1. Challenge to election notice of Multi-State Cooperative Bank due to alleged cessation of membership on amalgamation of Andhra Bank with Union Bank of India. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 )
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2022 Supreme(Telangana) 741
IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
T. VINOD KUMAR, J.
G. Bakkaiah S/o G. Ramachandram – Petitioner
Versus
State of Telangana – Respondent
I.A. Nos. 2, 3 of 2021, W.P. No. 22515 of 2020
Decided On : 30-12-2022
Advocates:
Advocate Appeared:
For the Petitioner: Vedula Srinivas.
For the Respondents: R.N. Hemendranath Reddy, Keethi Kiran Kota, M. Pratheek Reddy.
Advocate Appeared:
For the Petitioner: Vedula Srinivas.
For the Respondents: R.N. Hemendranath Reddy, Keethi Kiran Kota, M. Pratheek Reddy.
Headnote:
Multi-State Cooperative Societies Act, 2002 - Section 5 - Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 - Election Notice to conduct elections - Board of Directors – Held, Since petitioner also claims to be an employee of erstwhile Andhra Bank, which got amalgamated with Union Bank of India under Scheme of 2020, even petitioner loses his membership in 5th respondent and cannot maintain present Writ Petition, if his contention is accepted - Petitioner on one hand while exercising his right as a member by seeking issuance of nomination form to participate in elections, cannot on other hand claim that 5th respondent has no members and affairs need to be managed by appointing a person-in-charge - Claim of petitioner in present Writ Petition seeking for issuance of a Writ of Mandamus restraining 4th respondent from proceeding further in terms of Election Notice by holding that 5th respondent does not have members to hold its elections for electing its Board of Directors is without any substance and is devoid of merits apart from lacking bona fides and same is liable to be rejected - Writ Petition is dismissed
Legal Category Hierarchy
- administrative law
- banking law
- statutory interpretation
- practice and procedure
Table of Contents
2. Petitioner: membership ceased due to Bank amalgamation. Respondents: Society independent; membership not automatically terminated; Scheme preserves employment continuity. (Para 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 )
3. Amalgamation does not automatically cease membership; bye-law cessation clauses tied to individual acts; literal interpretation leads to absurdity. (Para 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44 , 45 , 46 , 47 , 48 , 49 , 50 , 51 , 52 , 53 , 54 , 55 , 56 , 57 , 58 , 59 , 60 )
4. Purposive interpretation preferred over literal one to avoid absurdity; employee continued in transferee, no cessation. (Para 42 , 43 , 44 , 45 , 46 , 47 , 48 , 49 , 60 )
5. Dismissed with costs; elections valid; management to continue until newly elected body assumes office. (Para 61 , 62 , 63 , 64 , 65 , 66 )
6. Does amalgamation of a transferor bank under a scheme result in automatic cessation of membership in a cooperative society tied to employment with that bank?
No. Cessation clauses in bye-laws are triggered by individual acts, not statutory amalgamation; employing entity continues through successor, avoiding automatic cessation. (Para 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44 , 45 , 46 , 47 , 48 , 49 , 50 , 60 )
7. When should a court prefer purposive interpretation over literal interpretation?
When literal interpretation leads to absurdity or anomaly, purposive interpretation is used to effectuate legislative intent and avoid unjust results. (Para 43 , 44 , 45 , 46 , 47 )
8. Can a writ of mandamus be granted to stop elections citing lack of membership after amalgamation?
No, because membership did not automatically cease; the existing board continued under the statute; petitioner's dual conduct also prevented relief. (Para 61 , 62 , 63 )
9. Does the phrase 'ceased to be in service of' in a cooperative society by-law apply when employees are transferred to another bank under amalgamation?
No, 'ceased' implies willing termination, not operational transfer; employees continue in service with the transferee bank without break. (Para 37 , 49 , 60 )
ORDER :
1. The present Writ Petition is filed for issuance of a Writ of Mandamus to declare the action of 4th respondent in proceeding to conduct elections to the Board of Directors of the 5th respondent Bank under the provisions of Multi-State Cooperative Societies Act, 2002 (for short ‘the Act’) by issuing Election Notice dated 25-11-2020 containing the detailed election schedule, as being illegal, arbitrary and unconstitutional, and to set aside the said Election Notice and to direct the 2nd respondent to appoint Person-in-Charge to run the 5th respondent till the bye-laws are amended by permitting the employees of Union Bank of India to become the members of the 5th respondent.
2. Initially, this Court by order dated 11-12-2020 passed the following interim order:
“Heard learned Senior Counsel Sri Vedula Srinivas appearing for the petitioner and learned counsel Sri Hemendranath Reddy appearing for the 5th respondent.
At request of learned Assistant Solicitor General appearing for respondent No. 2, post on 23-12-2020.
Having regard to the issue involved, the Court is of the prima-facie opinion that as of now, the erstwhile employees of Andhra Bank cannot hold a General Body meeting to conduct election to the Board of Directors of 5th respondent. Therefore, the present Election Notice is not in law.
However, as stated by Sri Hemendranath Reddy, that all the arrangements are made to hold elections on 13.12.2020, the Court is not inclined to stall the election process at this stage.
Having regard to the above, the election may go on as scheduled, but counting and declaration of result shall not be undertaken until further orders.”
3. Subsequent to filing of the Writ Petition, respondent Nos. 6 to 8 were impleaded as respondents in the Writ Petition.
4. Vacate Petitions along with their respective counter affidavits were filed by Respondents 6 to 8 vide I.A. No. 2 of 2022 and I.A. No. 3 of 2021 by the 5th respondent seeking for vacating the interim order dated 11-12-2020. Counter affidavits were also filed on behalf of Respondents No. 1, 3 and 4.
CONTENTIONS OF PETITIONER:
5. Petitioner contends that he was working with Andhra Bank, a Nationalized Bank, where the employees of Andhra Bank had established the 5th respondent as a Banking establishment by getting it registered under the Act with respondent No. 2 and that in terms of Section 5 of the Act, the 2nd respondent is the authorized person to register the Society.
6. It is further contended that the 5th respondent, though is set up as a Banking establishment, ostensibly formed as a Society for the purpose of employees of Andhra Bank to encourage thrift, self-help and cooperation among its members. It was also accepting deposits from members, nominal members and public, which were repayable on demand, thereby carrying on the general business of banking in terms of ‘the Act’; and that the bye-laws of the 5th respondent Society specifies its objects and functions, for which the 5th respondent was formed.
7. Petitioner further contends that the bye-laws of the 5th respondent, provides for two types of membership (1) Members and (2) Nominal members as specified in bye-law Nos. 6 and 7 thereof. It is further contended that in terms of bye-law No. 6, only an employee of Andhra Bank can become a member of the 5th respondent, while a nominal member as per bye-law No. 7 can be any person who resides within the area of operation of the 5th respondent or is gainfully engaged in any occupation in the area and is desirous of availing services of the Bank.
8. Petitioner contends that bye-law No. 8 of the bye-laws deals with disqualification of membership and bye-law No. 9 deals with resignation/withdrawal of members. It is further contended that bye-law No. 10 deals with cessation of membership and contemplates various situations whereby the membership of a member ceases to exist thereunder. One of the circumstance for cessation of membership specified under bye-law No. 10, is when a member of the 5th r
