http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 6  

PETITIONER: DINESH PRASAD YADAV

       Vs.

RESPONDENT: THE STATE OF BIHAR & ORS.

DATE OF JUDGMENT13/01/1995

BENCH: KULDIP SINGH (J) BENCH: KULDIP SINGH (J) HANSARIA B.L. (J)

CITATION:  1995 SCC  Supl.  (1) 340 JT 1995 (2)    45  1995 SCALE  (1)153

ACT:

HEADNOTE:

JUDGMENT: 1.   The  term  of office of the members  ,of  the  Managing Committee  of  a  society registered  under  the  Bihar  Co- operative Societies Act, 1935 (the ’Act’) and the Bihar  Co- operative  Societies Rules, 1959 (the Rules) is  three  "co- operative years".  The State Government, under the Act,  has a right to nominate - depending upon its share in the share- capital  of  the society certain number of  members  to  the Managing   Committee   of  a  society.  The   question   for consideration is whether the three-year term of the Managing Committee  is to be counted from the beginning of the  coop- erative  year’ in which the elections by ballot are held  or from  the ’co-operative year’ when the nominations are  made by the State Government? 2. Before stating    the necessary facts, it would be useful to examine the relevant provisions of the Act and the Rules. These are Sections 2(bb), 2(e), 14(2), 14(4), 14(9) and  the first proviso to Section 14(10) reading as under:-               "2(bb)   "Cooperative  year’  means   a   year               beginning with the 1st April and ending on the               3 1st March/               2(1) ’Managing Committee’ means the  committee               of  management  or  other  body  to  whom  the               management  of  the affairs  of  a  registered               society is entrusted.               14(2)  The  management of  registered  society               shall  be  vested  in  a  managing   committee               constituted in accordance with the rules:               14(4)  Notwithstanding anything  contained  in               any  provision of this Act, the  rules  framed               thereunder  or the bye-laws of any  registered               society where the State Government has --               (a)   subscribed directly to the share capital               of a registered,.society; or               (b)   assisted indirectly in the formation  or               augmentation   of  the  share  capital  of   a

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 6  

             registered society; or               (c)   given  loans  or  made  advances  to   a               registered society or guaranteed the repayment               of  principal  and  payment  of  interest   on               debentures issued by a registered society  for               or  guaranteed the repayment of principal  and               payment  of interest on loan or advances to  a               registered society;               in  that case the State Government shall  have               the   right  to  nominate  on   the   Managing               Committee of such registered society not  more               than  two  persons  one of  whom  shall  be  a               Government  servant, but the  said  Government               servant  shall  have no right to vote  in  the               election   of  the  office  bearers   of   the               registered society;               Provided that notwithstanding the               47               foregoing provisions contained in Sub-sections               4(a),(b) and (c)               (i) Where the share of the State Government in               the  share capital of such registered  society               exceeds  thirty per cent but does  not  exceed               fifty  per  cent, the State  Government  shall               have  the right to nominate upto one third  of               the  total  number  of  the  members  of   the               Managing Committee including the Chairman; and               such  right once accrued shall continue  until               the share of the State Government in the share               capital of the registered society goes down to               less than twenty five per cent;               ii)   Where the share of the State  Government               in  the  share  capital  of  such   registered               society  exceeds fifty per cent, but does  not               exceed  sixty  per  cent of  the  total  share               capital  of the registered society, the  State               Government  shall have the right  to  nominate               such   number  of  members  of  the   Managing               Committee   including  the  Chairman,  as   is               nearest  upto one-half of the total, and  such               right  once accrued shall continue  until  the               share  of  the State Government in  the  share               capital of the registered society goes down to               less than forty five per cent;               iii)Where the share of the State Government in               the  share capital of such registered  society               exceeds  sixty per cent, the State  Government               shall  have the right. to nominate  upto  two-               thirds  of  total  number of  members  of  the               Managing Committee including the Chairman, and               such  right once accrued shall continue  until               the share of the State Government in the share               capital of the registered society goes down to               less than fifty five per cent;               Provided    that   notwithstanding    anything               contained  in proviso (i), (ii) and  (iii)  of               sub-section  (4), the State  Government  shall               not nominate Chairman and other members of the               Managing   Committee  if  the  share   capital               subscribed  to  by the State Government  in  a               registered society is less than fifteen  lakhs               of rupees;               Provided further that where the bye-laws of  a               registered   society  so  provide  the   State               Government  or the Registrar, as the case  may

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 6  

             be,  may nominate more than two third  members               including  office  bearers  of  the   Managing               Committee on such terms and conditions as  may               be prescribed in the bye-laws;               14(9)  Notwithstanding anything  contained  in               the rules or bye-laws of a registered society,               the term of the members and the office-bearers               of  the  Managing Committee  of  a  registered               society shall be three co-operative years, and               they  shall  continue  to  hold  office  after               expiry  of their term till the  elections  are               held or for nine months from the close of  the               co-operative year, whichever is earlier;               14(10).................               Provided  that irrespective of the  date  when               the  election  is  so held  the  term  of  the               members and the office-bearers of the Managing               Committee  shall be deemed to  have  commenced               from the beginning of the co-operative year in               which the elections are held:               .................................................... Rules  2(xvi), 21A, 22(1) and 22(2) of the Rules  which  are relevant are reproduced hereunder: "2(xvi) ’Election’ means election, in accordance with  these Co-operative Society;                21  -A Notwithstanding any rule and bye  laws                             of any society the election of the members  of               the Managing Committee,                                     48               office-bearers  thereof and the  delegates  of               the society shall be held in a Special General               Meeting according to rule 20(2)(a) to (c).               22.   Managing Committee --               (1)   Subject  to  nominations  by  the  State               Government and/or the Registrar of such number               of  members  to  the  Managing  Committee   as               prescribed in the Act, Rules and bye-laws of a               registered society, the Managing Committee  of               the society shall be constituted:               Provided  that the election of the members  of               the  Managing  Committee  and   office-bearers               thereof  shall be held in accordance with  the               procedure laid down in Rule 21 -B to 21 -X.               (2)   The  members of the  Managing  Committee               and the Office-bearers shall be deemed to have               taken   over  charge  immediately  after   the               constitution of the Managing Committee:               Provided that the constitution of the Managing               Committee  shall  not be treated  as  complete               unless and until the members thereof have been               duty elected and/or nominated by the authority               empowered  to do so under the Act,  Rules  and               the Byelaws of the Society.               48               3.    Dinesh Prasad Yadav, the appellant,     was               a member of the Managing Committee  of     the               Kaithar  District  Central  Co-operative  bank               (the  ’Bank’) along with respondents 5 to  12.               They were elected as such by votes on  January               20,  1991  under Rule 21A of the  Rules.   The               State Government being a major shareholder  in               the share capital of the Bank it has the right               to nominate upto one-third of the total member               of   the  Managing  Committee  of  the   Bank,               including the Chairman.  Though the  elections

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 6  

             by  way  of ballot were held  on  January  20,               1991,   the   State   Government   made    the               nominations  to the Managing Committee of  the               Bank  as  late as March 2, 1993.   It  is  not               disputed  that the Managing Committee was  not               permitted  to function till March 2,  1993  on               the ground that it got constituted under  Rule               22  of  the Rules only after  the  nominations               were made by the State Government.               4.        The Managing Committee of  the  Bank               had  hardly  started functioning when  by  the               Order   dated   March  5,  1993,   the   State                             Government informed the Committee that itsterm               was  to expire on March 31, 1993.   The  State               Government,  on  the  basis  of  the   opinion               obtained  from  the  law  department  and  the               Advocate  General  of the State, came  to  the               conclusion that the elections having been held               on January 20, 1991, the term of office of the               Managing Committee under the first proviso  to               Section  14(10) of the Act would be deemed  to               have  commenced from April 1, 1990  (beginning               of the co-operative year) and would come to an               end  on March 31, 1993 (end of the  third  co-               operative year).               5.      The appellant and respondents 5 to  12               challenged  the order of the State  Government               dated March 5, 1993 by way of a writ  petition               before the Patna High Court.  A Division Bench               of  the  High  Court  following  its   earlier               judgment in Bihar State Handloon Weavers Union               & Ors. v. State of Bihar & Ors., CWJC No. 6543               of  1993  and  connected  matters  decided  on               February 10, 1994, dismissed the writ petition               by the impugned order dated March 2, 1994.  In               Bihar  State  Handloom Weavers case  the  High               Court proceeded on the following reasoning:-               "No doubt, in some of the cases, due to               49               laches and inaction of the executive,  certain               members  who  are so nominated  by  the  State               Government under the provisions of  subsection               (4) of Section 14 are deprived to hold  office               for full term or three co-operative years, but               due  to  such  inaction  and  laches  of   the               executive, the mandate of legislature,  fixing               a   tenure   of   three   cooperative   years,               commencing   from   the   beginning   of   the               cooperative year, in which election was  held,               cannot be extended.  On the other hand,  there               is  no  provision under the Act and  Rules  to               show that the term of the elected members  and               office  bearers, which is  three  co-operative               years,  can be extended, except in the  member               prescribed  under subsections (9) and (10)  of               Section 14." This  appeal,  by  way  of special  leave,  is  against  the impugned  order of the High Court.  The appellant  has  also challenged  the  correctness of the High Court  judgment  in Bihar State Handloom Weavers case. 6.   Sri  Sunil  Gupta, learned counsel  appearing  for  the appellant,  has  vehemently  contended  that  the   Managing Committee constituted under the Act and the Rules has three- year term in office and the same cannot be reduced by giving an  isolated meaning to the first proviso to Section  14(10)

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 6  

of the Act thereby rendering the provisions of Rule 22(2) of the  Rules  as otiose.  He further  contended  that  various provisions  of the Act and the Rules are to be  harmoniously interpreted   to  give  purposeful  meaning  to   the   said provisions.   In  the alternative the learned  counsel  con- tended that the provisions of the Act which permit the State Government  to  reduce  the  office  term  of  the  Managing Committee from three years to three weeks, as happened here, are wholly arbitrary and cannot be sustained in the eyes  of law. 7.   The provisions of the Act and the Rules, quoted  above, clearly  indicate  that  the scheme of the  Act  gives  wide powers to the State Government to control those societies in which  it  has considerably contributed  towards  the  share capital.   The State Government can nominate even upto  two- third  of  the  total  members  of  the  Managing  Committee including  the  Chairman.  It would, therefore, be  in  tune with  the  scheme  of  the Act to  hold  that  the  Managing Committee cannot assume office till the time the nominations are made by the State Government.  Proviso to Rule 22(2)  of the Rules rightly provides that the Managing Committee shall not  be treated as complete unless the members thereof  have been   duly  elected  and/or  nominated  by  the   authority empowered to do so under the Act, Rules and bye-laws of  the Society. 8.   The expression ’election’ has not been  defined   under the Act.  In the absence of    any   definition    by    the legislature we have to follow the ordinary meaning given  to the  said  expression.  Collins English  Dictionary  defines ’election’ as under:               "The selection by vote of a person or  persons               from  among candidates for a position, esp.  a               political  office.  The act or an instance  of               choosing. Webester Comprehensive Dictionary, International Edn., gives the following meaning to the expression ’election’:               "The  selection  of a person  or  persons  for               office  as  by ballot.  A choice,  as  between               alternatives, choice in general." 9.   The expression ’election’, therefore, means selection of  a person by  vote or even otherwise.  When a  person  is nomi- 50 nated  by way of selection on the basis of a given  criteria from  amongst several persons, then in the broader sense  he is  elected  to  the office.  We are of the  view  that  the expression  ’elections’,  in the first  proviso  to  Section 14(10)  of the Act, has been used in the broader sense.   It includes election by ballot as well as the choice by nomina- tion.   This  interpretation would make Rule  22(2)  of  the Rules  workable.   Section  14(2)  of  the  Act  vests   the management  of a registered society in a Managing  Committee constituted  in  accordance with the Rules.   Section  14(4) further  provides  that even upto two-third members  of  the Managing  Committee  can be nominated.  Sub-section  (8)  of Section  14  further  imposes  bar on  the  members  of  the Managing Committee for re-election after they have held  two consecutive  terms.  Rule 22(2) read with Section  14(2)  of the  Act makes it abundantly clear that constitution of  the Managing  Committee is to be treated as complete  only  when the  elections  by  ballot as well as  the  nominations  are finalised.  Even otherwise, to fulfill the avowed object  of the  Act  and  to encourage  and  promote  the  co-operative movement  in  the State, it is necessary that  the  Managing Committee  as  constituted  under Rule 22(2)  of  the  Rules

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 6  

should be given its full tenure of three co-operative years. Having-provided  for  three  years’ term in  office  to  the Managing  Committee  of  a  Society, it  could  not  be  the intention  of  the  legislature to leave  it  to  the  State Government to reduce the same to as short a period as  three weeks,  which would be a mockery.  We, therefore, hold  that in  the first proviso to Section 14(10) the expression  ’the co-operative  year  in which elections are held’  means  not only   the  elections  by  way  of  ballot,  but  also   the nominations under the Act.  The net result is that the  term of the Managing Committee under the Act and the Rules is  to commence  from  the beginning of the  co-operative  year  in which the nominations by the State Government are  completed and the Managing Committee is constituted in terms of  Rules 22(2) of the Rules. 10.  Although  the  expression ’election’ has  been  defined under   the  Rules,  but  the  said  definition   has   been specifically confined to the election in accordance with the Rules.   The election under Rules 21B21X is only by  way  of ballot.   There  is no provision for nominations  under  the Rules.   therefore, the definition of ’election’ under  Rule 2(xvi) read with Rules 21B to 21X only means the election as provided  under the Rules by way of ballot.  The  expression ’election’ as defined under the Rules has to be  interpreted in  the  context of the Rules and would not,  therefore,  go contrary  to  the  interpretation given by us  to  the  said expression in the context of the provisions of the Act. 11.  Ordinarily,  in view of the interpretation given by  us to  the  relevant provisions of the Act and  the  Rules,  we should have directed that the Managing Committee of the Bank whose  election was completed in March, 1993 be put back  in office  and given a three year term from April 1, 1992,  but on  the  facts and circumstances of this case,  we  are  not inclined  to  do so.  After the impugned order of  the  High Court, fresh elections to the Managing Committee of the Bank have  taken place on July 5, 1994.  The General Body of  the Bank having elected fresh members to the Managing  Committee of  the Bank, it would not be in the interest of justice  to set  aside  the  same.   Even  if  we  give  relief  to  the appellant, the old Committee gets tenure 51 only  upto  March 31, 1995.  We do not wish to  reverse  the process  to give benefit to the appellant only for  a  short period. 12.  We  allow the appeal in the above terms and  set  aside the impugned order of the High Court.  We further hold  that the  judgment  of the Patna High Court in CWJC No.  2297  of 1993  (R) does not lay down the correct law.  The  appellant shall be entitled to costs which we quantify as Rs. 15,000/- to be paid by the State Government. 52