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Andhra Pradesh High Court
Judges : A.LAKSHMANA RAO, P.A.CHOUDHARY
P.Veeraswamy - Appellant
Versus
Collector (Co-operation), Krishna Chilakalpudi - Respondent
Decided On : 07-18-84
CO-OPERATIVE SOCIETIES ACT - SECTION 32(7) AND 34(1) - INTERPRETATION - DISTINCTION BETWEEN NON-FUNCTIONING COMMITTEE AND NO COMMITTEE - APPOINTMENT OF PERSON-IN-CHARGE - VALIDITY.
Fact of the Case:
The Managing Committee of a Co-operative Society was divided into two warring factions. Seven directors of the minority group resigned, along with two directors from the majority group, creating a stalemate in the administration of the society. The Registrar of Co-operative Societies appointed a person-in-charge under Section 32(7) of the Co-operative Societies Act, 1964, on the ground that there was no committee.
Finding of the Court:
The court held that the Registrar erred in invoking his powers under Section 32(7) of the Act. It held that Section 32(7) applies only when there is no committee at all, while Section 34(1) applies when there is a non-functioning committee. The court found that in this case, there was a committee, but it was not functioning properly. Therefore, the Registrar should have acted under Section 34(1) instead of Section 32(7).
Issues: 1. Whether the Registrar had the authority to appoint a person-in-charge under Section 32(7) of the Act when there was a committee, but it was not functioning properly. 2. Whether the Registrar should have acted under Section 34(1) of the Act instead of Section 32(7).
Ratio Decidendi: The court held that the Registrar erred in invoking his powers under Section 32(7) of the Act because: 1. Section 32(7) applies only when there is no committee at all, while Section 34(1) applies when there is a non-functioning committee. 2. In this case, there was a committee, but it was not functioning properly. 3. Therefore, the Registrar should have acted under Section 34(1) instead of Section 32(7).
Final Decision: The court set aside the impugned order and allowed the Writ Petition.
( 1 ) THE Nuzvid Agricultural Development Bank, Nuzvid is a Co-operative Society. Its managing committee consisting of 11 members in all was elected by the General Body on 6-11-1981. The elections to those bodies are rarely held on principles of co-operation. The 11 members of the Managing Committee were divided into two warring factions. The division was of course based on no principle. Both the majority and the minority were equally anxious to manage the funds and the affairs of the society. As a part of this internal strife raging among the Directors defections were organised. The minority succeeded. Seven directors of the minority group were joined by the defecting two of the majority group and had together resigned their membership as Directors of the Managing Committee. This was on 21st September, 1983. The idea was to create a stalemate in the administration of the affairs of the Society. The idea had succeeded. These resignations had admittedly crippled the functioning of the Managing Committee. The quorum for the meetings of the Managing Committee was fixed by the rules as six. After seven members out of 11 of the total strength of the committee had resigned, there were only four members left in the managing committee, that number was short by two members for providing the required quorum. In those circumstances the managing committee could not transact any business. It could not even accept the resignations. There was complete stalemate in the running of the society. Now it was from this situation the Registrar of the Co-operative Societies had concluded that there was no managing committee at all within the meaning of Sec. 32 of the Co-operative Societies Act. Where there was no committee, the Registrar under Section 32 of the Act can appoint a person in charge.
( 2 ) THE Registrar equated the Managing Committee of the society which was not functioning with a managing committee that does not exist at all. Where there is no committee at all the matter has to be dealt with under Sec. 32 of the Act while a committee that is in existence but is not functioning should be dealt with under Sec. 34 of the Act. The Registrar acting under Sec. 32 (7) of the Act appointed a Divisional Co-operative Officer on 29-9-1983 as the person-in-charge of Nuzvid Agricultural Development Bank, Nuzvid, Krishna District. A person-in-charge if appointed validly will have the power of management. It is the validity of this order of the Registrar that is questioned in this Writ Petition by two of the Directors of the aforesaid Agricultural Development Bank.
( 3 ) WE think we need not refer to the arguments of counsel because we are of the opinion that this Writ Petition has to be allowed for reasons other than those raised and urged by the petitioners. We are of the clear opinion that the Registrar had erred in invoking his powers under Sec. 32 (7) of the Act. We are of the opinion that Sec. 32 (7) has no application to the present situation and that it is Sec. 34 of the Act that should govern the matter.
( 4 ) THE order passed by the Registrar appointing the person-in-charge reads thus :-"whereas, the Secretary, Nuzvid Co-operative Agricultural Development Bank Ltd. , Nuzvid reportedthat the following seven Directors out of 11 tendered their resignations on 21-9-1983 and it is not possible to convene Board Meeting with the remaining 4 Directors. 1. Sri Cherukuri Kutumbarao. 2. Sri Guduru Sambasiva Rao. 3. Sri Tummalapalli Laxminarayana. 4. Sri Pinniboina Mallikarjunarao. 5. Sri Devineni Umamaheshwararao. 6. Sri Palaballa Venkiah. 7. Sri Banavathu Chinabichchalu. And whereas in the letter read second above, the Deputy Registrar for Agricultural Development Banks, Vijayawada has reported that he also received the resignation letters on 24-9-83 from the same 7 Directors of the Nuzvid Agricultural Development Bank and that he had satisfied himself about the genuineness of the resignations. And whereas it is concluded that there
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