Karnataka High Court
B.B.BANNAD - Appellant
Versus
BETGERI URBAN CO-OPERATIVE BANK, LTD. - Respondent
Decided On : 09-21-72
W.P. : 4071 of 1968
Expulsion - Cooperative Society - Bombay Co-operative Societies Act, 1925, Mysore Co-operative Societies Act, 1959 - S. 131 - Bye-law 10 (iv) - The court held that Bye-law 10 (iv) providing for expulsion of a member of a Society incorporated under the Bombay Act is ultra vires of the said Act. The expulsion made on the basis of an invalid Bye-law is illegal. The Bye-law is also inconsistent with the provisions of the Mysore Act and the Rules made thereunder. The expulsion of the petitioner is declared illegal and quashed.
Fact of the Case:
The petitioner, a member of the respondent Bank, was expelled based on Bye-law 10 (iv) of the Bank. The petitioner challenged the expulsion under the Mysore Co-operative Societies Act, 1959.
Finding of the Court:
The court found that Bye-law 10 (iv) providing for expulsion of a member under the Bombay Act is ultra vires and illegal. The expulsion of the petitioner was declared illegal and quashed.
Issues: The main issue was whether Bye-law 10 (iv) providing for expulsion of a member of a Society incorporated under the Bombay Act is valid.
Ratio Decidendi: The power of expulsion of a member cannot be implied and must be expressly provided by law. The court held that Bye-law 10 (iv) is ultra vires of the Bombay Act and inconsistent with the provisions of the Mysore Act.
Final Decision: The court allowed the writ petition, quashed the order of the Appellate Tribunal, and issued a direction to respondents 1 and 2 to forbear from giving effect to the Resolution dt. 30th May 1965 removing the petitioner from the membership of the respondent Bank.
( 1 ) THE Betgeri Urban Co-operative Bank Ltd.-Respondent-1, is a cooperative society registered under the Bombay Co-operative Societies Act, 1925 (hereinafter referred to as the Bombay Act ). The petitioner is a member of the 1st respondent Bank since about 1953. Bye-law 10 (iv) of the 1st respondent Bank provided that ' a member may be expelled from the Bank by the votes of not less than 213rd of the members assembled at a general meeting if he intentionally does any act likely to injure the credit of the Bank. Purporting to act in exercise of the power conferred by the said Bye law, the General Body of the 1st respondent Bank by Resolution dt. 30th May 1965 expelled th petitioner from the membership of the 1st respondent.
( 2 ) THE Bombay Act was repealed by the Mysore Co-operative Societies act, 1959 (hereinafter referred to as the Mysore Act) which came into force with effect from first June, 1960. The first proviso to S. 131 of the Mysore act provided that ' any co-operative society existing on the date of commencement of the said Act which has been registered or deemed to be registered under any of the repealed enactments shall be deemed to be registered under the said Act and the Bye-laws of such Society shall so far as they are not inconsistent with the provisions of the said Act or the Rules made thereunder, continue in force until altered or rescinded in accordance with the provisons of the Act and the Rules made thereunder'. The Bye-laws of the 1st respondent Bank continued in force by virtue of the first proviso to Section 131 of the Mysore Act. The petitioner raised a dispute under S. 70 of the Mysore Act contending that hia expulsion from membership was illegal. That dispute was referred by the Deputy Registrar to an Arbitrator who dismissed the dispute.
( 3 ) THE Award of the Arbitrator was affirmed by the Mysore Co-operative appellate Tribunal, Bangaore in Appeal No. 141 of 1967. Aggrieved by the said decision, the petitioner has approached this Court for relief under articles 226 and 227 of the Constitution.
( 4 ) THE main ground urged by Sri S. C. Javali for the petitioner was that bye-law 10 (iv) of the 1st respondent Bank is ultra vires of the Bombay act and it it also inconsistent with the provisions of the Mysore Act and the Rules made hereunder, and therefore the petitioner's expulsion by the resolution dt. 30th May 1965 was Illegal. The question presented for decision, therefore, is whether Bye-law 10 (iv) providing for expulsion cf a member of a Society incorporated under the Bombay Act is ultra vires of the said Act.
( 5 ) THE power of expulsion of a member is a serious matter and such a power cannot be implied. Unless express provision if made by law confering the power of expulsion. no member of a society can be expelled from its membership: nor can a Bye-law be made providing for such expulsion where the law governing the Society does not provide for it. There is no express provision in the Bombay Act or in the Mysore Act providing for expulsion of a member of a Society governed by the said Acts. S. 71 of the bombay Act which conferred the power on the Government to make Rules has provided by Clause (g) that ' the rules may provide for the appointment, suspension and removal of the members of the Committee'. The Committee referred to is the Committee of management. Clause (c) provided that 'the Rules may prescribe the matters in respect of which a Society may or shall make Bye-laws. That is a general power for making Bye-laws. Sub-rule (2) of Rule 4 of the Bombay co-operative Societies Rules, 1927 provided that ' every society may make Bye-laws in respect of any other matters incidental to the management of its business'. Sri B. G. Sridharan, for the 1st respondent Bank relied on the said Rule read with clause (c) of S. 71 of the Bombay Act and contended that the Bye-law impugned is within the power conferred by sub-rule (2) of Rule 4. We are unable to accept the said contention.
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