Full Judgment Text
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PETITIONER:
THE PUNJAB STATE CO-OPERATIVE BANK LIMITED
Vs.
RESPONDENT:
MILKHAN SINGH (DECEASED) BY LRS. AND ANR.
DATE OF JUDGMENT: 24/09/1997
BENCH:
G. N. RAY, G. B. PATTANAIK
ACT:
HEADNOTE:
JUDGMENT:
J U D G M E N T
G.N. RAY, J.
Leave granted. Heard learned counsel for the parties.
The predecessor-in-interest of the respondents Sri
Milkha Singh since deceased was a senior accountant in the
Gurdaspur Central Co-operative Bank Ltd. For alleged
misconduct of the said employee in misappropriating the
finds of the appellant Bank, Sri Milkha Singh was placed on
suspension on 6.5.1974. A Criminal Case under sections 409,
467, 468, 477A and 120B and 120B IPC was registered against
the said employee but he was discharged in the said case by
the Chief Judicial Magistrate Gurdaspur on 26.11.1977. Sri
Milkha Singh was allowed to join duties on 19.4.1978.
Subsequently, a departmental proceeding was initiated
against Sri Milkha Singh and a penalty for stopping
promotion for two years was imposed on the said employee
vide order dated 13.7.1984. The period from 6.5.1974 to
19.4.1978 was also regularised against leave vide dated
6.2.1985.
Sri Milkha Singh challenged the order of punishment and
order regarding regularisation of the period under
suspension in a Civil Suit initiated on 23.4.1986. Such
suit was decreed with cost on 15.10.1990. The Managing
Director of the appellant Bank thereafter preferred an
appeal against the said decree before the learned District
Judge. such appeal was dismissed as time barred on
9.9.1991. The Judgment of the lower appellate court was
challenged by the appellant in revision petition filed
before the High Court. The High Court allowed the revision
petition and the delay in preferring appeal was condoned and
the was remanded for disposal on merits. The appeal was,
however, dismissed with cost of affirming the decree of the
trial court on merits. The Managing Director of the
appellant Bank thereafter preferred a second appeal before
the High Court. By the impugned order such second appeal
has been dismissed on a finding that the Managing Director
was not competent to prefer the said appeal without the
approval by the Board of Directors of the Bank Such decision
of the High Court is impugned in this appeal.
The short question that arises for decision in this
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appeal is whether the Managing Director on its own had the
authority to prefer appeal against a decision of the Court
in the absence of any resolution by the Board of Directors
or by the Bank on the general body of the society deciding
to prefer such appeal. It may be stated here that the
learned counsel for the respondent has also contended that
in any event, the decision for file a special leave petition
before this Court can not be taken by the Managing Director
of the appellant Bank even if it is assumed for argument’s
sake that such Managing Director was competent to prefer
first or second appeal.
The learned counsel for the appellant has contended
that the appellant Bank is an Apex Bank under the Punjab Co-
operative Societies Act 1961. According to Section 23 of
the said Act, the final authority vests in the general body
of the members of co-operative society. The appellant Bank
has framed bye-laws which are duly registered with the
Registrar of the Societies of Punjab. Section 24 of the
Punjab Co-operative Societies Act provides that the genera
body meeting of the co-operative societies is to be held at
least once in a year. The Bank has framed bye laws which
provide powers of the Board of Directors and of the Managing
Director of the appellant Bank. Bye law 29 provides for the
Constitution of the Board of Directors. There is nothing in
bye law 37 which empowered the Board of Directors to take a
decision for instituting any suit or for filing any appeal
or revision petition. The High Court has failed to
appreciate that the Board of Directors have not been
authorised to take decision regarding institution of suit or
preferring appeal or revision petition in a court and it has
erroneously held that unless a decision is taken by the
Board of Directors, no appeal can be preferred by the
Managing Director.
The learned counsel for the appellant has referred to
bye law 46 and has submitted that the said bye law provides
for appointment of Managing Director and also the powers
conferred on such Managing Director. It is contended by the
learned counsel for the appellant that the Managing Director
is the principal executive officer of the appellant Bank and
has been given wide powers to run the Bank by taking various
decisions for running day to day business including decision
to transfer, suspend, reinstate or punish an employee of the
Bank Similarly, the Managing Director is empowered to
incur expenditure with the sanctioned budget. In exercising
all such powers as enumerated in various clauses, of bye law
46, the Managing Director is not required to take my
sanction of any other authority. The learned counsel has
referred to clause 8 of bye law 46 which runs as follows:-
"To institute, conduct, defend, compound or abandon any
legal proceedings by or against the Bank or it officers or
otherwise concerning the affairs of the Bank". It is
contended by the learned counsel that the Managing Director
has been empowered to take the vital decision about
institution of suit and to compound or abandon such suit or
any legal proceeding by or against the Bank. The appeal is
continuation of suit in a higher forum and basically there
is no difference in taking decision to institute, abandon or
compound a suit and to take a decision to take up the list
in a higher forum by way of appeal. The learned counsel has
submitted that the Board of Directors have no authority to
take decision regarding filing of suit or appeal and other
legal proceedings. The general body is undoubtedly the
supreme body which can take any decision relating to the co-
operative society. But such general body cannot and do not
meet very often to take various decisions required to be
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taken urgently. Therefore, the Managing Director the
highest executive officer of the Bank had been clothed with
wide powers in various in clauses of bye law 46.
In this connection, reference has been made to the
decisions of this Court in Civil Appeal No. 14568 of 1996
(Punjabi University, Patiala Vs. M.R. Garg) decided on
1.11.1996. The question that arose for decision in the said
appeal was whether the Registrar of the University was
competent to take a decision to prefer an appeal in the
absence of any resolution b the Syndicate of the University
to prefer appeal. The High Court held that Registrar was
not competent to take a decision to prefer appeal. This
Court has held in the said decision that the Syndicate
having resolved authorising the Registrant to defend cases
instituted against the University and to file suits in the
law courts on behalf of the University, except in cases
relating to examination matters, and authorising the
Registrar to sign, verify plaints, written statements,
petitions, applications and to do all acts necessary for the
prosecution of the cases, the appeal filed by the Registrar
was maintainable. The learned counsel for the appellant has
submitted that the bye laws have been passed by the Co-
operative Society and such bye laws are also registered with
the Registrar of Societies. The provisions of bye laws
therefore must be held to be decision of the Co-operative
Society itself. Hence, the appeal was maintainable and the
High Court has erred in holding to the contrary.
The learned counsel for the respondent has, however,
disputed the aforesaid contentions. It has been contended
by the learned counsel for the respondents that the Managing
Director of the appellant Bank is a statutory authority and
therefore has only such power as has been conferred on such
Managing Director by the Co-operative Society. The Managing
Director can not have any power which has not been conferred
n it. There is no mention in the bye laws that the Managing
Director may prefer appeal or special leave petitions Under
order 29 Rule I.C.P. Code, any pleading may be signed or
verified on behalf of the Co-operative Society by the
Secretary or by any Director or Principal officer of the
Society who is able to dispose about the facts of the case.
Therefore, Managing Director being a Principal Officer of
the Co-operative Society is competent to sign or verify the
pleadings on behalf of the Society. But such authority does
not confer on the Managing Director may power to take an
independent decision as to whether against an adjudication
of a court of law an appeal should be preferred. The power
to institute legal proceedings and to defend the same is
entirely different from the power to take decision for
preferring any appeal or special leave petition against an
adjudication made by a law court against the co-operative
society. Such decision being a matter of policy decision,
can not be exercised by the Managing Director in the absence
of specific authority in that regard in bye law 46.
The learned counsel for the respondent has also
contended that the decision of this Court in Punjabi
University’s case since relied on by the learned counsel for
the appellant is distinguishable. In Punjabi University’s
case, the Syndicate had authorised Registrar to take all
decisions regarding legal proceedings, excepting cases
relating to examination matter. In view of such wide
authorisation, this Court has held that the Registrar was
competent to prefer appeal even in the absence of specific
authorisation by the Syndicate to prefer an appeal. The
learned counsel for the Respondent has also contended that
even if it is assumed that appeal may be included within the
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authority to institute legal proceedings, special leave
petition before this Court is not a statutory appeal. The
special leave petition is within the absolute discretion of
this Curt and a petitioner cannot claim leave to appeal as
of right. Hence, special leave petition before this Court
stands entirely on a different footing and unless any
specific authority is given by the co-operative society to
the Managing Director to file special leave petition, the
Managing Director cannot take any independent decision to
file such special leave petition. Therefore, this appeal
must fail on that ground alone. The learned counsel has
also submitted that in equity also, the appellant does not
deserve any leave from this Court. The poor employee was
sought to be harassed for no good reasons. The said
employee being dead, his legal heirs have been dragged
before this Court for no just cause. Therefore, the appeal
should be dismissed with cost.
After giving our careful consideration to the facts and
circumstances of the case and the submissions made by the
learned counsel for the parties, it appears to us that the
Managing Director of the appellant bank is the Principal
Executive Officer of the Bank. The Board of Directors have
not been authorised to take decisions regarding institution
of suits and legal proceedings and to defend and compound
the same. Th Co-operative Society has given such powers to
its Managing Director in the bye laws. Bye law 46 is quite
wide in its amplitude and it encompasses all powers relating
to institution of legal proceedings and consequential
actions required to be taken in connection with such act
legal proceedings by or against the Society. it is not
necessary to specifically mention filing of appeal by the
Managing Director. In our view, bye law 46 is wide enough
to include powers to prefer appeal and to take steps in such
appeal as a consequential measure in connection with a suit
or legal proceeding. If the Managing Director has been
clothed with the authority to institute a suit and abandon
or compound a suit or legal proceedings, there is no reason
to hold that decision to prefer appeal is something so
solemn and important that the Managing Director should not
and cannot take such decision on its own. It is not a
practical feasibility that the general body may meet
frequently to take various executive decision. As a matter
of fact, the general body of a Co-operative Society usually
take broad policy decisions on one or two occasions. As it
is not practicable to take various executive decisions, some
of which require urgent decisions an implementations, the
bye law has given wide powers to the Managing Director. The
Managing Director, in our view, has authority to take
decision in the matter of preferring appeal within the scope
and ambit of bye law 46. The said Managing Director has
also the authority to take a decision to prefer an appeal
before this Court by praying for leave to appeal by filing
special leave petition We, therefore, allow this appeal and
set aside the impugned judgment and direct the High Court to
dispose of the appeal preferred by the appellant Bank on
merits as early as practicable preferably within a period of
six months from the date of communication of this order. As
the High Court is directed to decide the appeal on merits,
we do not think that any observation on the merits of the
case should be made by this Court even though the
respondents invited the court’s attention on the merits of
the case. There will be no order as to cost.