Source: https://nearlaw.com/PDF/MumbaiHC/1991_1995/1991%20ALLMR%20ONLINE%20716.html
Timestamp: 2019-05-20 09:12:35
Document Index: 570370668

Matched Legal Cases: ['Art. 226', 'Art. 226', 'Art. 226', 'Art. 12', 'Art. 12', 'Art. 12']

1991 ALLMR ONLINE 716
S.V. MANOHAR AND S.H. KAPADIA, JJ.
Firozali Abdulkarim Jivani, and another Vs. The Union of India and others
Writ Petition No. 1538 of 1989
15th October, 1991
Multi-State Co-operative Societies Act (1984),S. 40 Constitution of India,Art. 226 Constitution of India,Art. 226 Multi-State Co-operative Societies Act (1984),S. 37 Expln
(1991) 2 SCC 423 [Para 18]
AIR 1990 AP 171 (FB) : 1990 Lab IC NOC 63 [Para 24]
AIR 1989 Ori 31 (FB) : (1988) 2 Orissa LR 375 [Para 24]
1989 Mah LJ 566 [Para 24]
AIR 1988 Ker 75 (FB) : 1987 Ker LJ 1461 [Para 24]
1988 Mah LJ 157 [Para 17]
1987 Mah LJ 709 [Para 17]
AIR 1971 SC 33 (Foll) : (1971) 1 SCJ 705 [Para 22]
AIR 1969 SC 1306 : (Foll) [Para 25]
MRS. SUJATA MANOHAR, J. :-The petitioners are members and shareholders of the Development Co-operative Bank Limited, the 6th respondent, which is a Multi-State Co-operative Society registered under the Multi-State Co-operative Societies Act, 1984. The petitioners have filed the present writ petition challenging the acceptance by the returning officer (respondent No. 7) of the nomination of respondent No. 8, Baddruddin Ahmed Pradhan, for the post of the President of respondent No. 6 Bank at the elections held on 23rd April 1989 and the subsequent election of respondent No. 8 to the post of the President of respondent No. 6 Bank.
2. For the purpose of this petition it is necessary to state in brief the history of this Barik. Prior to 30th June 1981 there was a Co-operative Bank known as the Ismailia Cooperative Bank Limited. Respondent No. 8 was the President of this bank since March 1979. There was also in existence another cooperative bank known as the Masalawala Cooperative Bank Limited. Both these banks were registered under the Maharashtra Cooperative Societies Act, 1960. Both these banks were amalgamated by an order dated 30th June 1981 passed by the Divisional Joint Registrar; Co-operative Societies, Bombay, in exercise of powers conferred on him under Sub-Section (1) of Section 17 of the Maharashtra Co-operative Societies Act, 1960. As a result of this amalgamation a new bank viz., respondent No. 6 Bank was brought into existence and the registration of the two amalgamating banks in terms of the provisions of S. 9(1) of the Maharashtra Cooperative Societies Act, 1960 were cancelled from the date of the order of amalgamation.
3. As per the scheme of amalgamation, a Board of Directors consisting of eight directors was nominated to hold office for a period of three years from the date of the order. Respondent No. 8 was nominated by this order as the President of the Board of Directors. Respondent No. 8 continued to hold the office of the President by nomination till 1986.
4. On and from 16th September 1985 the Multi-State Co-operative Societies Act, 1984 came into effect. The 6th respondent Bank, which had its area of operation not merely in the State of Maharashtra but also in part of Andhra Pradesh, was deemed to be registered under the Multi-State Co-operative Societies Act, 1984. On the date when the Multi-State Co-operative Societies Act, 1984 came into operation respondent No. 8 was holding the office of President of respondent No. 6 Bank by nomination. He continued to so hold this post. The election of the President and the members of the Board of Directors of the 6th respondent Bank was held for the first time on 6th April 1986. At these elections respondent No. 8 was again elected as the President of the Board of Directors of respondent No. 6 Bank.
5. Under the provisions of Section 35(3) of the Multi-State Co-operative Societies Act, 1984 the terms of office of the elected member of the Board shall not exceed three years from the date of election. Accordingly, on 15th March 1989, an election programme was declared for elections to be held on 23rd April 1989 to the Board of Directors, including the President of the 6th respondent Bank.
6. Respondent No. 8 again filed his nomination for the post of the President of the Board of Directors of the 6th respondent Bank on 3rd April 1989. Petitioner. No. 1 objected to the nomination form of respondent No. 8 on the ground that he was not entitled to stand for election for another term of office as President of the 6th respondent Bank in view of the provisions of S. 37 of the Multi-State Co-operative Societies Act; 1984. Despite this objection, however, respondent No. 7, who was the returning officer, accepted the nomination of respondent No. 8.
7. On 12th April 1989 the petitioners filed Writ Petition No. 1115 of 1989 challenging the acceptance of the nomination of respondent No. 8 by the Returning Officer. This writ petition, however, was rejected by a \learned single Judge of this Court by observing that as the election process had been set in motion, the appropriate remedy for the petitioners would be to challenge the election of respondent No. 8 in the event of his being elected. An appeal from this order of the learned single Judge was filed by the petitioners, being Appeal No. 444 of 1989. The same was, however, withdrawn by the petitioners on 20th April 1989 stating that the petitioners will take recourse to a fresh petition in case respondent No. 8 gets elected as the President of the Board of Directors of respondent No. 6 Bank.
8. Thereafter elections were held on 23rd April 1989, Respondent No. 8 was elected as the President of the Board of Directors of respondent No. 6 Bank. The results were declared on 27th April 1989. Immediately thereafter, on 9th May 1989 the present writ petition was filed. This petition was rejected at the stage of admission by a learned single Judge of this Court by his order dated 27th June 1989. The learned single Judge has recorded in his order that the petitioners had restricted their petition to the contention that Section 37 of the Multi-State Co-operative Societies Act, 1984 precludes respondent No. 8 from offering himself as a candidate for the April 1989 poll. The learned Judge dismissed the writ petition on the ground that the appropriate remedy was to move the statutory authority under the Multi-State Cooperative Societies Act, to annul the election by means of a dispute.
9. From this order, Appeal No. 742 of 1989 was filed. The Division Bench which heard the appeal, allowed it by its order dated 13th July 1989. The Division Bench (Desai and Kantharia, JJ.) have, in their order, dealt With the observation of the learned single Judge in the impugned order that the appropriate remedy for the petitioners would be to raise a dispute in the manner enjoined under the Multi-State Co-operative Societies Act. The Division Bench said that in Writ Petition No. 5527 of 1985 filed by the very bank, as petitioner, the bank had challenged various provisions of the Multi-State Cooperative Societies Act including Sections 74 to 76 and 87 read with second proviso to sub-s. (2) of S. 4. Under the interim order in that petition, the provisions of S. 74, inter alia had been stayed. Section 74 is the Section which provides for determination of disputes, including any dispute in connection with any election to a Multi-State Co-operative Society. The Division Bench attached some weight to the argument that in view of the pendency of the writ petition and the grant of interim reliefs in that petition, the petitioners may be precluded from filing a dispute before the forum prescribed under Section 74 of the Multi-State Co-operative Societies Act, 1984. Hence the Division Bench considered the exercise of writ jurisdiction as warranted in the circumstances of the case. The Division Bench granted rule in terms of prayers (a) and (b) but restricted it to the alleged infraction of Section 37.
10. In the special leave petition, which was filed before the Supreme Court from this order, the Supreme Court has upheld the remand of the writ petition made by the Division Bench for disposal on merits. The Supreme Court has, however, modified the directions given by the Division Bench. Apart from the infraction of Section 37, the appellants before the Supreme Court i.e. the respondents herein have been given the liberty to raise a contention as to the maintainability of the writ petition as also the question as to the applicability of Section 91 of the Maharashtra Co-operative Societies Act, 1960 for the decision of the dispute between the parties. The Supreme Court has directed that if such contentions are advanced, the learned single Judge will dispose of the same on merits. In view of the changes made in the High Court Rules on the Original Side, the writ petition has come up for disposal before us instead of before a single Judge.
11. Originally, this writ petition was directed to be heard along with a number of other writ petitions where the constitutional
validity of certain provisions of the Multi-State Co-operative Societies Act are under challenge. The parties, however, have agreed to de-link this writ petition from the other writ petitions pending before this Court. The learned Advocates for the respondents, who have argued before us, have stated at the outset that they are not challenging the constitutional validity of the Multi-State Cooperative Societies Act, 1984 for the purpose of this petition. They do not, therefore, desire to go into the question of legislative competence to enact the Multi-State Co-operative Societies Act. This contention has, therefore, not been argued before us. The learned Advocates for the respondents have also stated before us that they do not wish to press the contention that an alternative remedy under Section 91 of the Maharashtra Cooperative Societies Act, 1960 is available to the petitioners. Hence no arguments have been advanced on this question also. We have, therefore, not examined this submission.
12. The respondents, however, contend that the present writ petition is not maintainable because an alternative remedy is available to the petitioners under Section 40 of the Multi-State Co-operative Societies Act, 1984. In view of this alternative remedy the present writ petition should not be entertained. To appreciate this contention we would like to examine the ambit of the dispute before us.
13. Under Section 37 of the Multi-State Co-operative Societies Act, 1984, it is provided as follows :
"No person shall be eligible to hold the office of a president, or chairman or vice-president or vice-chairman on the board of a multi-State co-operative society, after he has held the office as aforesaid during two consecutive terms, whether full or part :
Provided that a person who has ceased to hold the office of a president or chairman continuously for one full term of three years shall again be eligible for election to the office aforesaid.
Explanation - Where any person holding the office of the president or vice-president or
chairman or vice-chairman at the commencement of this Act is again elected to that office after such commencement, he shall for the purpose of this Section, be deemed to have held office for one term before such election."
The petitioners contend that in view of the explanation to Section 37, respondent No. 8 has already held office as president of the Board of Directors of the 6th respondent Bank for two consecutive terms. Hence he is not eligible for being elected for a further term in April 1989.
14. Section 74 of the Multi-State Cooperative Societies Act provides
"(1) Notwithstanding anything contained in any other law for the time being in force, if any dispute..... touching the constitution, management or business of a multi-State Cooperative Society arises ...... such dispute shall be referred to the Central Registrar for decision and no Court shall have jurisdiction to entertain any suit or other proceedings in respect of such dispute........"
Section 74(2) provides
"For the purpose of Sub-Section (1) the following shall be deemed to be disputes touching the constitution, management or business of a multi-State Co-operative Society, namely :
(a)and(b)...........
(c) any dispute arising in connection with the election of any officer of a multi-State Co-operative Society."
Ordinarily, therefore, any dispute as to whether the nomination of respondent No. 8 was rightly accepted by the returning officer, or whether the election of respondent No. 8 to the office of the president of the board of directors of respondent No. 6 Barik in April 1989 is valid in view of the provisions of S. 37, would have gone before the Central Registrar under S. 74 of the said Act. Section 74, however, has been stayed as set out earlier.
15. The respondents, however, contend that there is another alternative remedy which is available to the petitioners under Section 40
of the Multi-State Co-operative Societies Act, 1984. Section 40 provides
"If in spite of cessation of office under circumstances mentioned in Section 34, Section 36, Section 37 or Section 39 a member of the board refused to vacate his office, the Central Registrar shall, by order in writing, remove him from such office."
Section 34 deals with disqualifications for being a member of a board, such as being adjudged an insolvent or of unsound mind or being convicted for an offence involving moral turpitude. There are also other disqualifications which are set out in that Section. Therefore, if a member has incurred any of these disqualifications, and he refuses to vacate the office, the Central Registrar can remove him. Section 36 deals with holding of office in more than one multi-State Co-operative Society. Section 37 deals with the restrictions on holding of office of a president or chairman or vice-president or vice-chairman for more than two consecutive terms at a time. Section 39 deals with the general body's power to remove an elected member of the board who has acted adversely to the interest of the multi-State Co-operative Society. The Central Registrar under Section 40, therefore, supervises the enforcement of these provisions. When there is a clear violation of these provisions he can remove an office-bearer from the office. Section 40 does not deal with a challenge, to the nomination filed by a member on the ground that the member had held that office for more than two consecutive terms. Nor does Section 40 deal with removal of a president who has been elected when there is a dispute as to whether that person has held office for more than 2 consecutive terms. In fact, Section 40 does not provide any forum or machinery for adjudication of such disputes. Machinery for resolution of disputes is provided in Section 74 and subsequent Sections. Under Section 90(1)(j) an appeal is also provided against a decision or order made under Section 76 in respect of disputes which may have arisen under Section 74. But this ready is not available to the petitioners in view of the stay of Section 74.
16. Section 40, therefore, does not provide a suitable alternative forum for the purpose of adjudication of disputes which are the subject-matter of the present petition. Even the Rules, which are framed under the Multi-State Co-operative Societies Act, called the Multi-State Co-operative Societies (Registration, Membership, Direction and Management, Settlement of Disputes, Appeal and Revision) Rules, 1985, do not provide any machinery for deciding any dispute under Section 40 of the Act. Chapter V under these Rules, deals with settlement of disputes. This chapter only deals with the procedure in proceedings before the Central Registrar under Section 74 and subsequent Sections of the Act. Section 40, therefore, merely empowers the Central Registrar to remove from office a member who has incurred a disqualification as set out in the Sections cited earlier. It is true that under Section 90(1)(f), an appeal is provided against an order made by the Central Registrar under Section 40 removing a member from his office. But looking to the nature of the disputes which are the subject-matter of the present writ petition, in our view, Section 40 does not provide a suitable alternative forum for adjudication of these disputes.
17. In this connection our attention was drawn to similar provisions under the Maharashtra Co-operative Societies Act, 1960. Under Section 73FF(2) of the Maharashtra Co-operative Societies Act, a member who has incurred any disqualification under Sub-Section (1), shall cease to be a member of the committee and his seat shall thereupon be deemed to be vacant. Under Section 78(1) of the Maharashtra Co-operative Societies Act, where any member of the committee stands disqualified by or under this Act for being a member, the Registrar may, after giving the committee or the member, as the case may be, an opportunity of stating its or his objections, if any, within fifteen days from the date of receipt of notice and after consultation with the federal society to which the society is affiliated, by order remove the committee or a member, as the case be, and pass further orders as set out in Section 78. Our High Court has held that Section 73FF(2) has to be read along with Section 78 so that the
machinery for adjudication under Section 78 becomes available under Section 73FF. In the case of Keshaorao Narayanarao Patil v. District Deputy Registrar, Co-operative Societies, Akola, reported in 1987 Maharashtra Law Journal, 709, a Division Bench of this Court held that Section 73FF(2) does not operate automatically. Passing of an order of removal, as required under the provisions of Section 78 in the matter of incurring disqualification under Section 73FF(1), is mandatory. The cessation of membership under Section 73FF(2) is not automatic. (See also in this connection Korbaji Maroti Rao Shinde v. State of Maharashtra reported in 1988 Maharashtra Law Journal 157).
18. The Supreme Court in the case of Pundalik v. District Deputy Registrar, Cooperative Societies, reported in (1991) 2 SCC 423, has also construed Sections 73FF and 78(1) in the same manner. Section 73FF does not operate automatically. An order of removal is necessary under Section 78(1). It has also held that the provisions relating to election have to be interpreted harmoniously with other provisions of the Maharashtra Cooperative Societies Act such as under Section 78(1). On the facts of the case, the Supreme Court held that the notice and the order were not for setting aside the election and hence the procedure under Sections 144E and 144T would not be attracted. The action taken under S. 78(1) read with S. 73FF was valid.
19. The respondents submit that S. 40 of the Multi-State Co-operative Societies Act is analogous to S. 73FF of the Maharashtra Cooperative Societies Act. It, therefore, provides suitable machinery for removal of an office bearer. The provisions of the Multi-State Co-operative Societies Act, however, and the scheme under this Act are quite different from the provisions of the Maharashtra Co-operative Societies Act, 1960. There are no provisions similar to S. 78(1) of the Maharashtra Co-operative Societies Act, 1984. Section 40 of the Multi-State Cooperative Societies Act, therefore, stands by itself. There is no adjudication machinery prescribed under S. 40. Looking to the fact that a separate appeal is provided from the order under S. 40, as against an order under S. 76, we cannot also read the provisions for resolving disputes under S. 74 onwards into. S. 40. The best that we can do, therefore, is to read the principles of natural justice as impliedly included in S. 40. Thus, in our view; the very fact that any detailed procedure for adjudication of any dispute under S. 40 is not provided, indicates that S. 40 is meant for conferring a supervisory jurisdiction on the Central Registrar for enforcement of Ss. 34, 36, 37 and 39. It is not meant for adjudication of disputes between members and/or officers of a Multi-State Co-operative Society, much less a dispute relating to the election of an officer of the society, which is expressly governed by S. 74.
20. Since, in our view, S. 40 does not provide an adequate alternative remedy to the petitioners in the present case, we need not go into the question whether it is mandatory for the petitioners to avail of an alternative remedy under S. 40 or not. The fact that an alternative remedy is available, is generally a ground for not entertaining a writ petition. But it is, ultimately, a matter of policy whether discretion under Art. 226 should be exercised in such a case or not.
21. In the present case, even if we come to the conclusion that an alternative remedy is available under S. 40, in our view, we cannot, at the stage of hearing of this petition now, dismiss the writ petition on the ground that the petitioners have not availed of any alternative remedy. To the first place, the petitioners had filed at the earliest opportunity a writ petition challenging the acceptance of nomination of respondent No. 8 by the returning officer. This was dismissed by a learned single Judge on the ground that an alternative remedy for challenging the election was available to the petitioners. The petitioners, therefore, after respondent No, 8 was elected as president, filed the present petition challenging his election. Once again, the question of alternative remedy was considered by the appellate Court which held that in view of S. 74 being stayed, the writ petition should be admitted. Neither at this stage nor at any earlier stage had the respondents raised
any contention that an alternative remedy under S. 40 was also available. The only contention which was urged thereafter before the Supreme Court was relating to an alternative remedy being available under S. 91 of the Maharashtra Co-operative Societies Act. It is in these circumstances that the present writ petition has been admitted and is now being heard. Although the petitioners had come at the earliest possible opportunity, right from the time when the nomination of respondent No. 8 was accepted, in view of various proceedings which have taken place, respondent No. 8 has enjoyed his impugned term of office as an elected president for a period of more than two years out of three by now. His term would be over in April 1992. At this stage, to ask the petitioners to resort to S. 40 would practically render the petition infructuous.
22. In this context, it is also necessary to bear in mind that in the writ petitions mentioned above, in which the operation, inter alia, of S. 74 has been stayed, the powers of the Central Registrar are also under challenge. So, it is doubtful whether in these circumstances the petitioners would be entitled to seek redressal of their grievance before the Central Registrar. As set out by the Supreme Court in Hirday Narain v. Income-tax Officer reported in AIR 1971 SC 33, when the High Court has entertained a writ petition and given a hearing on merits, the petition Should not thereafter be rejected on the ground that an alternative remedy under the relevant statute was not availed of, particularly in a case like the present one where there is a clear violation of S. 37 as will be set out thereafter.
23. It is also pointed out by the petitioners that the Multi-State Co-operative Societies Act, 1984 is comparatively a new Act and the provisions of S. 37 have not come up for interpretation so far. It is, therefore, desirable that these provisions be interpreted. Looking to all these circumstances, in our view, this is not a fit case where the petition should be rejected on the ground that the petitioners have not availed of a statutory remedy under S. 40 of the Multi-State Co-operative Societies Act.
24. It was also urged that this writ petition is not maintainable against respondent No. 6 Bank and against respondent No. 7 returning officer because respondent No. 6 cannot be considered as a State within the meaning of that term under Art. 12 of the Constitution. In support of this submission Mr. Sathe, learned Counsel appearing for respondent No. 6, drew our attention to Full Bench judgments of (1) Kerala High Court in the case of P. Bhaskaran v. Additional Secretary, Agricultural (Co-operation) Department, Trivandrum, reported in AIR 1988 Ker 75 and (2) Andhra Pradesh High Court in the case of Sri Konaseema Cooperative Central Bank Ltd. v. N. Seetharama Raju, reported in AIR 1990 AP 171 : (1990 Lab IC NOC 63) as also to the judgment of the Full Bench of the Orissa High Court in the case of Banabihari Tripathy v. Registrar, Co-operative Societies, reported in AIR 1989 Ori 31, which have held that a co-operative society does not fall within the definition of a 'State' under Art. 12. He also drew our attention to a contrary judgment of a single Judge of this Court in the case of Padubidri Pattabhiram Bhat v. The Shamrao Vithal Cooperative Bank Limited reported in 1989 Maharashtra Law Journal 566, from which, we are told, an appeal has been admitted.
25. We need not go into the question as to whether respondent No. 6 Bank is a 'State' within the meaning of Art. 12. In the present case, what is sought to be enforced is the statutory duty imposed upon respondent No. 6 Bank and its returning officer respondent No. 7 by virtue of the provisions of S. 37. It is true that the returning officer is also a private individual, because in the Rules Regarding Electing Members of the Board of Directors, framed by respondent No. 6, a returning officer is required to be appointed by the Board of Directors. Nevertheless, the Act casts certain statutory duties and obligations on a returning officer as well as on respondent No. 6. For the enforcement of these statutory duties and obligations, a writ would lie. As observed by the Supreme Court in the case of Praga Tools Corpn. v. C. V.Imanual,
reported in AIR 1969 SC 1306
"............It is, however, not necessary that the person or the authority on whom the statutory duty is imposed need be a public official or an official body. A mandamus can be issued, for instance, to an official of a society to compel him to carry out the terms of the statute under or by which the society is constituted or governed and also to companies or corporations to carry out duties placed on them by the statutes authorising their undertakings................." (p. 1309).
A writ is, therefore, maintainable.
26. The question which is before us relates to the interpretation of S. 37. This Section has been set out earlier. Under this Section, no person shall be eligible to hold office inter alia of a president of the board of a multi-State Co-operative Society after he has held this office during two consecutive terms, whether full or part. The explanation to S. 37 provides that where a person was holding office. inter alia of the president at the commencement of this Act and he is again elected to that office after such commencement, he shall, for the purpose of this Section, be deemed to have held office for one term before such election. A plain reading of S. 37 along with the explanation would show that in a case like the present one, where a person was already holding the office of the president at the commencement of the Act in September 1985, and is subsequently elected as the president again, his earlier term before the election will also count as a term for the purpose of S. 37. In other words, if a person is president at the commencement of the Act and he is thereafter elected at any subsequent date as a president again, he cannot, on the expiry of his elected term, again stand for the office of the president for one full term of three years. In the present case on 16th September 1985, when the Act came into force, the 8th respondent was holding office of the president of the 6th respondent Bank by virtue of his nomination to that post on 30th June 1981. Thereafter, election was held on 6th April 1986 when he was elected as the president of the 6th respondent Bank. The elected term came to an end in April 1989. In view of the explanation to S. 37, therefore, respondent No. 8 has held two consecutive terms as a president of the board of respondent No. 6 Bank. Under the proviso to S. 37, therefore, he can become eligible again only after he has ceased to hold the office of the president continuously for one full term of three years and not till then. His election, therefore, as the president on the board of directors of respondent No. 6 in April 1989 is in violation of S. 37.
27. It was urged by Dr. Naik, who appears for respondent No. 8, that explanation to S. 37 does not cover a case where the office held at the commencement of the Act was not by virtue of any election but by; nomination. In other words, he contends that unless the office which was held at the commencement of the Act was by virtue of an election, the explanation to S. 37 will not apply. He drew our attention to the words "is again elected to that office after such commencement" and submitted that the words "again elected" go to show that the earlier holding of office must also be as a result of an election. In this connection he has also drawn our attention to the proviso to S. 37 where the phrase "shall again be eligible" is used. In our view, this contention has no merit.
28. The first part of the explanation deals with "any person holding the office of the president or vice-president or chairman or vice-chairman at the commencement of this Act." This phrase makes no reference to the manner of holding office at the commencement of this Act. It can be either by nomination or by election. It is the second part of the I explanation which deals with election. The second part lays down that if such a person, who was holding the office of the president at the commencement of the Act, gets elected again to the same office, after such commencement, he shall be deemed to have held office for one term before such election. The word "again" is to be read in conjunction with the holding of office. It would be wrong to interpret the explanation as laying down that the first term should also be an elected term. The explanation is merely to further the purpose of the main part of S. 37 which
prevents a consecutive holding of office for more than two terms. A question may, however, arise about a person who was holding office at the commencement of the Act. The explanation deals with this transitory situation where a person was holding the office of the president or vice-president or chairman or vice-chairman at the commencement of the Act. In such a case the disqualification, in order to apply, will take into account his earlier term also which he held at the commencement of the Act. If we accept the interpretation put by Dr. Naik, the earlier nominated term cannot be taken into account at all, even though a person may have held the post in question for a number of years as a nominated president or vice-president, as the case may be. Such an interpretation is not warranted. It would defeat the purpose of Section 37.
29. In this connection a reference may be made to the Statement of Objects and Reasons underlying the enactment. Of course, the Statement of Objects and Reasons cannot be brought in aid for interpreting Section 37. Nevertheless, it does indicate the background and the circumstances in which this legislation was brought into effect. The Notes on Clauses 36 and 37 state that no person shall hold office of Chairman or President, Vice-Chairman or Vice-President in more than one multi-State Co-operative society and shall not be eligible to hold such office for more than two consecutive terms. The respondents have drawn our attention to a notification dated 7th June, 1989 issued by the Ministry of Agriculture, New Delhi, bearing No. S.O. 411(E). This notification deals with Section 37 and in particular, to the explanation to Section 37. The notification inter alia sets out that national co-operative societies and the chairman of some of such societies have represented to the Central Government that the provisions of the Explanation to Section 37 of the Act deprive some of such societies of the continuance of the holder of such offices for full two terms of a total permissible period of six years, which prejudicially affects the overall performance of such societies, particularly in view of the fact that the membership and operation of such societies is spread over to all the States. By this notification the Central Government has, therefore, provided that in the case of national co-operative societies, where any person holding office of the president or vice-president or chairman or vice-chairman in a national co-operative society is again elected to that office after such commencement, he shall be deemed to have held office for one term before such election only if he has held such office for more than one half of the full term before such election, provided the total continuous period for holding such office including the period for which the person has held such office before the commencement of the Act, shall not exceed the total continuous period of six years. While this notification is not directly relevant for us, it clearly brings out the underlying intention that a total term of office including the term of office held at the commencement of the Act, should not exceed a continuous period of six years. Had there been any intention to exclude, from this period of six years, the period during which the office was held by nomination, the same should have been expressly provided. In fact, such an exclusion would be clearly contrary to the intention that the continuous holding of office should not exceed six years. The whole objection of this Section is to restrict the tenure of the person holding the office in a co-operative society. Interpreting the explanation as excluding a nominated term would defeat the very object of the Section and the explanation.
30. It was urged before us that Section 37 is a penal provision and, therefore, it must be strictly construed. Hence the Explanation must be confined only to cases where the term held at the commencement of the Act was an elected term. This submission, in our view, is misconceived. Section 37 cannot be construed as a penal provision at all. It is, in effect, a remedial measure which seeks to prevent the same person from holding a position of power in a co-operative society for a very long period of time. As set out at page 448 of G. P. Singh's Principles of Statutory Interpretation, Fourth Edition 1988
"Every modern legislation is actuated with
some policy and speaking broadly has some beneficial object behind it. Penal statutes, on the other hand, are those which provide for penalties for disobedience of the law and are directed against the offender. . .. ."
In case of remedial statutes the doubt is resolved in favour of the class of persons for whose benefit the statute is enacted; whereas in case of penal statutes the doubt is resolved in favour of the alleged offender. Section 37 is not penal in character. The interpretation of Section 37, therefore, must be in a manner which advance the intention underlying Section 37 rather than in a manner which thwarts that intention. Moreover, in our view, there is no ambiguity in Section 37 at all. This Section clearly provides that the term held at the commencement of the Act will also count for the purpose of restrictions imposed by Section 37 for holding the office in question.
31. Dr. Naik has next drawn our attention to the Bye-laws of respondent No. 6. Under the Bye-laws of respondent No. 6 society, Bye-law No. 2 provides that at the Annual General Meeting a president is to be elected for the next term by the general body. Under Bye-law No. 22(1) the president shall be a member of the Board of Directors. The duties of the president shall be to preside at the annual general and, the special general meetings of the members of the Bank summoned through the Managing Director and to supervise the administration of the Bank. Bye-law 30 deals with the Board of Directors. Under Bye-law 30(3) the president of the Bank elected under Bye-law 22(1) shall preside over all the meetings of the Board.
32. It is submitted by Dr. Naik that under Section 37, what is prohibited is holding the office of the president of the board of directors of a multi-State co-operative society. He submits that in the present case, in view of the bye-laws, the president performs dual functions. He is the president of the society, elected as such, and he is also the president of the Board of Directors. So, even if it is held that respondent No. 8 cannot hold office of the president of the Board of Directors, he can still continue to hold office as the president of the 6th respondent Bank. This submission, in our view, must also be rejected. There is only one office to which respondent No. 8 is elected, and that office is of the president. As such president, he presides over the board of directors. There is, therefore, no distinction made under the bye-laws between the president of the Bank and the President of the Board of Directors of the Bank. His duties and functions cannot be bifurcated in the manner contended by Dr. Naik. The duties and obligations prescribed under the bye-laws are to be exercised by virtue of respondent No. 8 having been elected as the president at the annual general body meeting. Hence provisions of Section 37 apply to the election of respondent No. 8 as the president of the 6th respondent-Bank and its Board of Directors. The office of the president of the respondent No. 6 Bank is not separate or distinct from office of the president of the Board of Directors of respondent No. 6 Bank. Hence this argument must also be rejected.
33. In the premises, rule is made absolute in terms of prayer (a). The order passed by respondent No. 7 dated 4th April, 1989, Exhibit F to the petition, to the extent that it declares respondent No. 8 as validly nominated for election to the post of the president of respondent No. 6 as well as election of respondent No. 8 to the post of the president of respondent No. 6 Bank pursuant to the election held on 23rd April 1989, is set aside. Rule is made absolute accordingly with costs.
34. Dr. Naik, who appears for respondent No. 8, applies for leave to appeal to the Supreme Court. In our view, no important question of law of public importance arises. Hence the application is rejected.
35. On the application of Dr. Naik, operation of this order is stayed for a period of eight weeks from today. He agrees to give 48 hours' notice to the petitioners of any application that may be moved before the Supreme Court.
Order Accordingly