Gauhati High Court: Registrar Exceeded Jurisdiction in Reinstating Cooperative Society Secretary

Guwahati: In a significant judgment clarifying the boundaries of regulatory power, the Gauhati High Court has ruled that the Registrar of Cooperative Societies lacks the jurisdiction under Sections 49(2)(l), 92, or 111 of the Assam Cooperative Societies Act, 2007 (ACS Act) to interfere with a cooperative society's decision to terminate the employment of its Chief Executive/Secretary.

The single bench of Justice ManishChoudhury delivered the judgment in W.P.(C) NO. 925/2022 , filed by The Bikrampur Coop Societies Ltd. and its Chairman, challenging an order passed by the Registrar of Cooperative Societies, Assam on January 10, 2022.

Case Background:

The dispute arose after the Board of Directors of Bikrampur Samaby Samity Ltd., a cooperative society registered under the ACS Act, decided to terminate the appointment of its Secretary, Abhijit Chakraborty (Respondent No. 4), and issued an advertisement for the vacant post. This decision was taken in a Board meeting on December 1, 2021, following a complaint regarding Chakraborty 's appointment and subsequent alleged actions, including a police case registered against him for forgery and criminal breach of trust.

Abhijit Chakraborty challenged his termination and the advertisement by filing an appeal before the Registrar of Cooperative Societies, Assam. The Registrar entertained the appeal, purportedly under Section 49(2)(l) and Section 111 of the ACS Act. In the impugned order dated January 10, 2022, the Registrar set aside the advertisement, allowed Chakraborty to continue as Secretary, citing lack of prior notice or opportunity for defence (violation of natural justice), and issues related to the Board's quorum and alleged contravention of Section 35(2) of the Act.

Petitioners' Arguments:

Appearing for the petitioners, Mr. B. Sinha argued that the Registrar had no power, authority, or jurisdiction under the cited sections to interfere with the Board's decision regarding the appointment or removal of its Secretary, who is an employee. He contended that the dispute related to an employer-employee relationship falling within the realm of private law, where reinstatement is not an available remedy even if termination is wrongful. Sinha also challenged the Registrar's findings on quorum and contravention of statutory provisions, asserting the Board acted within its powers.

Respondents' Arguments:

Mr. S.K. Talukdar, Standing Counsel for the Cooperation Department (Respondent Nos. 1-3), and Mr. R. Goswami, counsel for the terminated Secretary (Respondent No. 4), supported the Registrar's order. They argued that the Registrar had jurisdiction, possibly under Section 92 (disputes touching the business of the society), even if Section 111 was wrongly cited. They contended that removal of a Secretary touches the society's business and might not be considered "disciplinary action" excluded by Section 92. They also argued that the Board meeting lacked the necessary quorum and that the removal violated natural justice and potentially the society's bye-laws requiring Registrar's approval.

Court's Analysis and Ruling:

Justice Choudhury meticulously examined the relevant provisions of the Assam Cooperative Societies Act, 2007:

1. Section 111 (Appeal): The Court held that an appeal under Section 111 lies only against decisions made by a Government Officer or a liquidator under the Act or Rules. A decision by the Board of a cooperative society does not fall under this category, thus the Registrar lacked jurisdiction under this section.
2. Section 92 (Reference of Dispute): The Court noted that Section 92 refers disputes "touching the business of a registered society" to the Registrar, but specifically excludes disputes regarding disciplinary action against an employee. Citing Supreme Court precedents in The Co-operative Central Bank Ltd. vs. The Additional Industrial Tribunal, Andhra Pradesh and Maharashtra State Cooperative Housing Finance Corporation Limited vs. Prabhakar Sitaram Bhadange , the Court reiterated that "touching the business of the society" refers narrowly to trading or commercial activities, not service disputes of employees. Furthermore, the Court found that the Board's action to remove the Secretary, especially given the preceding complaint and FIR, clearly falls under the category of "disciplinary action", which is explicitly excluded from the Registrar's purview under Section 92.
3. Section 49(2)(l) (Dispute between Chief Executive and Board): This section states that in case of dispute between the Chief Executive and the Board "in any matter", the Registrar's decision is binding. The Court interpreted this clause in conjunction with the other clauses of Section 49(2), which delineate the Chief Executive's powers and functions under the superintendence of the Board . The Court held that Section 49(2)(l) applies to disputes arising within the scope of the Chief Executive's listed functions and the society's business, not to the fundamental power of the Board to appoint or remove the Chief Executive himself, a power explicitly granted to the Board under Section 38(2).

The Court further clarified the legal status of a cooperative society registered under the Act, noting it is not a statutory body created by the statute, but rather a body corporate governed by it. It is not an instrumentality of the State under Article 12 of the Constitution unless performing significant public duty. The relationship between the Board and its Secretary (appointed by the Board) is purely contractual, falling in the realm of private law.

Citing established principles from the Specific Relief Act, 1963 and Supreme Court judgments ( S.N. Goyal , Kailash Singh ), the Court affirmed that a contract of personal service is generally not specifically enforceable. If such a contract is terminated, even wrongfully, the remedy is ordinarily damages, not reinstatement, unless it falls under specific exceptions (public servants, workmen under ID Act, employees of statutory bodies violating statutory rules). None of these exceptions applied to the Secretary of this cooperative society. The Board, having the statutory power to appoint, also has the inherent power to remove (Section 38(2), read with General Clauses Act principles). The contract of employment was inherently determinable.

Addressing the quorum issue, the Court found that with 9 Directors on the Board after 4 were removed, the presence of 6 Directors constituted the necessary 50% quorum as per Section 43(5) of the Act.

Finally, the Court noted that bye-laws of a cooperative society do not have the force of statute and cannot override the express provisions of the ACS Act. The Act vests the power of removal of a non-government appointed Chief Executive solely with the Board, without requiring prior approval of the Registrar.

Conclusion:

Finding that the Registrar of Cooperative Societies acted without jurisdiction in entertaining the appeal and setting aside the Board's decisions, the Gauhati High Court quashed the impugned order dated January 10, 2022. The Court held that the Board's resolution and the subsequent advertisement for the Secretary post were valid. The Board is now free to proceed with the recruitment process, with the option to issue a fresh advertisement if necessary, given the time elapsed.

The judgment reinforces the principle that while cooperative societies are regulated by statute, the internal management of their staff, particularly in matters of appointment and removal, rests primarily with the elected Board, and the Registrar's intervention powers are strictly limited by the provisions of the Act.