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2012(2) AllMR 910
Bombay High Court
A. P. LAVANDE, R. P. SONDURBALDOTA
Ivo Almeida Coutinho & Ors.
Vs
P. M. Naik & Ors.
Decided On : 22/12/2011
Petitioners contended that respondent-1, illegally rejected motion of no confidence for want of quorum on 7.7.2011 - As quorum in terms of Bye-Law 35 of Bank is not required for a meeting called under Section 59-A of Act - Held - For a meeting held under Section 59-A of Act, quorum interms of Bye- Law 35 cannot be insisted upon as Section 59-A prevails over Bye- Law 35 of Bank - Respondent-1, not justified in rejecting motion of no confidence for want of quorum - View taken by respondent-1 as expressed in minutes dated 7.7.2011 patently unsustainable in law - Respondents 1, 4 and 2 directed to convene a fresh special meeting after complying with necessary procedure - Petition allowed.
It is also well settled that if a rule or a bye-law is in conflict with the Act, the rule or the bye-law has to yield to the statutory provisions and the statutory provisions shall prevail over any rule or bye-law which is inconsistent with the provisions of the Act. In the present case, therefore, for a meeting held under Section 59-A, quorum in terms of Bye-law 35 cannot be insisted upon. In terms of Bye-law 35 the quorum would be six, since there was admittedly no Director representing the depositors. Thus, there is apparent conflict between Section 59- A(1) and Bye-law 35. In view of the settled law, therefore, Section 59-A prevails over Bye-law 35 of the Bank and as such quorum in terms of Bye-law 35 is not required.
There is no apparent conflict between the judgments in the cases of Jayprakash Salunkeand Pramod Raikarand, therefore, Court does not deem it necessary to refer the issue to a Larger Bench.
It is also well settled that the provisions of the statute has to be interpreted keeping in view the intention of the Legislature. In the present case, Section 59 of the Act provides that the motion of no confidence has to be passed by a simple majority of the total number of members of the Board of Director who are for the time being entitled to attend and vote at such meeting of the Board of Directors. Court has already held that since there were 9 elected Directors and only they were entitled to vote at such meeting convened to consider the motion of no confidence, only a simple majority would be required and not 6 as held by respondent No. 1. Though in terms of Bye-law 35 quorum for the meeting was 6, Section 59-A(l) must prevail over bye-law 35, since bye-law 35 is inconsistent with the said provision. Court finds considerable merit in the submission of Mr. Pangam that in case the interpretation sought to be put on behalf of the respondents is accepted, the same would render Section 59-A ineffective and inoperative. Therefore, respondent No. 1 was not justified in rejecting motion of no confidence for want of quorum.
Having already held that Section 59-A(1) would prevail over bye- law No. 35, Court does not deem it necessary to deal threadbare with the other judgments relied upon by Mr. Nadkarni which are in relation to the meetings and quorum. In none of these judgments, it has been held that in case of conflict between the Act and the bye-laws, the bye-laws have to be followed. The view taken by respondent No. 1, as expressed in the Minutes dated 7.7.2011, is patently unsustainable in law.
GOA COOP. SOCIETIES ACT, 2001 - Section 59-A - No Confidence Motion. Board of Directors, in special meeting held under Section 59- A of Act, can pass "no confidence motion" against elected officers of society by a simple majority of total number of Board of Directors entitled to attend and vote.
In the present case, for motion of no confidence only 9 Directors are entitled to vote and as such, 5 number of Directors constitutes simple majority. The expression "number of members of the board of directors/committee who are for the time being entitled to attend and vote" must be construed as members who are entitled to attend for the purpose of voting at a meeting convened for consideration of no confidence motion against the Chairman or Vice-Chairman, etc. The words "entitled to attend and vote" must be construed conjointly and, therefore, for the purpose of Section 59-A, 5 members would constitute simple majority. If it is held that quorum for such a meeting is 6 as had been held by respondent No. 1, the motion of no confidence moved by the petitioners who are 5 in number and in majority, would be defeated and would permit respondent Nos. 3 and 4 who are in minority to continue to be Chairman and the Vice-Chairman of the Bank, although they do not have support of the majority.
It is also well settled that if a rule or a bye-law is in conflict with the Act, the rule the bye-law has to yield to the statutory provisions and the statutory provisions shall prevail over any rule or bye-law which is inconsistent with the provisions of the Act. In the present case, therefore, for a meeting held under Section 59-A, quorum in terms of Bye-law 35 cannot be insisted upon. In terms of Bye-law 35 the quorum would be six, since there was admittedly no Director representing the depositors.
Thus, there is apparent conflict between Section 59-A(1) and Bye- law 35. In view of the settled law, therefore, Section 59-A prevails over Bye-law 35 of the Bank and as such, quorum in terms of Bye-law 35 is not required. Since there were 9 elected Directors and only they were entitled to vote at such meeting convened to consider the motion of no confidence, only a simple majority would be required and not 6 as held by respondent No. 1. Though in terms of Bye-law 35 quorum for the meeting was 6, Section 59-A(1) must prevail over Bye-law 35, since Bye-law 35 is inconsistent with the said provision. The view taken by ’respondent No. 1, as expressed in the minutes dated 7.7.2011, is patently unsustainable in law.
The respondent Nos. 1 and 2 are directed to convene a fresh special meeting after complying with the necessary procedure, to consider, the motion of no confidence. 2001 (3) Mh LJ 787, Rel.
CONSTITUTION OF INDIA - Article 226 - Goa Co-operative Societies Act, 2001, Section 59-A(2) - Writ petition - Petitioners, Directors of Bank, a co-operative society - Challenging minutes of meeting dated 7.7.2011 and seeking direction against respondents 1 and 2 to convene a fresh special meeting of Board of Directors of Bank under Section 59-A of Act for consideration of no confidence motion against respondents 3 and 4, Chairman and Vice-Chairman of Bank. - Petitioners contended that respondent-1, illegally rejected motion of no confidence for want of quorum on 7.7.2011 - As quorum in terms of Bye-Law 35 of Bank is not required for a meeting called under Section 59-A of Act - Held - For a meeting held under Section 59-A of Act, quorum in terms of Bye-Law 35 cannot be insisted upon as Section 59-A prevails over Bye-Law 35 of Bank - Respondent-1, not justified in rejecting motion of no confidence for want of quorum - View taken by respondent-1 as expressed in minutes dated 7.7.2011 patently unsustainable in law - Respondents 1, 4 and 2 directed to convene a fresh special meeting after complying with necessary procedure - Petition allowed. - It is also well settled that if a rule or a bye-law is in conflict with the Act, the rule or the bye-law has to yield to the statutory provisions and the statutory provisions shall prevail over any rule or bye-law which is inconsistent with the provisions of the Act. In the present case, therefore, for a meeting held under Section 59-A, quorum in terms of Bye-law 35 cannot be insisted upon. In terms of Bye-law 35 the quorum would be six, since there was admittedly no Director representing the depositors. Thus, there is apparent conflict between Section 59-A(1) and Bye-law 35. In view of the settled law, therefore, Section 59-A prevails over Bye-law 35 of the Bank and as such quorum in terms of Bye-law 35 is not required.
There is no apparent conflict between the judgments in the cases of Jayprakash Salunke and Pramod Raikar and, therefore, Court does not deem it necessary to refer the issue to a Larger Bench.
It is also well settled that the provisions of the statute has to be interpreted keeping in view the intention of the Legislature. In the present case, Section 59 of the Act provides that the motion of no confidence has to be passed by a simple majority of the total number of members of the Board of Director who are for the time being entitled to attend and vote at such meeting of the Board of Directors. Court has already held that since there were 9 elected Directors and only they were entitled to vote at such meeting convened to consider the motion of no confidence, only a simple majority would be required and not 6 as held by respondent No. 1. Though in terms of Bye-law 35 quorum for the meeting was 6, Section 59-A(l) must prevail over bye-law 35, since bye-law 35 is inconsistent with the said provision. Court finds considerable merit in the submission of Mr. Pangam that in case the interpretation sought to be put on behalf of the respondents is accepted, the same would render Section 59-A ineffective and inoperative. Therefore, respondent No. 1 was not justified in rejecting motion of no confidence for want of quorum.
Having already held that Section 59-A(1) would prevail over bye- law No. 35, Court does not deem it necessary to deal threadbare with the other judgments relied upon by Mr. Nadkarni which are in relation to the meetings and quorum. In none of these judgments, it has been held that in case of conflict between the Act and the bye-laws, the bye-laws have to be followed. The view taken by respondent No. 1, as expressed in the Minutes dated 7.7.2011, is patently unsustainable in law.
A. P. Lavande
1.Heard Mr. D. Pangam, learned Advocate for the petitioners, Mr. S. S. Kantak, learned Advocate General for the respondent nos. 1 and 2, Mr. D. Lawande, learned Advocate for respondent nos. 3 to 7 and Mr. A. N. S. Nadkarni, learned Senior Advocate for respondent no.8.
2. Rule. By consent of the learned Counsel for the parties, heard forthwith.
3. Briefly, the case of the petitioners is as follows:- Respondent no. 8 Bank is a Co-operative Society registered under the Goa Co-operative Societies Act, 2001 ( “the Act” for short). Initially the society was registered under the Maharashtra Co-operative Societies Act, 1960 as applicable to the State of Goa and after coming into force of the Act, respondent no. 8 continues to be a Co-operative Society registered under the Act.
4. In terms of byelaw 29 as amended vide Memo dated 7/2/2008, the affairs of the bank are managed by the Board of Directors constituting nine duly elected directors from amongst the members and one director shall be representative of the Apex Finance Bank, if any. Bye-law further provides that the elected directors can co-opt two additional directors from the category of Chartered Accountant and Ex- Banker. However, they will not have voting rights. The Chief Executive Officer is an Ex-officio member of the Board of Directors who is not entitled to vote in any of the meetings of the Board of Directors of the bank.
5. Petitioners and respondent nos. 3, 4, 5 and 6 were elected as directors of the bank in the election held on 28/1/2007. Respondent no. 7 has been co-opted as a member of the Board of Directors.
6. On 21/9/2010, the respondent nos. 3 and 4 were elected as Chairman and Vice-Chairman respectively of the bank. According to the petitioners, respondent nos. 3 and 4 resorted to several illegalities and irregularities which were against the interest of the bank. As such, the petitioners issued requisition notice dated 22/6/2011 under Section 59A(2) of the Act to the respondent no. 2 requesting to convene a special meeting of the Board of Directors of the bank for consideration of no confidence motion against respondent nos. 3 and 4. Pursuant to the said requisition notice respondent no. 2 issued notice dated 24/6/2011 fixing the special meeting of the Board of Directors of the bank on 7/7/2011 at 11.00 a.m in the head office of the bank at Aquem, Margao, Goa to consider the no confidence motion against respondent nos. 3 and 4. Respondent no. 2 authorised respondent no. 1 to preside over the meeting as required under Section 59A of the Act.
7. On 7/7/2011, the petitioners remained present at the venue of the meeting convened by respondent no. 2. Respondent no.1 who was authorised to preside over the said meeting was also present. Respondent no.1 held that since only five directors were present there was no quorum and as such the motion of no confidence against the respondent nos.3 and 4 stood rejected. Petitioners have placed on record minutes of the meeting dated 7/7/2011 (Exh. D). It is further case of the petitioners that they informed respondent no.1 that in the special meeting convened under Section 59A of the Act only elected members were entitled to participate and vote and what is contemplated is only passing of the no confidence motion by simple majority amongst the directors who are entitled to vote, in any such meeting. Since only 9 directors were entitled to vote five members constituted a simple majority as contemplated under Section 59A. However, respondent no.1 did not allow the petitioners to table no confidence motion on the ground that there was no quorum. The respondent no.1 has recorded in the minutes of the meeting that since there was no quorum no confidence motion stood rejected.
8. Petitioners have challenged the minutes of the meeting dated 7/7/2011 and have sought direction against respondent nos.1 and 2 to convene a fresh special meeting in terms of Section 59A of the Act of the Board of Directors of the Bank.
9. On be
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