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PETITIONER: CHANDRIKA JHA

       Vs.

RESPONDENT: STATE OF BIHAR & ORS.

DATE OF JUDGMENT27/10/1983

BENCH: SEN, A.P. (J) BENCH: SEN, A.P. (J) VENKATARAMIAH, E.S. (J)

CITATION:  1984 SCR  (1) 646        1984 SCC  (2)  41  1983 SCALE  (2)888

ACT:      Constitution of  India 1950,  Article 154(1) ’Executive power’ of State-Exerciseby Governor-Supervisory jurisdiction of State  Government under statute-Whether exercisable under ’executive power’.      Bihar &  Orissa Co-operative  Societies Act,  1935.  S. 65A.      Bihar Co-operative  Society  Rules,  1959  Bye-Law  29. District  Co-operative   Bank-First   Board   of   Directors nominated  by   Registrar-Expiry  of   term-Chief   Minister extending  term   from   time   to   time-Minister-in-charge forwarding list of names with directive to Registrar to make appointment therefrom-Such action whether valid.      Administrative Law-Chief  Minister or Minister-incharge whether can exercise the functions of a statutory authority.

HEADNOTE:      Bye-law 29  of the  Bihar Co-operative  Society  Rules, 1959 provided  that the  management of  a Co-operative  Bank shall vest  in the  Board of  Directors, and  that the first Board of Directors shall be nominated by the Registrar for a period not  exceeding one  year at  a time and not exceeding three Co-operative  years in  the aggregate,  and  that  the Registrar could modify the nomination if and when required.      The Registrar, Cooperative Societies in exercise of the power  conferred   by  the  aforesaid  bye-law  nominated  a Committee of  Management of 17 members to the first Board of Directors of  the District  Co-operative Bank. The Committee was directed  to get  the election of the Board of Directors completed within six months of the date of their nomination. The appellant who was a political person was nominated to be the Secretary of the first Board.      The appellant  got the  period of  the first  Board  of Directors extended from time to time and the election of the Board postponed  without any  lawful justification.  Between October 1981  and November  1983  at  the  instance  of  the appellant,  the   Chief  Minister  gave  directions  to  the Minister (Co-operation),  that the  Registrar  be  asked  to extend the term of the Board, and the Registrar 647 in turn  extended the  term  with  the  direction  that  the Committee of  Management should  call a  general meeting and

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get the Board of Directors elected.      When the  Chief Minister  demitted  office,  the  third respondent, who  was the  Minister for  Industries issued  a direction  to   the   Commissioner   of   the   Co-operative Department, marked  as ’unofficial’.  It was  stated therein that if  the Committee  was reconstituted  the  Board  shall legally consist  of seven  members only.  For  this  purpose seven names were sent If the Committee was superseded it was to consist  of fifteen  members. On  a  separate  sheet  the Minister indicated  the first  set of seven names and second set of eight names.      In  compliance   with  the   Minister’s  directive  the Registrar by  his impugned  order  in  supersession  of  all earlier orders  reconstituted the  first Board  of Directors with immediate  effect and  directed that  the tenure of the office of the reconstituted Board shall be for the remainder of the term i.e. till November 30, 1983.      Being aggrieved,  the appellant assailed the order by a writ petition in the High Court, which was dismissed.      On appeal  to this Court, it was contended on behalf of the  appellant   that  the   Registrar  had   no  power   to reconstitute the  Board under  bye-law 29  and that  in  any event the  Minister could  not issue  any direction  to  the Registrar  as  to  the  reconstitution  of  the  Board.  The respondents, however,  contended that the Chief Minister had illegally usurped  the statutory  functions of the Registrar and  passed   several  orders  and  that  the  Minister  was justified in issuing the requisite orders.      Allowing the appeal, ^      HELD: 1.  Neither the  Chief Minister  nor the Minister for Cooperation  or Industries  had the power to arrogate to himself the  statutory functions of the Registrar under bye- law 9.  Under the  Cabinet system  of Government,  the Chief Minister  occupies   a  position   of  pre-eminence  and  he virtually carries  on the governance of the State. The Chief Minister may  call for any information which is available to the Minister-in-charge  of  any  department  and  may  issue necessary   directions   for   carrying   on   the   general administration of  the  State  Government.  Presumably,  the Chief Minister  dealt with  the question  as if  it were  an executive function  of  the  State  Government  and  thereby exceeded his  powers in  usurping the statutory functions of the Registrar  under bye-law 29 in extending the term of the first Board of Directors from time to time. [655 A, 654 C-D]      2. The  executive power  of the  State  vested  in  the Governor  under   Art.  154(1)   connotes  the  residual  or governmental functions that remain after the legislative and judicial functions  are  taken  away.  The  executive  power includes acts  necessary for  the carrying on or supervision of the  general administration of the State including both a decision as  to action and the carrying out of the decision. Some of the functions exercised under "executive powers" may 648 include powers  such as  the supervisory jurisdiction of the State Government  under s. 65A of the Act. The action of the Chief Minister  cannot however  be supported by the terms of s. 65A  of the  Act inasmuch  as  there  was  no  proceeding pending before  the Registrar  in relation  to  any  of  the matters specified in s. 65A of the Act nor had the Registrar passed any order in respect thereto. [654 E-G]      For the same reasons, it must be held that the Minister for Industries  also exceeded his own authority in directing the manner  in which  the new  Board of  Directors was to be constituted by  the Registrar under bye-law 29 by forwarding

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a  list   of  7   names  to  be  nominated  by  him  in  the reconstituted Board and a further list of 8 names indicating that if  the Committee  of Management  was superseded  under another provision,  it should  consist of  those 15 persons. [655 C-D]      3. Under  bye-law 29,  the Registrar  had the  power to reconstitute the  first Board of Directors or to curtail the extended term.  Proviso to  bye-law 29  lays down  that  the first Board of Directors shall be nominated by the Registrar for a  period not  exceeding one  year at  a  time  and  not exceeding three  cooperative  years  in  the  aggregate.  It however does  not entail  the consequence that when the term of the  first Board  of Directors  is extended  from time to time, it must necessarily extend to three cooperative years. That  apart,  the  extended  term  of  the  first  Board  of Directors was  to enure  "till further orders" and therefore the Registrar  had reserved  to himself the right to curtail the extended  term by reconstituting the Board, at any time. [655E-656A]      Upon this  view, the  Court directed (i) the Registrar, Cooperative Societies,  to take  over the  District  Central Cooperative Bank and exercise all the powers and perform all the duties vested in the Committee of Management which under the Bihar  & Orissa  Cooperative Societies Act, 1935 and the Bihar Cooperative  Societies Rules,  1959 and  the  bye-laws thereunder are  vested in  the Committee  of Management. And (ii) the  Registrar, either himself or through an Officer in the Cooperative  Department designated  by him, shall call a general meeting  of the  Society and  require the society to elect a new Board of Directors.[656 C-D]

JUDGMENT:      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 10296 of 1983      Appeal by  Special leave  from the  Judgment and  Order dated the  30th September,  1983 of  the Patna High Court in C.W.J.C. No. 4139 of 1983      Pramod Swarup for the Appellant.      K.N. Rai for the Respondent.      The Judgment of the Court was delivered by 649      SEN, J. The controversy in this appeal by special leave against an order of the Patna High Court dated September 13, 1983 relates  to the legality and propriety of the action of the Chief Minister of a State in issuing certain directions, and incidentally  the scope  and extent  of the  power of  a Minister to  interfere  with  the  working  of  a  statutory functionary under his department.      The facts  are that  on the bifurcation on the district of  Muzaffarpur   and  creation  of  the  new  districts  of Muzaffarpur and  Hajipur, a  separate  Central  Co-operative Bank called the Vaishalli District Central Co-operative Bank for  the   district  of  Hajipur  was  registered  with  its registered bye-laws.  Bye-law No.29  of the  said registered bye-laws provides inter alia as follows:           "29. Management:  The Management of the Bank shall      vest in  a Board  of Directors which will consist of 17      persons:      XX        XX        XX        XX        XX           Provided also that the first Board of Directors of      the Bank  shall be  nominated  by  the  Registrar,  Co-      operative Societies,  Bihar for  a period not exceeding      one year at a time and not exceeding three Co-operative

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    years in aggregate and that the Registrar, Co-operative      Societies  may   modify  the  nomination  if  and  when      required."      The  Registrar,   Co-operative  Societies,   Bihar,  in exercise of  the powers conferred by bye-law 29 by his order dated July  22, 1981  nominated a Committee of Management of 17 members,  including the  appellant, to be the first Board of Directors  of the  Co-operative Bank  for a period of six months i.e.  upto December 31, 1981, or till further orders, whichever was  earlier.  The  Committee  of  Management  was specifically directed  to get  the election  of the Board of Directors of  the Central  Bank held  in accordance with the law within  six months  of the  date of their nomination and the Registrar  by the  order had  reserved his discretion to make changes  in the  nomination of  the Board by the use of expression ’until  further orders’.  The  Registrar  by  his letter dated  October 1,  1981  directed  the  Committee  of Management  to   complete  the  election  of  the  Board  of Directors of  the Bank as per programme laid down therein by December 20,  1981 as  the six months’ term of the nominated Board 650 was going  to expire  on December  31, 1981.  Copies of  the letter were  endorsed to  the District Co-operative Officer, Vaishalli for  necessary action  as also  to  the  Executive Officer of  the Bank  stating that  it would be his personal responsibility to  get  the  desired  steps  taken  in  that connection as  per the  time schedule  fixed. In  accordance therewith, the  District Co-operative  Officer, Vaishalli by his letter  dated October  23, 1981  directed the  Executive Officer of  the Co-operative Bank to get the election of the Board of Directors completed by December 20, 1981.      The case illustrates an unfortunate trend which has now become too  common these  days  in  the  governance  of  the country. The appellant who was nominated to be the Secretary of  the  first  Board  of  Directors  and  is  apparently  a political person  had a direct approach to the seat of power viz., the  then Chief  Minister  Dr.  Jagannath  Misra.  The result was  that the first Board of Directors as constituted by the Registrar kept on flouting with impunity the repeated directions of  the Registrar, Co-operative Societies in that behalf, since  they  were  not  interested  in  holding  the general meeting  for the purpose of election of the Board of Directors. Instead  of complying  with the directions of the Registrar, the  appellant by  using the  letterhead  of  the District  Congress   Committee  (1),   Vaishalli  and  after bypassing the  Registrar of  Co-operative Societies  and all other officials,  directly approached  Dr. Jagannath  Misra, the then  Chief Minister  of Bihar,  and got the term of the first Board  of Directors extended from time to time and the election of  the new  Board  postponed  without  any  lawful justification. The  then Chief  Minister made an endorsement thereon dated  October 29,  1981 addressed  to the  Minister (Co-operation) with  a direction  that the  Registrar should extend the  period of  the Committee  of Management  for the time being. The Registrar was constrained by his order dated November 26,  1981 to  extend the  term of  the Committee of Management for  a period  of six  months i.e.  till June 30, 1981 but  he nonetheless  gave a  specific direction  to the Committee of  Management to call the general meeting and get the Board of Directors elected within the extended term, but this was  of no  avail. On  April  21,  1982  the  appellant addressed a  letter to  the then  Chief Minister for further extension of  the term of the Committee of Management by one year and the then Chief Minister made an endorsement thereon

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addressed to  the Minister  (Co-operation) to take necessary steps for  extending the  term. Again,  the Registrar by his order dated  June 21,  1982 was forced to extend the term of the nominated Board of Directors for a 651 period of  one year i.e. upto May 31, 1983, or until further orders, whichever  was earlier.  Nevertheless, the Registrar while extending  the term  again made  a direction requiring the Committee  of Management  to call the general meeting to get the  new Board of Directors elected but despite the said direction, no  such meeting  was ever  called. On  April 13, 1983, the  appellant again  addressed a communication to the then Chief  Minister  for  extension  of  the  term  of  the nominated Board  of Directors  for a period of one year from June 1,  1983 and the then Chief Minister by his order dated June 13,  1983 extended the term for six months and endorsed the same  to  the  Minister  (Co-operation).  The  Registrar accordingly  by  his  order  dated  June  23,  1983  further extended the  term of  the nominated Board till November 30, 1983, or  till further  orders, whichever was earlier. While extending the  term, he  again made  a specific direction to the Committee  of Management to call the general meeting for the aforesaid purpose.      With the  resignation of  the then  Chief  Minister  on August 13,  1983, the  respondent No.  3 Laliteshwar  Prasad Shahi, Minister  for  Industries  for  the  State  of  Bihar appears to  have issued  a direction on September 5, 1983 to the  Commissioner   of  the   Co-operative  Department.  The communication was  marked as  ’unofficial’ and  was  to  the following effect:           "If the  Committee  is  reconstituted,  the  Board      shall legally  consist of  7  members  only.  For  this      purpose, 7  names are being sent. When the Committee is      superseded under  another provision,  it may consist of      even 15  members. For  this purpose,  8 names are being      sent on a separate page." On a  buff-sheet, the  Minister indicated  the first  set of seven names and the second of eight names.      In compliance  thereof the  Registrar by  his  impugned order dated  September 6,  1983 in  supersession of  all his earlier orders  reconstituted the  first Board  of Directors with immediate effect and directed that the tenure of office of the reconstituted Board shall be for the remainder of the term i.e,  till November  30, 1983,  or till further orders, whichever was earlier. 652      The short  question that  falls  for  determination  is whether the  then Chief  Minister was  entitled to usurp the functions of  the Registrar  of Co-operative Societies under bye-law 29.  Further, the  question is  whether the Minister was entitled  to issue  a direction  to the Registrar of Co- operative Societies  to reconstitute  the nominated Board of Directors under  bye-law 29;  and if so, whether he could go further and  assume  the  functions  of  the  Registrar  and forward to  him a  list of  names to  be  nominated  on  the reconstituted Board. Under bye-law 29, it is the function of the Registrar  to constitute  the first  Board of  Directors which  necessarily   carries  with   it  the  incidental  or ancillary power  to  reconstitute  such  Board  when  he  is satisfied that the circumstances attendant so require.      It is  urged  on  behalf  of  the  appellant  that  the Registrar had  no power to reconstitute the Board under bye- law 29  and that  in any  event the Minister could not issue any direction to the Registrar as to the manner in which the Board  was  to  be  reconstituted.  The  contention  to  the

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contrary advanced  by the respondents is that the then Chief Minister had  illegally usurped  to  himself  the  statutory functions of  the Registrar  under bye-law 29 and passed the several orders  in question  to oblige  the appellant  and a handful of  persons who  retained  their  control  over  the Central Cooperative  Bank contrary to the scheme of the Act, and  that  upon  his  demitting  the  office  of  the  Chief Minister, the Minister for Industries was fully justified in issuing a  direction to  the Registrar for reconstitution of the Board.  It is  said that  the Minister  was an important political worker  in the  district of  Vaishalli and  he was informally asked to suggest the names of suitable persons to the  Registrar  for  his  consideration.  The  communication referred  to   was  addressed   by  the   Minister  to   the Commissioner of  the Cooperative  Department and  marked  as ’unofficial’ merely  contained his  informal suggestion. The submission is  that the  Minister is  entitled  to  issue  a direction of  this nature  to a  statutory functionary under his department  and therefore  the Registrar had necessarily to act under the directions of the Minister.      The Bihar  & Orissa  Cooperative  Societies  Act,  1935 (’Act’ for  short) is  intituled as:  "An Act to consolidate and amend  the law  relating to Cooperative Societies in the States of  Bihar and  Orissa", and the Preamble recites that the object and purpose of the legislation was "to facilitate the  formation  working  and  consolidation  of  cooperative societies for  the promotion  of thrift, self-help and mutal aid among  agriculturists  and  other  persons  with  common needs". 653 Sub-s.(1) of  s.7 provides  that a  society which has as its objects the promotion of the common interests in its members in accordance  with cooperative  principles,  or  a  society established with  the object  of facilitating the operations of such  a society,  may be registered under the Act with or without limited  liability. Sub-s. (1) of s.11 provides that if the  Registrar is  satisfied that  a society has complied with provisions  of the  Act and  the  Rules  and  that  its proposed bye-laws  are not  contrary to  the Act,  or to the Rules, he  may, if  he thinks  fit, register the society and its bye-laws.  Sub-s. (2)  of s. 14 of the Act provides that the management  of a registered society shall be vested in a managing committee constituted in accordance with the Rules. Sub-s.(3) of  s. 14  of the  Act provides  that the  term of office of  the elected  members and  office-bearers  of  the managing committee  of the  society shall  be as provided in the bye-laws  of the  society and  the elected  members  and office-bearers shall  continue  to  hold  office  after  the expiry of  their term  till their  successors are elected or for  three   months,  whichever   is  earlier.   A   Central Cooperative Bank  is a  financing Bank within the meaning of s.2(c) which  means a  registered society the main object of which  is  to  make  advances  in  cash  or  kind  to  other registered  societies   or  to   both  such   societies  and agriculturists. From  the very  nature of  things, a Central Cooperative Banks  holds large  sums  of  money.  Under  the scheme of the Act, the Registrar of Cooperative Societies is charged with  the  duty  of  administering  all  cooperative societies within the State.      The Bihar  Cooperative Societies  Rules,  1959  provide that, subject  to nomination by the Registrar of such number of members  to the  managing committee and in such manner as may  be  prescribed  by  him,  a  managing  committee  of  a registered society  including its  office-bearers  shall  be elected by vote from among the members of the society at the

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annual general meeting held in accordance with the bye-laws. Bye-law 29  read with  the  proviso  confers  power  on  the Registrar to  constitute the first Board of Directors of the Central Cooperative  Bank. Under  the  second  part  of  the proviso to  bye-law  29,  he  has  the  necessary  power  to reconstitute such Board.      S. 65A  of the  Act, on  which reliance is placed, runs thus:           "65-A. Notwithstanding  anything to  the  contrary      contained in this Act, the State Government may, of its      own motion or on an application made to it by any party      aggrieved by the constitution, or reconstitution, 654      amalgamation, election,  supersession,  liquidation  or      any other  matter concerning  working of  the  society,      call for any record of inspection or enquiry made under      this Act  or proceedings  of any  matter pending before      the Registrar  or his  subordinate or any person acting      under his authority and examine and pass such orders as      it may deem fit."      We fail  to  appreciate  the  propriety  of  the  Chief Minister passing  orders for extending the term of the first Board of  Directors. Under the Cabinet system of Government, the Chief  Minister occupies  a position of pre-eminence and he virtually  carries on  the governance  of the  State. The Chief  Minister  may  call  for  any  information  which  is available to  the Minister-in  charge of  any department and may issue  necessary directions  for carrying on the general administration of  the  State  Government.  Presumably,  the Chief Minister  dealt with  the question  as if  it were  an executive function  of  the  State  Government  and  thereby clearly  exceeded  his  powers  in  usurping  the  statutory functions of the Registrar under bye-law 29 in extending the term of  the first Board of Directors from time to time. The executive power  of the  State vested  in the Governor under Art. 154 (1) connotes the residual or governmental functions that remain after the legislative and judicial functions are taken away.  The executive power includes acts necessary for the carrying on or supervision of the general administration of the  State including both a decision as to action and the carrying  out   of  the  decision.  Some  of  the  functions exercised under  "executive powers"  may include powers such as the  supervisory jurisdiction  of  the  State  Government under s.65A  of the  Act. The  Executive cannot, however, go against the provisions of the Constitution or of any law.      The action  of the  then Chief  Minister cannot also be supported by the terms of s.65A of the Act which essentially confers revisional  power on the State Government. There was no proceeding  pending before  the Registrar  in relation to any of the matters specified in s.65A of the Act nor had the Registrar passed  any  order  in  respect  thereto.  In  the absence of  any such  proceeding or such order, there was no occasion for the State Government to invoke its powers under s.65A of  the Act.  In our  opinion,  the  State  Government cannot for  itself exercise  the statutory  functions of the Registrar under the Act or the Rules. 655      Neither  the   Chief  Minister  nor  the  Minister  for Cooperation or  Industries had  the  power  to  arrogate  to himself the  statutory functions of the Registrar under bye- law 29.  The act of the then Chief Minister in extending the term of  the Committee  of Management  from time to time was not within  his power.  Such action  was  violative  of  the provisions of  the Rules and the bye-laws framed thereunder. The Act  as amended  from time  to time  was enacted for the

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purpose of  making the cooperative societies broad-based and democratizing the  institution rather  than to allow them to be monopolized  by a  few persons.  The action  of the Chief Minister meant  the very negation of the beneficial measures contemplated by the Act.      For the same reasons, it must be held that the Minister for Industries  also exceeded his own authority in directing the manner  in which  the new  Board of  Directors was to be constituted by  the Registrar under bye-law 29 by forwarding a  list   of  7   names  to  be  nominated  by  him  in  the reconstituted Board and a further list of 8 names indicating that if  the Committee  of Management  was superseded  under another provision, it should consist of those 15 persons.      There  is  no  warrant  for  the  submission  that  the Registrar had  no power  to reconstitute  the first Board of Directors under  bye-law 29 or to curtail the extended term. While the  proviso to  bye-law 29  lays down  that the first Board of Directors shall be nominated by the Registrar for a period not  exceeding one  year at  a time and not exceeding three cooperative years in the aggregate, it does not entail the consequence  that when  the term  of the  first Board of Directors is extended from time to time, it must necessarily extend  to   three   cooperative   years.   The   expression "cooperative year"  is defined  in s.2 (bb) to mean the year beginning from  the 1st  of July  to the  30th of  June. The second part  of the  proviso expressly  confers power on the Registrar to  modify the  nomination of  such Board,  if and when required.  On a  reading of  bye-law 29 read along with the  proviso,  it  is  manifest  that  the  first  Board  of Directors is  entitled to  hold  office  for  a  period  not exceeding three  cooperative years  in the aggregate, unless it is  reconstituted by  the Registrar  within the aforesaid period. That  apart, the order passed by the Registrar dated July 22,  1981 nominating  the first  Board of Directors was for a  period of  six months  i.e. upto December 31, 1981 or till further  orders. The words "till further orders" appear in all the subsequent orders extending the term of the Board and therefore the Registrar had reserved 656 to himself  the  right  to  curtail  the  extended  term  by reconstituting the  Board, at any time. In the instant case, however, the  impugned order  issued  by  the  Registrar  to reconstitute the  first Board  of Directors  was not made by him at  his own  discretion in  the exercise  of his  powers under bye-law  29 but was made at the behest of the Minister for Industries  and  it  must  accordingly  be  held  to  be invalid.      In the  circumstances of the case, we feel it proper to direct the  Registrar, Cooperative  Societies, Bihar to take over the  Vaishalli District  Central Cooperative  Bank  and exercise all  the powers  and perform  all the  duties which under the  Bihar and  Orissa Cooperative Societies Act, 1935 and the  Bihar Cooperative Societies Rules 1959 and the bye- laws of  the Central  Cooperative Bank  are  vested  in  the Committee of  Management. The Registrar shall either himself or  through   an  Officer   in  the  Cooperative  Department designated by  him call  a general meeting of the society at such time  and place  at the  headquarters  of  the  Central Cooperative Bank  and to  require the society to elect a new Board of  Directors. We  further  direct  that  neither  the members of  the first  Board of Directors constituted by the Registrar of  July 22,  1981, nor  the  so-called  Board  of Directors reconstituted  by him  on September 6, 1983, shall interfere with  the affairs  of the  society. In  compliance with these direction, the Registrar of Cooperative Societies

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will  issue  immediate  instructions  for  taking  over  the management of the Central Cooperative Bank and may designate an Officer  in the  Cooperative Department  to discharge the duties and  functions of  the Committee of Management till a new Board  of Directors  is constituted  in accordance  with law.      The appeal  is disposed  of accordingly. There shall be no order as to costs. N.S.K.                                       Appeal allowed. 657