.K. Sarma, S/o late Narayana Murthy, Aged about 63 years, r/o 12-2-784/A/1, Rethi Bowli, Mehdipatnam, Hyderabad-28 and seven others …. Respondents ! Counsel for the Petitioner: Sri N. Subba Rao ^ Counsel for the Respondents: Sri Challa Sitaramaiah, Learned Senior Counsel appearing for the first respondent <GIST: > HEAD NOTE: ? Cases referred [1] AIR 1977 SC 2328 2 AIR 1963 SC 1207 3 AIR 1979 SC 1029 4 AIR 2004 SC 4219 5 (2007)4 SCC 266 6 AIR 1987 SC 1454 7 AIR 1984 SC 505 8 2010(4) ALT 34 (D.B) 9 2003(4) SCC 86 10 2004(3) SCC 1 11 (1961) 2 S.C.R. 537 12 1963 Suppl (1) SCR 113 13 AIR 1936 PC 253 14 AIR 1969 SC 267 15 AIR 1969 SC 634 16 AIR 1962 SC 1621 17 1994 Suppl (1) SCC 257 18 1909 (1) KB 310 19 (1985) 4 SCC 417 20 Judgment of the Division Bench of the A.P. High Court in W.P. No.13970 of 2005 dated 19.08.2005 21 2000(1) ALL ER 65 22 (2001)1 SCC 182 23 1960(2) All ER 703 24 AIR 1987 SC 2386 25 AIR 1973 SC 2701 26 (1993) 2 AII ER 724 27 (2002) 1 ALL.E.R. 465 28 (2004) 1 All.E.R. 187 29 2002(2) All E R 353 THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION No.21022 OF 2009 ORDER: This writ petition is filed by the LIC Employees Mutually Aided Cooperative House Building Society Limited, Hyderabad represented by its Secretary, seeking a declaration that the order of the Co- operative Tribunal, in I.A. No.393 of 2009 in O.P. No.76 of 2008 dated 28.08.2009, is illegal, arbitrary and without jurisdiction. 2. Facts, in brief, are that the petitioner society was originally established, under the A.P. Cooperative Societies Act in the year 1963 with registration No.TA-203, with the object of providing housing facilities to its members. On 22.06.2007 it converted itself into a Society under the A.P. Mutually Aided Cooperative Societies Act, 1995 (hereinafter called the “Act”). On the allegation that the 1st respondent herein had committed several acts of malfeasance and misfeasance, in entering into a development agreement dated 30.07.2007, a resolution was passed by the general body of the petitioner society removing him from the office of the Secretary of the Society. 3. The 1st respondent filed O.P. No.76 of 2008 raising a dispute, under Section 37 of the Act, regarding his removal as the Secretary of the petitioner society etc. The petitioner society filed I.A. No.393 of 2009 in O.P. No.76 of 2008 seeking dismissal of the O.P. on the preliminary ground that the petition filed by the 1st respondent, under Section 37 of the Act, was not maintainable as he did not exhaust the remedies, available under the bye-laws of the society, for settlement of disputes. The 1st respondent filed his counter affidavit contending that no committee was constituted, as stipulated in bye-law 35 of the bye- laws of the society, ever since its inception; there was no remedy available under the bye-laws for settlement of disputes; and, as such, the question of exhausting the remedy under the bye-laws, before invoking the jurisdiction of the co-operative tribunal, did not arise. 4. In the order, under challenge in this Writ Petition, the Tribunal held that the proviso to Section 37 (1) of the Act required a member to first exhaust the remedy available under the bye-laws for settlement of disputes; bye-law 35 of the bye-laws of the petitioner- society required the general body to constitute a committee to deal with settlement of disputes; no such committee had been constituted; and accepting the petitioner’s contention, that as the 1st respondent had neither submitted a representation nor did he raise a dispute no committee for settlement of disputes was constituted by the Society, would mean that, after a representation was submitted for settlement of disputes, a meeting of the general body of the society would be called for, and the said general body would then constitute a committee to resolve the dispute. The Tribunal observed that, since no committee was constituted and there was no internal mechanism in the Society to resolve the dispute, it could not be said that the 1st respondent had violated either the mandatory provisions of Section 37 of the Act or the bye-laws of the Society; as no committee was constituted by the petitioner, to resolve the dispute with him, the 1st respondent had not committed any illegality in filing the O.P directly before the Tribunal; and it could not be said that O.P. No.76 of 2008 was not maintainable in view of the bar under Section 37 of the Act. Aggrieved thereby, the present Writ Petition. IS THE DISPUTE IN O.P. 76 OF 2008 AN ELECTION DISPUTE? 4. Sri N. Subba Rao, Learned Counsel for the petitioner, would submit that the averments in the O.P. showed that there were several civil disputes in relation to the land owned by the Society; the 1st respondent had indulged in various malpractices during the course of his tenure as the Secretary of the Society; the general body was of the view that he was responsible for various irregularities and he was, therefore, removed from the post of Secretary; the contention, that the dispute in the O.P. related to the election of a cooperative society, was contrary to the pleadings before the tribunal; and, from the contents of the O.P and the relief sought for, it was evident that the dispute did not pertain to the elections of a cooperative society. 5. On the other hand, Sri Challa Sitaramaiah, Learned Senior Counsel appearing for the 1st respondent, would submit that the prayer in the O.P. before the Tribunal includes a dispute relating to elections; Section 37(2) of the Act stipulates that a dispute, relating to the elections of a society, can only be decided by the Tribunal; and the proviso to Section 37(1) has, therefore, no application to such disputes. 6. Under Section 37(2) of the Act any dispute relating to the elections held to a co-operative society may be referred to the co- operative tribunal for its decision. The requirement, under the proviso to Section 37(1) of the Act, of exhausting the available remedies under the bye-laws of the society would apply only to disputes falling within the ambit of clauses (a) to (f) of Section 37(1) of the Act. Any dispute, relating to the elections held to a co-operative society, can only be raised before the tribunal, and the remedies available under the bye- laws would not be applicable thereto in view of the mandate of Section 37(2) of the Act. In the present case the 1st respondent raised a dispute before the cooperative tribunal, in O.P. No.76 of 2008, seeking the following reliefs:- “(i) declaring the Minutes of Board of Directors alleged to have been convened on 10.10.2007, 15.10.2007 and 29.10.2007 and of Special General Body Meeting alleged to have been convened on 12.10.2007, 25.10.2007 and 4.11.2007 as illegal and void being contrary to the bye-laws of the 1st respondent Society and provisions of law. (ii) To declare the Cancellation Deed document No.3491 of 2007 dated 15.10.2007 executed by Respondents 2 and 3 claiming to be the President and Secretary of 1st respondent society and the Agreement of Sale cum GPA Doc. No.3614 of 2007 dated 29.10.2007 executed by Respondents 2 and 3 in favour of Respondent No.7 and also the Development Agreements Doc. Nos.3615 of 2007 and 3616 of 2007 both dated 29.10.2007 executed by Respondent No.7 on its behalf and also on behalf of 1st respondent in favour of the Respondents 9 and 8 respectively as illegal, null and void and consequently to set aside the same. (iii) granting such other relief for which the petitioner is entitled and the Hon’ble Tribunal deems it just and proper in the circumstances of the case” 7. It is evident that the reliefs sought for in O.P.No.76 of 2008, filed before the co-operative tribunal, do not relate to the election of a co- operative society and, as such, the contentions, that, in view of Section 37(2) of the Act, it is only the co-operative tribunal which can adjudicate such disputes, and the proviso to Section 37(1) has no application, do not merit acceptance. PROVISO TO SECTION 37(1) OF THE ACT: ITS SCOPE: 8. Sri N. Subba Rao, Learned Counsel for the petitioner, would submit that, as the first respondent did not avail the remedy available under the bye-laws for settlement of disputes, he could not invoke the jurisdiction of the co-operative tribunal in view of the bar under the proviso to Section 37(1) of the Act; the constitution of a committee, or its existence, is not a pre-condition for the raising of a dispute and, if a representation had been made by the first respondent, the general body would have taken a decision in a democratic manner either to constitute a committee or to examine the dispute on its own; the ‘Act’ was made to promote self-reliant and autonomous cooperative societies to make the cooperative movement more vibrant in the State; the legislative intent was to give more autonomy to cooperative societies; without exhausting such internal remedies, by way of submitting a representation or a complaint to the society, the 1st respondent could not straight away approach the tribunal; all issues must first be decided by the general body or its committees; it is only if the general body does not act on the representation would the 1st respondent then be at liberty to approach the tribunal; the 1st respondent was the secretary of the society for over three decades; no committee, as is referred to in bye-laws 34 and 35, was ever constituted for resolution of disputes; the bye-laws of the society do not require a disputes resolution committee to be in existence before a dispute is raised; a disputes committee was constituted after the O.P. was filed; without submitting an application to the general body to resolve the dispute, the 1st respondent was not entitled to contend that a committee must exist on the date the dispute arose; a conjoint reading, of bye-laws 15, 15(m), 20, 34 and 35, with the provisions of the Act, made it clear that a committee need not be constituted before a complaint or grievance is brought to the notice of the society; in the absence of any such complaint being filed before the society the 1st respondent was dis-entitled from approaching the tribunal; the Act stipulates that the general body shall be the supreme authority to decide issues in a democratic manner; the purpose and object of the Act is to promote self-reliant and autonomous cooperative societies to enable the society to determine its functions in a democratic manner; it cannot, therefore, be said that the general body has no jurisdiction to hear the cause; and, if the 1st respondent was allowed to file the O.P. directly without submitting a representation to the Society, it would affect the democratic process contemplated under the Act. 9. Sri Challa Seetharamaiah, Learned Senior Counsel appearing on behalf of the first respondent, would submit that since a committee for settlement of disputes, as specified in bye-law No.35, was not constituted even till the impugned order was passed by the tribunal, no such remedy was available under the bye-laws for resolution of the dispute; bye-law 35 should be read with bye-law 20(d) and 34(c); under bye-law 20(k) the board of directors can only appoint committees, other than the committee under bye-law 35; no rules were framed by the board of directors for settling the disputes; the general body did not appoint any committee to settle disputes; the authority (the committee) must be in existence when the cause is pleaded, and rules for settling the dispute should have been framed even before the 1st respondent raised a dispute before the tribunal; the general body has no jurisdiction to settle the dispute as the bye- laws stipulate that the committee, constituted by the general body, can alone decide the dispute; if the general body intended to resolve the dispute on its own, the bye-laws ought to have been amended and approved in accordance with the provisions of the Act and the bye-laws; and, hence, the OP is maintainable. 10. Section 3 of the Act requires individuals or co-operatives, intending to form into a co-operative society under the Act, to frame bye-laws conforming to the principles of co-operation, including that the membership of the co-operative society shall be voluntary and available without restriction; the co-operative societies shall be democratic organizations; the share capital of the Society would only receive a limited rate of interest; the economic results, arising out of the operations of the co-operative society, belonged to its members; and would be distributed in such a manner as to avoid one member gaining at the expense of others, etc. As rightly contended by Sri N. Subba Rao, learned counsel for the petitioner, the object of the Act is to promote self-reliant and autonomous cooperative societies to make the co-operative movement more vibrant in the State, and to give more autonomy to cooperative societies. The proviso to Section 37(1) of the Act is in furtherance of this object, and requires members of the society to resolve their disputes within the frame work of the bye-laws itself before invoking the jurisdiction of the tribunal. 11. The normal rule of interpretation is that the words used by the legislature are generally a safe guide to its intention. But if the words of an instrument are ambiguous in the sense that they can reasonably bear more than one meaning, that is to say, if the words are semantically ambiguous, or if a provision, if read literally, is patently incompatible with the other provisions of that instrument, the court would be justified in construing the words in a manner which will make the particular provision purposeful. (Union of India v. Sankalchand Himatlal Sheth[1]) . If an expression is susceptible of a narrow or technical meaning, as well as a popular meaning, the Court would be justified in assuming that the Legislature used the expression in the sense which would carry out its object and reject that which renders the exercise of its powers invalid. (M/s. New India Sugar Mills Ltd., v. Commissioner of Sales Tax, Bihar[2]). If the choice is between two interpretations the narrower of which would fail to achieve the manifest purpose of the legislation, a construction which would reduce the legislation to futility should be avoided, and the construction, based on the view that the legislature would legislate only for the purpose of bringing about an effective result, should be accepted. (Superintendent and Remembrancer of Legal Affairs to Govt. of W.G. v. Abani Maity[3]). If there is any doubt or ambiguity in the Statute the rule of purposive construction should be taken recourse to, to achieve the objectives, (See Swedish Match AB v. Securities & Exchange Board of India[4], Prakash Kumar v. State of Gujarat[5]), for a Statute is best understood if we know the reason for it. The reason for a Statute is the safest guide to its interpretation. The words of a Statute take their colour from the reason for it. (Utkal Contractors and Joinery Pvt. Ltd. v. State of Orissa[6]) . A purposive interpretation is to give effect to the intention underlying the Statute and, therefore, unless the grammatical construction leads to an absurdity, it is safe to give words their natural meaning because the framer is presumed to use the language which conveys the intention. If two constructions are possible, the construction which advances the intention of the legislation, and remedies the mischief to thwart which it is enacted, should be accepted. (M/s. Glaxo Laboratories (I.) Ltd. v. Presiding Officer, Labour Court, Meerut[7]). 12. Section 37(1)(b) of the Act enables a dispute to be raised if it touches upon the constitution, management or business of a society and matters connected therewith or incidental thereto. The word “touching” is of wide import and would include any matter which relates to or concerns the business of the society. (M. Venkata Ramana v. A.P. Co-operative Tribunal, Hyderabad[8]). The jurisdiction which the Tribunal exercises, under Section 37(1)(b), is wide. It is only to the limited extent of the bar, under the proviso to Section 37(1), is there any restriction on the jurisdiction of the co- operative tribunal to entertain disputes touching upon the constitution, management and business of a society. 13. The construction to be placed on the proviso to Section 37(1) of the Act must, ordinarily, be on its plain language, and it is only in case of ambiguity can resort be had to other interpretative aids including a purposive construction based on legislative intent and the object for which the Act was made. The proviso to Section 37(1) of the Act does not suffer from ambiguity and, on a plain reading of its language, it is evident that it is only where a remedy is available under the bye-laws should the party raising a dispute first exhaust such a remedy before invoking the jurisdiction of the cooperative tribunal. The twin condition for the bar to apply is firstly that the bye-laws should provide for a remedy for settlement of disputes, and secondly that such a remedy is “available”. 14. It is useful to refer to the relevant provisions of the Act, and the bye-laws, in order to examine whether or not the bye-laws provide a remedy for settlement of disputes and, if so, the scope and extent of such a remedy. Section 6 of the Act stipulates that the society shall be a body corporate. Section 9 relates to bye-laws and, under sub- section (1) thereof, except on such specific matters for which the Act has provided, the functioning of every co-operative society shall be regulated by its bye-laws and, subject to the provisions of the Act and the bye-laws, every co-operative society shall have regard to co- operative principles in its functioning. Section 9(2) stipulates that, subject to Section 3, the bye-laws of a co-operative society shall be specific on matters enumerated therein. Section 20 relates to the general body and, under sub-section (1) thereof, subject to the provisions of the Act and the bye-laws, the ultimate authority of a co- operative society shall vest in its general body. Section 20(2) provides that the matters enumerated therein shall be dealt with by the general body of the co-operative society. 14. Under bye-law 15(b), of the bye-laws of the petitioner society, the general body of the society shall consist of all the members of the society, and it shall exercise all powers including amendment of the bye-laws. Under bye-law 15(m), the general body shall exercise all powers on all other matters as are necessary and incidental thereto. Bye-law 20 (d) stipulates that the Board shall be the authority to formulate rules, among other matters, for the settlement of disputes. Bye-law 20(k) prescribes the Board to be the authority to appoint committees with specific functions, powers, tenure, remuneration etc., and reconstitute the same or remove any or all the committee members at any time. Bye-law 34(c) stipulates that the provisions of the Act, the bye laws, and the rules of business and administration of the society shall be applied and adhered to in respect of the procedure for settlement of disputes. Bye-law 35 relates to settlement of disputes and, thereunder, the general body shall appoint various committees to deal with various issues including settlement of disputes concerning the affairs of the Society. The committees, which the Board is empowered to appoint under bye-law 20(k), are other than those Committees required to be appointed by the general body under bye- law 35 of the bye-laws of the petitioner society. 15. The authority which the general body is empowered to exercise, in terms of Section 20(2) of the Act and the bye-laws of the Society, is subject to the provisions of the Act and the bye-laws of the Society. The word 'subject to' has been defined in Black's Law Dictionary, Fifth Edition, as: "subservient, inferior, obedient to; governed or affected by; provided that; provided; answerable for". In Collins' English Dictionary the word 'subject to' has been stated to mean as: "under the condition that we accept, subject to her agreement". (M.V. Shankar Bhat v. Claude Pinto[9]) . "Subject to" is an expression whereby limitation is expressed. (Ashok Leyland Ltd. v. State of Tamil Nadu[10]). The import of the expression “subject to” is that, to the extent of the restriction imposed by the use of the said expression, the power is taken away. (Hingir-Rampur Coal Company v. State of Orissa[11]; The Gujarat University, Ahmedabad v. Krishna Ranganath Mudholkar[12]). The power to settle disputes has been specifically conferred, by bye-law No.35, on a committee and not on the general body. The bye-laws empower the general body/board of directors to constitute a committee for settlement of disputes, and do not authorize either the general body or the board of directors to take upon themselves the task of settlement of disputes. Under bye-law 20(d), the board is the authority to formulate rules for settlement of disputes. In view of the specific mandate of Sections 9(1) & (2) and 20(1) of the Act, read with bye-law 34(c) and 35 of the bye-laws of the society, while the ultimate authority of the society vests in the general body, such authority can only be exercised subject to the provisions of the Act and the bye-laws and, as bye-law No.35 requires a committee to be constituted for settlement of disputes and it is this committee which is required to examine the disputes raised and settle them, the general body cannot itself exercise the power, of resolution of disputes, as long as the bye-laws of the petitioner Society remain unamended. 16. Clause (xi) of Section 9(2) of the Act relates to the manner of making or amending the bye-laws. Section 10 relates to amendment of bye-laws and, under sub-section (1) thereof, a co-operative society may amend any of the provisions of its bye-laws by a resolution of its general body. Section 10(2) provides that, in case of amendment of its bye-laws with regard to matters relating to Section 9(2)(xi), an application for registration of the amendment shall be forwarded by the co-operative society, by registered post, to the Registrar within a period of thirty days from the date of the resolution. Clause (a) of Section 20(2) relates to amendment of bye-laws. Under bye-law 15(b) the general body has been given the power to amend the bye- laws and, under bye-law 15(m), it is empowered to exercise powers on all other matters as are necessary and incidental thereto. The bye-laws of the petitioner society have not been amended, let alone the procedure for amendment of the bye-laws, as prescribed under Section 10(1) & (2) of the Act and bye-law 15(b), being adhered to. 17. The powers conferred, under bye-law 15(m), on the general body is to exercise powers which are necessary and incidental to its other powers. A thing is said to be incidental to another when it appertains to the principal thing or if it appertains to something else as primary. (Stround’s Judicial Dictionary; P. Ramanatha Aiyer The Law: Lexicon Reprint Edition 2002). It is only if a matter appertains to those enumerated in clauses (a) to (l) of bye-law 15 would it fall under the incidental powers stipulated in bye-law 15 (m). The power of settlement of disputes is not incidental to the powers enumerated under clauses (a) to (l) of bye-law 15. In the absence of the bye-laws being amended it is only a committee, constituted for settlement of disputes, which can examine and settle the dispute raised by the first respondent, and not the general body, for when a power is given to do a certain thing in a certain