Vineshkumar Mavjibhai Parmar v. Dethali Gopalak Vividh Karyakari Sahakari Mandali Ltd. and Ors. - (Supreme Court) (16 Nov 2016)

Officers of credit society facing liquidation not disabled from enforcing or performing certain rights and obligations attached to the office

MANU/SC/1491/2016

Trusts and Societies

Issue in facts of present case is relating to participation of members of the Managing Committees of co-operative societies (against whom proceedings under Section 107 of the Gujarat Co-operative Societies Act, 1961 are pending) in the election process of an Agricultural Produce Marketing Committee constituted under the Gujarat Agricultural Produce Markets Act, 1963. In view of the pendency of the liquidation proceedings, objections for the inclusion of the names of the members of the managing committees of the 8 cooperative societies were raised. Objections were upheld by the proceedings dated 26.02.2015 of the Additional Registrar and Co-operation Officer (Market), Patan, directing the deletion of the names of the members of the managing committee of the above-mentioned 8 cooperative societies. Aggrieved by such a decision, the members of the managing committee of the said society filed special civil applications invoking Article 226 of the Constitution of India. By the judgment impugned in these appeals, the special civil application was allowed setting aside the orders of the Additional Registrar.

Right to elect 'agriculturists' to a market committee is conferred under Section 11 of Gujarat Agricultural Produce Markets Act, 1963 upon electoral college consisting of members of managing committees of cooperative societies operating in the market area which are dispensing agricultural credit. Section 108(3) (b) of Act, 1961 stipulates that the officers of the cooperative society vacate their offices only on the passage of the final order of winding up. Obviously, they continue to be the office bearers but are disabled from enjoying certain rights attached to the office and performing certain functions to be performed by the holders of the office.

The rights and functions of the Officers of a co-operative society are many. Some of them are created by the statute under which the office is created. Others could be the creation of subordinate legislation (in the context of the present case, even the byelaws of the society). Existence or lack of such rights and functions depend upon scheme and tenor of Societies Act and the subordinate legislation made thereunder. Such rights and functions are put to an end by operation of law only i.e., the Societies Act. Apart from that, nothing prevents the legislature from conferring by another law additional rights or functions on a person holding an office created under Societies Act.

The legislature of Gujarat by Section 11(1) of the Markets Act conferred on officers of a class of credit societies an additional function of electing members of the market committees. Such function is neither conferred on officers of all the societies functioning under the Societies Act nor such function includes the right to elect every member of the concerned market committee. Such a function creates a right in officers of societies. Such a statutory right could not be taken away in absence of any express authority of law. Gujarat legislature expressly provided under Societies Act for curtailment of certain rights of the officers of societies facing liquidation proceedings. At the same time, it also declared that such officers cease to be the officers of the Society only when a final order of winding up is passed. In a given case, if Registrar after an appropriate enquiry following the interim order of winding decides not to finally wind up society, officers of the society would once again be entitled to exercise all the rights associated with it and perform all the functions attached to office. Therefore, merely because officers of credit society facing liquidation are disabled from enforcing certain rights attached to the office or perform certain obligations appended to the office, it does not necessarily follow that they are disabled from performing every function entrusted by law to such office.

Credit Societies against which there is an 'interim order' of winding up are temporarily debarred from dispensing agricultural credit, by virtue of the operation of law. Embargo imposed by such interim order may or may not fructify into a final order of winding up. Supreme Court observed that, on face of such possibility of the society resuming its activity of "dispensing agricultural credit" - to debar its managing committee members from discharging their statutory obligation under Markets Act would be productive of public mischief. Such an interpretation of the statute must be avoided. Supreme Court dismissed the appeals.

Relevant : Sections 107, 110, 108 of Gujarat Co-Operative Societies Act, 1961, Section 11 of Gujarat Agricultural Produce Markets Act, 1963

Tags : ELECTION RIGHT PARTICIPATION