Full Judgment Text
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PETITIONER:
GAJANAN NARAYAN PATIL AND ORS.
Vs.
RESPONDENT:
DATTATRAYA WAMAN PATIL AND ORS.
DATE OF JUDGMENT20/02/1990
BENCH:
RAY, B.C. (J)
BENCH:
RAY, B.C. (J)
KULDIP SINGH (J)
SAHAI, R.M. (J)
CITATION:
1990 AIR 1023 1990 SCR (1) 491
1990 SCC (3) 634 JT 1990 (1) 517
1990 SCALE (1)305
ACT:
Maharashtra Cooperative Societies Act 1960--Section 27
and 73 ID read with Rule 57A and Bye Law of Society--Whether
nominees of financial institutions and co-opted Technical
Directors are entitled to vote and participate in special
meeting.
HEADNOTE:
The appellants, elected Directors of the Sanjay Sahakari
Sakhar Karkhana Ltd., signed a requisition and sent the same
to the Respondent 3, Joint Director of Sugar and Joint
Registrar Cooperative Societies, Maharashtra State, request-
ing him to summon a special meeting of the Committee of the
karkhana to consider the proposed motion of no-confidence
against the Chairman of the Committee, Respondent No. 1. The
requisition was signed by more than 1/3rd of the total
members in accordance with the provisions of Clause (2) of
Sec. 731D of the Maharashtra Cooperative Societies Act 1960.
On receipt of the said requisition, Respondent No. 3 issued
a notice dated 13.9.1989 convening a special meeting of the
Committee of karkhana i.e. Board of Directors on 25.9.1989.
The said notice was issued to the elected members only. No
notice was sent to nominated members of the financial bodies
or co-opted members. Respondent No. 1 filed a writ petition
before the High Court and challenged the action of the
Respondent No. 3 in not issuing the notice to the co-opted
members and the member nominees of the Financial Institu-
tions, as according to him, those members are entitled to
sit and vote at the special meeting when the committee
considers the vote of no-confidence under Section 73 ID of
the Act. The High Court on consideration of the provisions
of Section 731D read with Rule 57A and bye-law No. 29 of the
Bye Laws of the Society, allowed the writ petition holding
that the three members of the second category who have got a
limited right to vote at a meeting except at a meeting to
elect Chairman or Vice-Chairman are entitled to be served
with notices of the special meeting and to participate in
the said meeting and as the two nominees of the Financial
Institutions and the expert co-opted members had not been
served with the notice of requisition meeting, the requisi-
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tion meeting could not be held. The High Court thus directed
the Registrar, respondent No. 3, to issue fresh notices to
the elected members as well as to the three Directors of the
second
492
category before holding the meeting and accordingly disposed
of the writ petition. The appellants thereupon moved the
High Court and obtained a certificate of fitness under
Article 134(1) of the Constitution and have filed this
appeal.
The main contention of the appellants is that the nomi-
nees of the Financial Institutions and the co-opted members
are not entitled to notice.
Dismissing the appeal (by majority B.C. Ray and Kuldip
Singh, JJ.) this Court,
HELD: (Per B.C. Ray, J.)
The right to participate in the special meeting as well
as to vote for such meeting is a statutory right and it
flows from the provision of the Act, Rules and Bye-laws of
the Society. It has nothing to do with the democracy. [501E]
The words ’entitled to sit and vote in any meeting of
the society’, refer to member to sit and vote not in every
meeting but in any meeting of the society. The only express
bar as provided in Section 27 is that the members, that is,
the Directors representatives of the Financial Institutions
as well as the expert Director (co-opted) are ’not competent
to participate only in the election of members of the socie-
ty. [501E-F]
The Directors have been conferred the right to partici-
pate in any meeting including the special meeting of the
Board of Directors or of the Managing Committee of the
society. [501G]
The requisition meeting that has been convened cannot be
held as the representatives of the Financial Institutions in
the Board of Directors as well as the Expert Director (co-
opted) under the relevant provisions of Bye-law No. 29 have
not been served with the requisition notices of special
meeting convened by the respondent No. 3 pursuant to the
said requisition notice. [502B-C]
(Per R.M. Sahai, J. --dissenting)
Sub-section (i) of Section 73-D provides the manner in
which Chairman or Vice-Chairman who holds such Office by
virtue of his election may cease to hold it. It also pro-
vides the method of such removal by two-third majority of
the total members of the committee
493
who, are, for the time being, entitled to sit and vote in
any meeting of the Committee. It is thus clear that the
right to remove and elect Chairman and Vice-Chairman has
been restricted to only limited class of members. [504E-F]
Literal construction of expression ’entitled to sit and
vote’ if it results in negation of democratic process or is
against logic and is fraught with danger of removal of an
elected representative by nominees of financial institutions
or government, then it has to be avoided. [504H; 505A]
Voting is sine qua non of election and under clause (i)
of sub-rule (7) of Rule 57-A, the decision to retain Chair-
man is arrived at by voting and such right namely, right to
vote in election meeting being nonexistent in nominees of
’entitled to sit and vote’ used in section 73 ID has to be
read as excluding such members from its ambit. [505E-F]
Such reading of the provision is necessary not only
because it is more logical but also that is the outcome of
combined reading of subsection (9) of Section 27, Section 73
ID and Bye-law 29. [505F]
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Jamuna Prasad Mukhariya and Ors. v. Lachhi Ram and Ors.,
[1955] 1 SCR 608 at 610--referred to.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 4676 &
4793 of 1989.
From the Judgment and Order dated 26.10.89 of the Bombay
High Court in W.P. No. 3976 of 1989.
P.C. Jain, S.S. Ray, B.A. Mansodkar, Manoj Swarup, P.H.
Parekh, J.H. Parekh, Sunil Dogra. A.M. Khanwilkar, V.D.
Khanna and A.S. Basme, for the appearing parties.
The following Judgments of the Court were delivered:
RAY, J. This is an appeal under Article 133 of the
Constitution of India against the Judgment and Order dated
October 26, 1989 passed by the High Court of Bombay in Writ
Petition No. 3976 of 1989 whereby the High Court directed
the Registrar of Cooperative Societies to give fresh notice
to the elected members as well as to the 3 persons namely 2
nominees of the Financial Institutions and the expert co-
opted member.
494
The matrix of the case is that the appellants who are
the duly elected Directors of the Sanjay Sahakari Sakhar
Karkhana Ltd. hereinafter to be termed as "Karkhana" signed
a requisition and sent the same to the respondent No. 3, the
Joint Director of Sugar and Joint Registrar Co-operative
Societies, Maharashtra State, Pune requesting him to summon
a special meeting of the Committee of the Karkhana to con-
sider the proposed motion of no-confidence against the
Chairman of the Committee, Dattatraya Waman Patil, respond-
ent No. 1. This requisition was signed by more than 1/3rd of
the total members of the committee in accordance with the
provision of Clause (2) of Section 73 ID of the Maharashtra
Cooperative Societies Act 1960 (Maharashtra Act No. XXIV of
1961). The above requisition was received in the office of
the Joint Director of Sugar and Joint Registrar, Cooperative
Societies, Maharashtra State, Pune, the respondent No. 3.
On 6.9.1989 the respondent No. 3 issued a notice dated
September 13, 1989 convening a special meeting of the Manag-
ing Committee of Karkhana i.e. Board of Directors of the
Karkhana on 25.9. 1989. This notice was issued as contem-
plated by Clause (3) of Section 73 ID of the Act. This
notice was sent to all the members of the Committee of the
Karkhana who at that time were entitled to sit and vote at
any meeting of the Committee i.e. the elected members of the
said Committee of Management. Over and above a copy of the
notice was sent to the office of Registrar, Deputy Director
of Sugar, Aurangabab (Presiding Officer). A copy of this
notice was also sent to the office of the Managing Director
of the Karkhana as by way of this notice, the Managing
Director had been directed to produce the minute book of the
Committee meeting and hand over possession thereof to the
Presiding Officer at the commencement of the special meet-
ing.
On 18.9.89 the respondent No. 1 filed writ petition No.
3976 of 1989 before the High Court at Bombay challenging the
requisition notice dated 5.9.89 signed by the 10 appellants
who are elected members of the Managing Committee as well as
notice dated 13.9.89 issued by the respondent No. 3 mainly
on the ground that under the scheme of the Act read with the
Rules and the bye laws of the Karkhana, coopted member and
nominees of the Financial Institutions who are members of
the Board of Directors of the Karkhana and are entitled to
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sit and vote at the special meeting when the Committee
considers the vote of no-confidence under Section 73 ID of
the Act are required to be served with the said notices of
requisition enabling them to partici-
495
pate in the said special meeting. This writ petition was
heard by the Division Bench of Bombay High Court on
26.10.89. On a consideration of the provisions of Section 73
ID read with Rule 57A and bye-law No. 29 of the Bye-Laws of
the Society the High Court allowed the writ petition holding
that the 3 members of the second Category who have got a
limited right to vote at a meeting except at a meeting to
elect Chairman or Vice-Chairman are entitled to be served
with notices of the special meeting and to participate in
the said meeting and as the two nominees of the Financial
Institutions and the expert Coopted members had not been
served with the notices of requisition meeting the requisi-
tion meeting cannot be held. Instead of quashing the notice
issued by the respondent No. 3 convening the meeting, the
High Court directed the Registrar, the respondent No. 3 to
issue fresh notices to the elected members as well as to the
3 Directors of the Second category gory before holding the
meeting and disposed of the writ petition accordingly. The
High Court however restrained the Chairman to enter into new
contracts and as well as giving any fresh commitment on
behalf of the Karkhana.
The appellants filed a petition under Article 133 of the
Constitution of India against the Judgment and order dated
October 26, 1989 passed by the High Court, Bombay in Writ
Petition No. 3976 of 1989. The High Court by Order dated
26.10.89 granted certificate for appeal to this Court under
Article 134(1) of the Constitution of India on the following
questions:
"Whether the nominees of the Financial Institutions and the
expert co-opted by the Committee under Bye-law 29 are in-
cluded within the expression "Committee members who are for
the time being entitled to sit and vote at any meeting of
the Committee?"
In order to decide the above question it is appropriate
to consider the relevant provisions of the Maharashtra
Cooperative Societies Act 1960 to be hereinafter called the
’Act’ and the rules framed thereunder as well as the rele-
vant bye laws of the particular Cooperative Society in
question.
The Karkhana is a Cooperative Society governed by the
Maharashtra Cooperative Societies Act. Section 2(7) defines
Committee as the Committee of Management or Board of Direc-
tors or other directing body by whatever name called in
which the management of the affairs of the society is vested
under Section 73 of the said Act.
496
Section 27 which deals with the voting powers of the
members provides in Sub-section ’9’ that no nominee of the
Government or of my Financial Bank on any society shall be
entitled to vote at any election of its Committee. Section
73 states that the management of every society shall vest in
a Committee, constituted in accordance with this Act, the
rules and bye-laws, which shall exercise such powers and
perform such duties as may be conferred or imposed respec-
tively by this Act, Rules and the Bye-laws. Therefore, the
management of every Cooperative Society is vested in the
Committee of management or for that in the Board of Direc-
tors of the Society. Section 73 ID which is relevant for
determination of the said question is quoted below:
73-ID "(1) A President, Vice-President, Chairman, ViceChair-
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man, Secretary, Treasurer or any other officer by whatever
designation called who holds office by virtue of his elec-
tion to that office shall cease to be such President, Vice-
President, Chairman, Vice-Chairman, Secretary, treasurer
or any other officer as the case may be, if a motion of no-
confidence is passed at a meeting of the committee by two-
third majority of the total number of Committee members who
are for the time being entitled to sit and vote at any
meeting of the committee and the office of such President,
Vice-President, Chairman, Vice-Chairman, Secretary, treasur-
er or any other officer, as the case may be, shall thereupon
be deemed to be vacant.
The requisition for such special meeting shall be
signed by not less than one-third of the total number of
members of the committee who are for the time being entitled
to sit and vote at any meeting of the committee and shall be
delivered to the Registrar. The requisition shall be made in
such form and in such manner as may be prescribed: Provided
that, no such requisition for a special meeting shall be
made Within a period of six months from the date on which
any of the officers referred to in sub-section (1) as en-
tered upon his office.
(3) The Registrar shall, within seven days from the date of
receipt of the requisition under sub-section (2), convene a
special meeting of the committee. The meeting shall be held
on a date not later than fifteen days from the date of issue
of the notice of the meeting."
497
Rule 57A--Motion of no-confidence against the officers of
the Society--
(1) The requisition to call the special meeting of the
committee of a society to consider a motion of no-confidence
against the President, Vice-President, Chairman, ViceChair-
man, Secretary, Treasurer, or other officer of the society,
by whatever designation called, who holds office by virtue
of his elections to that office, shall be made in Form M-
18. The requisition shall be accompanied by--
(a) the grounds of no-confidence,
(b) the text of the motion of no-confidence to be moved,
(c) the name of the committee members who shall move the
motion of non-confidence,
(d) a list of members of the committee specifying their full
names, and address who are, for the time being, entitled to
sit and vote at any meeting of the committee,
(e) signatures of the members of committee who are signing
the requisition duly attested by the Chief Executive Officer
of the society or Special Executive Magistrate or Executive
Magistrate or any Gazetted Officer of the Government.
(2) The requisition referred to in sub-rule (1) shall be
delivered in person to the Registrar. Such requisition or
requisitions shall be delivered in duplicate in each case.
The Registrar on ascertaining that the requisition or requi-
sitions, as the case may be, have been signed by not less
than 1/3rd members of the Committee who for the time being
are entitled to sit and vote in any ’meeting of the commit-
tee of society.
(a) receive and acknowledge the requisition under his signa-
ture with date and time,
(b) issue notice, within 7 days from the date of receipt of
the requisition, convening the special meeting for that
purpose specifying therein place, date, time name and desig-
nation of the officer who shall be presiding over such
498
meeting, to all the members of the Committee, the Presiding
Officer and the Managing Director, General Manager, Manager,
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Paid Secretary, Group Secretary or such employee of the
society, to whom the Registrar has directed to produce
minute book of Committee meetings of the society. This
notice of no-confidence, shall also be issued, to the offi-
cer or officers against whom the motion of noconfidence is
being moved. and shall be accompanied by the copy of the
requisition along with enclosures and agenda.
(5) The time of the meeting shall be between office hours of
the authorised officer. The meeting shall be held either in
the office of the Registrar or in the office of the person
authorised by the Registrar to preside over the meeting.
(6) No other subject, except the motion or motions of nocon-
fidence shall be kept on the agenda.
(7d) The Registrar or the officer authorised to preside over
the meeting shall not allow any other person to enter the
place of meeting except the person or persons appointed to
assist him, the officer of the society who has produced the
minute book, the officer or officers against whom the motion
of no-confidence is moved, the members of the committee who
are for the time being entitled to sit and vote in any
meeting of the committee, who are present at the commence-
ment of the meeting and police officer or officers if called
by him to maintain the law and order.
BYE LAW No. 29.
Board of Directors:
A. xxxxxx
B. xxxxxx
to
E. xxxxxx
(F) "Managing Director, and representatives in sub-clause
(d) and (e) (Coopted Technical Director) shall not be enti-
tled to function as Chairman and Vice-Chairman. The
499
representatives referred to in above sub-clause (d) and
technical expert coopted as per provisions of sub-clause (e
and Managing Director, will not be entitled to vote at the
meeting for the election for Chairman and Vice-Chairman The
representative of the State Government shall not be entitled
to vote on any subject at any meeting of the Board, But his
opinion will be recorded in the minute book. He will not be
responsible for mismanagement and negligence of the Board.
Further no action can be taken against him for any losses
sustained to the Karkhana due to the mismanagement and the
negligence of the Board."
It has been contended on behalf of the appellant that
Section 27 sub-section ’9’ debars the Government nominee or
the nominee of any Financing Bank on any society to vote at
any election of the Committee of the Society and as such
except the elected Directors other Directors can not partic-
ipate in the election of the Managing Committee of the
Society and cannot vote for such election. It has been also
submitted that under section 73 ID Clause (A) in the special
meeting convened for consideration of no-confidence motion
against the Chairman and Vice-Chairman of the society and
other officers of the society only the members who are for
the time being "entitled to sit and vote at any meeting of
the Committee may participate and vote in the said meeting.
It has also been provided therein that as soon as vote of
no-confidence is passed against the Chairman of the managing
committee of the society by 2/3rd majority of the total
number of committee members who are for the time being
entitled to sit and vote the office of Chairman etc. shall
be deemed to be vacant. Therefore, it has been submitted
that the word at any meeting of the committee shall be
deemed to refer to all the meetings of the managing commit-
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tee or the Board of Directors. The nominees of the Financial
Institutions and also the coopted expert, coopted Technical
Director having been not entitled to function as a Chairman
and Vice-Chairman and not to vote at the meeting of the
election for Chairman and Vice-Chairman of the Board of
Directors are not entitled to sit and vote in the special
meeting convened for the purpose of consideration of the
no-confidence motion against the Chairman of the Board of
Directors. It has also been contended in this connection
that the Chairman of the managing committee or of the Board
of Directors is elected by the elected Directors of the
managing committee. It is against the democratic principles
that the motion of no-confidence against the Chairman for
removal from his elected office are to be passed by the
2/3rd majority of the members of the Board of Directors
including the Directors who
500
are representatives of the Financial Institutions and expert
nominee (co-opted),
Mr. S.S. Ray, learned counsel appearing on behalf of the
respondent No. 1 has on the other hand joined issues and
submitted that the right to participate in the special
meeting convened for consideration of no-confidence motion
against the Chairman is a statutory right flowing from the
provisions of the statute. This right has been conferred
expressly by the provisions of section 73 ID read with Rule
57A Clause 2(b) read with Clause 7(D) i.e. "members of the
committee who are for the time being entitled to sit and
vote in any meeting of the Committee." Though Section 27
sub-section 9 enjoins that no nominee of the Government or
of financing bank or of any society shall be entitled to
vote at any election of its committee. This merely means and
signifies that the nominee of the Government as well as of
the Financial Institutions are not entitled to participate
in the election meeting of the society and from casting
their votes in such meeting. Bye law 29 of the Bye Laws of
the Society provides that the Board of Directors of the
Karkhana would consist of the following members:
S. No. Particulars No. of Members.
1. Members falling under Bye- -- elected producer, 11
law No.29(A) members,
2. Members failing under Bye- -- elected by society 01
law No.29(B) members
3. Members falling under Bye- -- Managing Director, 01
law No.29(C) Ex-officio.
4. Members falling under Bye--- Representative of 01
law No.29(D)(i) the financing agency.
5. Members falling under Bye- -- Representatives of 01
law No. 29(D)(ii) Indian Finance Corporation
of India, LIC, IDBI etc.
(Not more than two)
In the present case only.
6. Members falling under -- Representative of NIL
Bye-law No. 29(D)(iii) ICICI (One) In the
present case.
7. Members falling under Bye- -- Nominee of the 01
law NO.29(D)(iv) State Government
501
8. Members falling under Bye- -- Expert nominee 01
law No. 29(E). (co-opted).
9. Members falling under -- elected from SC/ 02
bye-law No. 29(G) ST and Weaker
r/w section 73B Section.
Total Strength 19
It is also evident from the provisions of Bye law No. 29
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that the Representative of the State Government shall not be
entitled to vote on any subject at any meeting of the Board,
but his opinion may be recorded in the minute book. So far
the representatives referred to in Clause D(i) and (D)(ii)
in Bye-law No. 29, that is, representative of the financing
institutions as well as the expert nominee (co-opted) fall-
ing under Bye-law 29(E) are entitled to participate in the
special meeting and also cast their votes in such meeting.
This being the position, it is against the provisions of the
Act, Rules and Bye-laws of the society to hold that the
members falling under Bye-law 29(D)(i) and (ii) as well as
the expert nominee (co-opted) under Bye-law 29(E) are not
entitled to sit and vote in the meeting of the committee
convened for consideration of the no-confidence motion
against the Chairman, Board of Directors or for that of the
Managing Committee. This interpretation will be wholly going
against the clear meaning of the expression namely members
who are entitled to sit and vote at any meeting of the
committee. The right to participate in the special meeting
as well as to vote for such meeting is a statutory right and
it flows from the provision of the Act, Rules and Bye-laws
of the Society. It has nothing to do with the democracy. The
words "entitled to sit and vote in any meeting o[ the socie-
ty" refer to member to sit and vote not in every meeting but
in any meeting of the society. The only express bar as
provided in section 27 is that the members, that is, the
Directors representatives of the Financial institutions as
well as the Expert Director (co-opted) are not competent to
participate only in the election of members of the society.
The said Directors have been conferred the right to partici-
pate in any meeting including the special meeting of the
Board of Directors or of the Managing Committee of the
society .. It is appropriate to refer of Jamuna Prasad
Mukhariya and Others v. Lachhi Ram and Others, [1955] Vol. 1
S.C.R. 608 at 610. It has been observed:
"The right to stand as a candidate and contest the election
is not a common law right. It is a special right created by
statute and can only be exercised on the conditions laid
502
down by the statute. The Fundamental Rights Chapter has no
bearing on a right like this created by statute. The appel-
lants have no fundamental right to be elected Members of
Parliament. If they want that they must observe the rules."
We have gone through the Judgment rendered by our
Learned Brother, Hon’ble Mr. Justice R.M. Sahai, we are
however, unable to concur with the views expressed by our
Learned Brother and the findings arrived at therein. We
therefore, hold that the requisition meeting that has been
convened cannot be held as the representatives of the Finan-
cial Institutions in the Board of Directors as well as the
Expert Director (co-opted) under the relevant provisions of
Bye-law No. 29 have not been served with the requisition
notices of special meeting convened by the respondent No. 3
pursuant to the said requisition notice. The impugned notice
convening the special meeting is wholly illegal and unwar-
ranted. Furthermore, as we have found hereinbefore that the
two Directors representing the Financial Institutions as
well as the expert nominee (co-opted) are entitled to parti-
ciapate in the special meeting of the committee and also to
vote at the same meeting as regards the no-confidence mo-
tion, the non-service of the notic of the said meeting on
the aforesaid Directors renders the said special meeting
illegal as there has been an infringement of the provisions
of the said Act, Rule 57A of the Maharashtra Cooperative
Societies Rules, 1961 and Bye-Laws 29D(i) and (ii) and 29E
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of the Bye-Laws of the Society. We, therefore, dismiss the
appeal and allow the writ petition filed in the High Court.
The appellants will pay costs quantified at Rs. 5,000 to the
respondents.
R.M. SAHAI, J. The short question of law that arises for
consideration in this appeal directed against the order of
Bombay High Court, is whether the nominees of financial
institutions and co-opted Technical Directors who are not
entitled under bye-law 29 of the Sanjay Sahakari Sakhar
Karkhana Ltd. (hereinafter called as ’Society’) framed under
Maharashtra Co-operative Societies Act, 1960 (for brevity
’Act’) either to function as Chairman or Vice-Chairman of
the Board of Directors of the Society or to vote at their
election are entitled to participate in a special meeting
requisitioned for consideration of motion of no-confidence
under Section 73 ID of the Act.
Resolution to requisition a special meeting to consider
motion of no-confidence against Chairman of the Board,
signed by more than 1/3rd members of the Board, was deliv-
ered to the Registrar as
503
required by Rule 57-A along with a list of members who were
entitled to sit and vote. Notices on it were issued under
Clause (b) of sub-rule (2) of rule 57-A to elected members
only. Validity of it and consequent proceedings were chal-
lenged before the High Court, amongst others, for being
violative of rule 57-A as it required the Registrar to issue
notices to all members of the Board. Further nominees of
financial institutions being vitally involved in the welfare
of the Society, their presence was essential for effective
and meaningful discussion even if they were not entitled to
sit and vote. Various other objections were raised. But the
High Court did not find merit in any except the one relating
to non-issuance of notice to nominees of financial institu-
tions and the expert co-opted by the Board. Reason for it
was wider construction of the expression who are for the
time being entitled to sit and vote at any meeting of the
committee" used in section 731D of the Act. The High Court
found that even though it would have been more logical to
restrict such right to those alone who were entitled to
elect yet it widened the ambit of expression because if two
meanings were possible then the meaning which extended the
right to vote rather than that limited should be accepted.
It also found that right to vote on a resolution of no-
confidence being an important matter affecting the Society,
it should be extended to even nominated members who had a
right to vote at some meeting.
Bye-law 29 framed by the Society, gives out the Consti-
tution of the Board of Directors comprising of elected, ex-
officio, representatives, and co-opted members. But right to
be elected as Chairman or Vice-Chairman of the Board or even
voting at the meeting of such election has been confined to
elected members by clause (F) which is extracted below:
"Managing Director, and (representatives in sub-clauses (d)
and (e) (Co-opted Technical Director) shall not be entitled
to function as Chairman and Vice-Chairman. The representa-
tives referred to in above sub-clause (d) and technical
expert director coopted as per provisions of subclause (e)
and Managing Director, will not be entitled to vote at the
meeting for the election of Chairman and ViceChairman. The
representative of the State Government shall not be entitled
to vote on any subject at any meeting of the Board. But his
opinion will be recorded in the minute book. He will not be
responsible for mismanagement and negligence of the board.
Further no action can be taken against him for any losses
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sustained to the Karkhana
504
due to the mismanagement and the negligence of the board. ’
’
The question is how does it reflect on the right to
participate in a meeting of no-confidence against the Chair-
man of the Board? For this purpose it is necessary to ex-
tract sub-section (1) of section 731D which reads as under:
"A President, Vice-President, Chairman, Vice-Chairman,
Secretary, Treasurer or any other officer by whatever desig-
nation called who holds office by virtue of his election to
that office shall cease to be such President, Vice-Presi-
dent, Chairman, Vice-Chairman, Secretary, Treasurer or any
other officer, as the case may be, if a motion of noconfi-
dence is passed at a meeting of the committee by twothird
majority of the total number of committee members who are
for the time being entitled to sit and vote at any meeting
of the committee and the office of such President, Vice-
President, Chairman, Vice-Chairman, Secretary, Treasurer or
any other officer, as the case may be, shall thereupon be
deemed to be vacant."
This sub-section provides the manner in which a Chairman
or Vice-Chairman who holds such office by virtue of his
election may cease to hold it. It also provides the method
of such removal by twothird majority of the total members of
the committee who are, for the time being, entitled to sit
and vote in any meeting of the Committee. It is thus clear
that the right to remove and elect Chairman and ViceChairman
has been restricted to only limited class of members. Who
are they?
Elections in a democracy have been conceived as an
instrument of selecting the best qualitatively superior and
politically valuable. Who should be entitled to reverse the
selection? Those who elect or any other numbers increased by
any methodology or law adding representatives and nominees
not entitled to participate in selection. If the value of
elective process has to have primacy then those worthy of
choice should not be permitted to be squeezed out by those
who are precluded from leadership or electing the leader.
This basic concept does not stand altered or modified either
by any provision in the Act or Rules. Literal construction
of expression ’entitled to sit and vote’ if it results in
negation of democratic process or is against logic and is
fraught with danger of removal of an elected representative
by
505
nominees of financial institutions or government then it has
to be avoided.
Reverting to statutory right the scheme of the Act does
not warrant the conclusion that such members are entitled to
participate in meeting requisitioned under section 73 ID.
Sub-section (9) of Section 27 reads as under:
"No nominee of the Government or of any financing bank on
any society shall be entitled to vote at any election of its
committee."
It clearly and unequivocally debars nominees of finan-
cial institutions or Government representatives from exer-
cising any right to vote at any election meeting. Therefore,
the provisions in the bye-law debarring such a member from
voting at ’election of Chairman or ViceChairman cannot be
interpreted to mean as permitting such representatives to
vote at other election meeting as that may result in invali-
dating the bye-law. Even if such ’members have some right to
vote in some meetings other than election meetings or they
have a right to record their opinion it does not entitle
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them to participate or even served with notice of vote of
confidence as nature of meeting for considering motion of
no-confidence has all the characteristics both in content
and effect of an election meeting. Voting is sine qua non of
election and under clause (i) of sub-rule (7) of Rule 57-A,
the decision to retain Chairman is arrived at by voting and
such right, namely, right to vote in election meeting being
non-existent in nominees of financial institutions or of
Government the expression "entitled to sit and vote" used in
section 73 ID has to be read as excluding such members from
its ambit. Such reading of the provision is necessary not
only because it is more logical but also that is the outcome
of combined reading of sub-section (9) of section 27, sec-
tion 73 ID and bye-law 29.
For these reasons, this appeal succeeds and is allowed.
The Writ Petition filed in the High Court is dismissed. But
there shall be no order as to costs.
Y. Lal Appeal
dismissed.
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