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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.