c CHANDRIKA iHA v. STATE OF BIHAR & ORS. October 17, 1983 (A.P. SEN AND E.S. VENKATARAMIAH, JJ.] Constitution of India 1950. Article 154(/) 'ExecutiVI power' of State- Exerciseby Governor-Supervisory jurisdiction of State Governn1ent 11nd1r statute- Whether exercisable under 'executive f!OWer'.
Bihar & Orissa Co·operative Societies Act, 1935. S. 65A. Biha/ Co-operatiYe Society Rules, 1959 Bye-Law 29. District Co-operative Bank-First Board of Directors nominated by Regislrar-EXpiry of term-Chief Minister extending term from time to time-Minister-in-charge forwarding /iJt of names with directive to Registrar to make appointn1ent therefrom-Such actio~ }Vhether valid.
Administrative LAw-Chief. Minister or Minister-incharge whether can exercis~ the functions of a statutory authority,. Bye-law 29 of the Bihar Co-operative Society Rules, l~i59 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 appellarit 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 ti~e to time and the election of the Board postponed without any lawful ju1ti- fication. 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 r
CllANbRilliA ', BIHAR . 64? in turn extended the term with thC direction that the Committee of Marulaement should call a general meeting and· get .the Board of Directors elected. When the Chief Minister demilted office, the third respondent, who was the Minister for Industries issued a direction to the CommissionCr of t~ co .. operative Department, marked as 'unofficial'. It was stated therein that if the Committee was reconstituted the Board shall lcgally·consist of seven mem- bers oDly. 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 tlic first set of seven names and second set of eight names. In compliance with the Minister's directive the-R.:ejistrar by his impugned order in superseSsion of all earlier orders recori-s!itutCd- the first Board of Directors with immediate effect and directed that the 1enure of the office of the reconstituted Board shall be for the remainder of the term i.e. till, November 30, 1983.
Being a1grieved 1 the appellant assailed the order by a wrH petition in the Hiah 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.
Allowina the appeal, HELD : I. Neither the Chief f\Hnister nor tl_le Minister for Cooperation or Jndustries had the power to arrogate to himself \he 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 infor- mation which is available to the Minister-in-charge of any department and may issue necessary directions for carrying on the general adn1inistration of the State Goverr,mcnt. 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 extendiilg the tenn of the first Board of Directors from time to time. [655 A, 654 C·D]
2. The executive power of the State vested in fhe Govcrncir under Att. 154(1) connotes the residual or governmental functions. that remaiD after the legislative and judicial functions arc taken away~- The· 11'xecutive power includes acts necessary-for the carrying ~nor 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 fun&'tions exercised under "executive power!" ma)' c
SUPREME COURT ilE.POR TS (1984f 1 S.C.R •. include powers such as the supervisory jui'isdictioa of the,, State, Government u'nder s. 65A of the Act. The action of the Chjef M_inister -cannot however, be supported by the terms of s. 65A of the Act inasmuch as there was no proceed- ing pen.ding befor~ the Registrar in relation to any of the matters specified in . s. 65A of .the. Act nor had the RegiStrar pasSed aaY· Order in. respect thereto. · ..
. For the same reasons, it must be held that thC: I\1inister "for Industries also exceeded his own allthority in directing the inanner in which the new Board of Directors was to be consiituted by the Registrar under bye-law 29 by rOrwarding a list of 7 nan1es to be nominated by him in the reconstituted Board _and a further list of 8 names indicating that if the ~ommittiee of Management Was_supersede_d uil.de·r ai1other provision, it she Jld Consist of those· 15 petsons. [655 C-D)
3. Ubder bye-law 29,-the Re&is"trar had the power to reconstitute·lbe· first Board of Directors· or tO curtail the extended term. Proviso to bye-law 29 lays down that the first B0:ard 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 ·enu1e "till further orders·• and·, therefore.the Registrar had reserved to himself the right to curtail the extended· te_rm. by reconstituting the Board, at any.liµie. "(65SE- 656A] Upon this view, thC Court directed "(i) ·the· Registrar, CoOperativC Societies, to take over the District Central Cooperative Bank and ·exerecise ·all the powers and perform all the duties vested in the Committee of Management which under the B1har & Orissa Coopefative Societies.Act, 1935.~nd.the Bihar Cooperativ·e Societies Rules, 1959 and the bye-laws thereunder are vested in the Gommittec of Management. And (ii) the Registrar, ·eitb_cr himseff or through an ·Omeer· in the-coopercltiVe Depaftri1enfdeSigDatcd b)i hiin, shall Calra general "meeting ·of the Society atid :f'.C-quire· the· SocU:ty to 'elect a' neW Boatd of Director;.[656 C-DJ
.C1v1LAPPELLATE JuR1so1cnoN : .Civil .Appeal No. .J0296 ,of ·. Appeal by Special leave from the Judgment. and Order., dated the 30tJ1September, 1983 ofthe Patn;i High Coui-tin .c … w .. J.C.No. 4139of1983
·PramodSwarupfo 0r the Appellant. K.N. Rai for the Respondent. T)le Judgment·of the Court. was deliv~red by -v–·( \. . "-._ .. – CllANDR!KA v. BIHAR (Sen, J.) – SEN, J. The controversy in this appeal by special leave against an order of the Patna High Court dated Septemb.er 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 01 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 a/ia as follows :
" 29. Management: The Management of the Bank shall vest in a Bpard of Qirectors which will consist of 17 persons : xx xx xx xx xx 'Provide.d also that the first Board of Directors of the
Bank shall be nominated by the Reg.istrar, Co-operative Societies, Bihar for a period not exceeding one year at a time and not· exceeding three Co-operative 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 confe:rred by bye-law 29 by his· -order dated July . 22,. 1981 n9minated a Committee of Mauagement 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 Manage- ment was specifically direoted to get the election Of the Board of Directors of the Central Bank .·held in ·accordance with the Jaw within six months of the date of their nomination and the ,Registrar by the order had reserved his discretion to make ~hange~· in ''the nomination of the Board by ·the use of expression 'until ''ftirtlier orders'. The Registrar by his letter.dated October I, 1981 directed the Committee of Management to complete the eleclio'n of the" Board of Directors of the Bank as per programme iaid down … therein by December 20, 1981 as the six mcin\hs' term of the riominated Board c
c sl:Jl>RM COURT REPORTS [1984) I s.c.a. was going to expire on December 31, 1981. Copies of the letter were endorsed to. the District Co-opera.live Qfficer, Vaisha!H 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 there- with, 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 Oecember 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 appro- ach to the seat of power viz., the then Chief Minister Dr. Jagannath Misra. The result was th.at the first {loard of. Directors as consti- tuted by the Registrar kept on flouting with impunity the repeated directions of the Registrar, Co-operat.ive 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 letter- head of. the District Congress Committee (I), Vaish.alli and after by- passing 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 firsi 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 extel)d the period of the Co~mittee of Management for the tiiµebeing. The Registrar was constrained by 1\is 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 be nonethefoss·gave a spetjfic direction to the Committee of Management to call the 'gene- ral meeting and get the Board of Diiectors elected within the exten- ded 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 addressed to the Minister (Co-operation) to
take necessary steps for extending the term-. Again, th~ Registrar by his order dated June 21, 1982 was forced to extend the term of the.nominated Board of Directors for a 7' .. .–.I.
CHANDRJKA v. BIHAR (Sen, /.) 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 Manage· ment 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 commu· nication to the then Chief Minister for extension of the term of the nominated Board of Directors for a period of one year from June I, 19S3 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 Co.mmittee of Management to call the genesral 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 Sepetember 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 arc being sent on a separate page." Ori a buff-sheet, the Minister indicated the first set of seven names and the second of eight names.
In compliance the reofthe Registrar by his impugned order dated Sepetember 6, 1983 in supersession of all his earlier orders· reconsti· tuted the first Board of Directors with immediate effect and directed that the tenure of office of the reconstituted Bgard shall be for the rcmain<ter of the term i.e, till November 30, 1983, or till further orders, whichever was earlier.
c c (19~4) 1 S,C.R. ·The short question that falls for determination is whether the then Chief Minister was entitled to usurp the functions of the Regis-. trar 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 nomi- • nated ·)3oard of Directors under bye-law 29; and if so, whether he could go further and ·assume the functions of the Registrar and for- ward 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 )legistrar 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 contrary advanced by the respondents is that the then Chief Minister had illegally usurped to himself the s\atutory functions of the Registrar under bye-Jaw 29 and passed the several orders in question to oblige the appellant and a handful of persons who retained their confrol over the Central Cooperative Bank cont- rary 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 Vaisha\li 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 Departm.ent and marked as 'un- official' 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 Regis· trar had necessarily to act under the directions of the Minister. The Bihar & Orissa Cooperative Societies Act, 19.35 ('Act' for short) is intitnled as : "An Act to consolidate and aniend the law relating to Cooperative Societies in the States of Bihar and Orissa", and the Preamble recites that t\le object and purpose of the legisla- tion 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". CHANDRIKA v. BIHAR (Sen, J.)
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. (I) 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 by.e·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) ofs .. 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 ti}at the. term of office of the elected members and office-bearers of the managing committee of. the society ~hall be·asprovided 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 agriiml• turists.
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 annual general meeting held in accordance ·with the bye-laws. Bye-law 29 read with the proviso confers po.w,er on the Registrar to constitute.the first Board of Directors of the . Central Cooperative Bank. Under the second part of the proviso to bye.Jaw 29, he has the necessary power to reconstitute such .Board; S. 65A of the Act, on which reliance is placed, runs thus : c
"65-A. Notwithstanding anything to th~ 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.
n c SUPRBMI! COUllT RBPORt'S (1984) 1 s.c.a. amalgamation, election, supersession, liquidation or any other matter concerning working of the society, call for any record of inspection or enquiry made nnder this Act
or proceedings of any matter pending before the Registrar 'r-\ or his subordinate or any person acting under his autho· rity and ex!!,mine and pass such orders as it may deem :fit."
We fail to appreciate the propriety of the Chief Minister pass· ing orders.for extending the term of the first Board of Directors. Under the Cabinet system of Government, the Chief Minister occu- pies a position of pre-eminence and he
virtually carries on the governance of the State. The Chief Minister may call for any in- formation which i~ available to the Minister-in charge of any depart· ment 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 (!)connotes the residual or governmental functions that remain after the legislative and judicial functions are taken away. The executive power includes acts nrcessary 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 term~ 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. . Jn 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,
;:J .. f. CH;:'NDRIKA v, BIHAR (Sen, J.) . 655. Neit.her 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 aci of the then• Chief Minister in extending the term of the Committee of Manage· ment from time to ·time was not within his power. Such action was . violative.of the provisions. of the Rules and the bye:laws frame·d 'thereunder. The Act as amended from time. to time was· enacted for the ,purpose of making the cooperative s~~ietie~ broad-based · and democrati.zing the institution rather than to allow them to be • monopolized by a few' persons. The action of the Chief Minister meant the very negation oflhe beneficial measures contemplated by the Act.
.I 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 furtbe~list of 8 names indicating th~t i.f the Committee of Management was super· · ,sede4 .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 he 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 nec<is.sarily extend to ·three cooperative years.
The expression· ~·cooperative year" is defined in s.2. (bb) to .mean the year beginning from the !st of July to the 30th – · of June .. The. second part of the proviso expressly confers power. on the Registrar tg modify ihe nomination of such Board, if and ._;.hen 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 fo'r a period not exceeding three cooperative years in tl\e aggregat~ 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, 1981or till further orders. The words "till further orders" appear in ali the subsequent orders exten· ding the term of the· Board and therefo're the Reg;i5trar bac;I reserved· .G
·B c 656, SUPREME COURT RB~ORTS [1984] I S.C.R. ·,to himself the right to curtai) ·the extended term by reconstituting .the Board, at any tiine. In the instant case, however, the impugned order issued by the Registrar to reconstitute the first Board of Directors was not niaM by him at his own discretion in , the exercise of his powers under bye-Jaw 29 but was made at the behest of the ·Minister for Industries and it' must accordingly be held to be fovalid. 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 Bibar 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 Cooperati~e 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 io elect ·a new Board of Directors. We further ·direct that neither the members of the first Board of Directors constituted by the R:egistrar of July' 22, 1_981, nor the so·called Board of Direotors 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 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.V.K. Appeal f!llowed.