M. PURUSHOTHAMAN NAIR Vs. STATE OF KERALA

JUDGEMENT

(1.) The Trivandrum District Cooperative Bank Ltd., (hereinafter referred to as the Bank) is a registered cooperative society under the Travancore - Cochin Cooperative Societies Act, 1951. This Act has now been repealed and replaced by the Kerala Cooperative Societies Act, 1969 (hereinafter referred to as the Act). Under the bye laws of the Bank, the management of its affairs is vested in a Board of Directors consisting of not more than eleven members subject to such resolutions as the general body may pass from time to time. The Board shall elect from among themselves the president and the Vice President. The period of the Board shall be three years beginning with the first of September. The Board consists of both elected and nominated members. Each member of the Board shall continue in office after the expiry of his term, until another member is elected in his place; and a retiring number shall also be eligible for reelection; but a nominated member holds office only during the pleasure of the authority nominating him. It shall be competent for the general body to remove any elected number and elect another in his place after giving due notice. The Board of Directors shall meet once in three months or oftener if necessary to conduct the affairs of the Bank. The quorum for a meeting shall be five; and all questions shall be decided by a majority of votes. The President or the presiding number, as the case may be, shall have a casting vote in case of equality of votes. If a member of the Board absents himself for four consecutive meetings without its permission, he shall cease to be a member. A meeting of the Board may be convened by the Executive Committee or the President on seven days' notice. The President shall also call a meeting upon a written requisition of not less than one half of the members of the Board within 14 days from the date of giving such requisition. Subject to the general directions that the Board may issue from time to time, the administration of the affairs of the Bank is vested in an Executive Committee, consisting of five members including the President, the Vice President and three other directors elected by the Board of Directors from among themselves. The members of the Executive Committee shall hold office during the term of their membership of the Board; but he shall cease to hold that office, if he absents himself from three consecutive meetings of the Committee. The Executive Committee also takes decisions by the majority of votes. Three members shall form the quorum for a meeting of the Executive Committee; and its decision shall not be valid unless it is assented to by at least three members. These are some of the relevant provisions in the bye laws of the Bank relating to its management.

(2.) The three petitioners in this Original Petition and respondents 5 to 12 are members of the Board of Directors, the fifth respondent being the President and the sixth respondent being the Vice President. Respondents 4, 6, 7 and 12 along with the third petitioner form the Executive Committee. Sometime after the constitution of the above Board, differences arose among the members on several matters. Consequently six members of the Board of Directors sent a non confidence motion against the members of the Executive Committee to the 5th respondent, the President, requesting him to convene a meeting of the Board of Directors to consider that matter. He placed it before the Executive Committee which resolved to convene a meeting of the Board of Directors on 10-4-1969. In the meanwhile, one Sri. Balakrishna Pillai, who is a member of the Bank, filed O. P. 2059 of 1969 in this Court and obtained an interim ex parts order on 8 4 1969, restraining the Board of Directors from convening its meeting on 10-4-1969. The interim order was vacated sometime in May 1969; but before that, the fifth respondent had taken steps to convene a general body meeting. Then another member of the Bank filed a suit in the Munsiff's Court, Trivandrum and obtained an interim order restraining the convening of the general body meeting. The six persons who had given notice of the no confidence motion against the Executive Committee then moved the Registrar of Cooperative Societies, the third respondent, to convene a meeting of the Board of Directors. The third respondent thereupon by his letter, Ex.. P 2 dated 23-5-1969, wrote to the fifth respondent the President of the Bank requesting him to convene an urgent meeting of the Board to consider all matters mentioned in Ex. P 2. The President, however, did not take any prompt steps to conduct the meeting. Then seven members of the Board of Directors, including petitioners 1 and 2, filed a representation, Ex. P 3 dated 27-5-1969 before the Deputy Registrar of Cooperative Societies, detailing the circumstances under which the administration of the Bank was coming to a standstill and requesting him to exercise his powers under S.30(4) of the Act to convene a meeting of the Board of Directors and solve all the problems which the Bank was facing. Apparently pursuant to Ex. P 3, a meeting of the Board of Directors was convened by the Deputy Registrar on 11 6 1969. Though the most important matter was to consider the no confidence motion, and to elect an Executive Committee to carry on the administration of the Bank, in case the no confidence was passed, that item was not included in the agenda of the meeting, but the Board transacted certain other administrative business and adjourned the meeting for being held on 20-6-1969. Then Shri Balakrishna Pillai again appeared on the stage by filing a suit in the Munsiff's Court, Trivandrum and obtained an ex parte interim order restraining the convening of the meeting of the Board of Directors fixed to be held on 20 6 1969. Thereafter nothing was heard except that the third respondent, the Registrar of Cooperative Societies in exercise of the power vested in him under S.32(1) of the Act read with Sub-s.(3) thereof issued an order, Ex. P5 dated 10-7-1967 by which he superseded the Board of Directors of the Bank and appointed the fourth respondent as administrator to manage the affairs of the Bank. This Original Petition has been filed to quash Ex. P5, to direct the fourth respondent to hand over the management of the affairs of the Bank to the Board of Directors, and to elect a new President, Vice President and an Executive Committee for carrying on the normal functioning of the Bank.

(3.) The second respondent in this Original Petition is Shri P. R. Kurup who was the Minister for Cooperation, at all relevant times. Very serious allegations have been made against him; and one of the main attacks against Ex. P5 is that it is an order passed by the Registrar at the dictation of the Minister malafide and merely on political considerations. According to the petitioners, Shri Balakrishna Pillai who filed O. P. 2059 of 1969 and the suit in the Munsiff's Court, Trivandrum and obtained ex pane interim injunctions restraining the convening of the meeting of the Board of Directors is one of the leaders of the political party to which Mr. Kurup belongs and all those proceedings were instituted and such orders obtained at the instance of Shri Kurup, in order to create a dead lock in the management of the Bank by the Board of Directors, and make use of that situation for superseding it under S.32(1) of the Act. The reason for this mala fide conduct and abuse of his high position as Minister of this State is said to be that the President and the Vice President belonged to the Minister's political party, that they had a majority in the Executive Committee, that the Minister and his party leaders were exploiting this situation for giving loans from the Bank to their party men contrary to its bye laws and to the detriment of the Bank and by creating unnecessary offices and making appointments thereto, that the Executive Committee could not hope to carry on like that, as the majority of the Board of Directors had given notice of no confidence motion against the Executive Committee, that under these circumstances the Minister wanted to supercede the Board and appoint his own nominee as administrator so as to enable him to continue to misuse the assets of the Bank for his personal advantage and the party men. The 2nd respondent has filed a counter affidavit denying the above charges. The 5th respondent also denies the allegations against him. I think that it is possible for me to dispose of this case without going into the above allegations. I may, however, observe, that, if the Deputy Registrar took up first, as he should have done, the no confidence motion against the Executive Committee in the meeting of the Board of Directors on 11-6-1969, and that matter was settled according to the majority of votes, all the difficulties created for the management of the affairs of the Bank according to its bye laws would have been solved, and there would have been no occasion for the Registrar to exercise his power under S.32 of the Act.