Jammu APRIL-11-2023- Justice Sanjay Dhar of Jammu & Kashmir and Ladakh High Court directed respondents to hold election of J&K State Cooperative Bank Ltd. Srinagar in accordance with the directions of the Writ Court by next date of hearing failing which rule shall be framed against them for having violated the judgment of the Writ Court.
This significant order has been passed in a petition filed by Kashmir Valley Cooperative Society challenged order No.04-JK(Coop) of 2023 dated 21.01.2023, whereby sanction has been accorded to the re-constitution of the Board of Directors of the J&K State Cooperative Bank Ltd. Srinagar for a period of two weeks in terms of sub-section (3) of Section 30-A of the Jammu and Kashmir Cooperative Societies Act, 1989.
2) According to the petitioners, petitioner No.1-Society is a share holder of the J&K State Cooperative Bank and in that capacity, writ jurisdiction of this Court has been invoked for challenging the aforesaid order. It has been submitted that the respondents on account of baseless and frivolous allegations removed the elected Board and nominated a Board of Management headed by Divisional Commissioner, Kashmir, and the said nominated Board took over the management of the Bank on 15.05.2020. It has been submitted that at the time when management of the Bank was taken over by the nominated Board, the Bank was earning huge profits. It has been submitted that the elected Board of the Bank, as per the decision of the General Body, had advanced loan to a Cooperative Housing Society by creating lien against 257.19 kanals of land situated at Shivpora Srinagar and this transaction would have yielded huge profits to the Bank. It is alleged that the respondents got a frivolous FIR registered with Anti-corruption Bureau (ACB) by contending that the loan has been sanctioned in favour of an unregistered society. It is in these circumstances, that the respondents took over management of the Bank after removing the elected members of the Board.
In an earlier round of litigation in the shape of WP(C)No.2775/2021, judgment dated 15.07.2022 came to be passed by this Court wherein it was directed that nominated Board of Directors of the Cooperative Bank is entitled to remain in position and legitimately run the affairs and management of the Bank till 04,10.2022. It was also held that it is incumbent upon the Government or the Registrar to reconstitute the Board of Directors of the Bank on or before 04.10.2022 by holding elections in accordance with the Jammu and Kashmir Cooperative Societies Act, the Rules and the byelaws of the Bank.
Justice Sanjay Dhar after hearing both the sides observed that If we have a look at the various provisions of the Act, the rules made thereunder as well as the byelaws, it becomes clear that the Cooperative Societies registered under the Act are democratic institutions whose affairs are to be run by the duly elected Board of Directors. Chapter IV of the Act provides the mechanism for management of Cooperative Societies. A perusal of the provisions contained in the said Chapter clearly shows that the Cooperative Societies are autonomous institutions run by General Body of members. Section 30-A of the Act has been incorporated as a transitional provision in the Act to take care of certain emergencies. Similarly, Section 30 of the Act governs a situation where the elected Board is persistently making a default or is negligent in the performance of duties imposed on it by the Act, the rules or the byelaws. So, role of the Government in running the affairs of the Cooperative Societies comes into play only upon the happening of certain exigencies. Otherwise, the affairs of the Cooperative Societies are to be run by the democratically elected Board of Directors as also its members. Continuation of a nominated Board in perpetuity is, therefore, anti-thesis to the object of the Act. The provisions of Section 30-A of the Act are, therefore, required to be interpreted in a manner to advance the object of the Act and not to defeat the same.
In view of the above, the contention of the respondents that while sub-section (3) of Section 30-A of the Act extends the life of a nominated Board for a period of two years beyond the date of commencement of Third Order, the proviso thereto can give fresh lease of life to such Board by further two years and even beyond, is without any merit and cannot be accepted. As already noted, the reference to the term “Board” or “Administrator” appearing in proviso has to take colour from similar expression used in the main provision. Thus, the only interpretation that can be given to second part of the proviso to sub-section (3) of Section 30-A of the Act is that it takes care of a situation where even a nominated Board acts in a manner prejudicial to the interests of the society or it does not follow the mandate of the Act and the rules made thereunder. In such an eventuality the Government has power to appoint a Transitory Board or an Administrator and not to reconstitute the earlier nominated Board.
Court further observed that since a nominated Board has no vested right to continue to manage the affairs of a Society, it is for this reason that second part of the proviso does not provide for right of hearing to the said Board before replacing it with a new Transitory Board as is the requirement while replacing an elected Board in terms of Section 30(1) of the Act. The life of such freshly appointed Transitory Board can be only upto a maximum limit of two years or any other period less than two years, as may be determined by the Government. The expression “or any other period as may be determined by the Government” appearing in the provision cannot be given any other interpretation so as to empower the Government to appoint Transitory Board for perpetuity because such an interpretation would be against the very object of the Act and it would render the expression “two years” appearing in the provision superfluous. For what has been discussed hereinbefore, it is clear that the respondents did not have power and competence to reconstitute the nominated Board which had already outlived its life. It was not open to the Government to give a fresh lease of life to the said Board simply by replacing one of its members. The action of the respondents cannot be countenanced by law, as such, the impugned order dated 21.01.2023 (supra) is liable to be quashed.
Accordingly, the writ petition is allowed and the impugned order bearing No.04-JK(Coop) of 2023 dated 21.01.2023 is quashed.
In CCP(S), Court observed that in view of the decision rendered in WP(C) No.174/2023, whereby Government 04-JK(Coop) of 2023 dated 21.01.2023 has been quashed, the defence of respondents for not implementing the judgment and order of the Writ Court passed in WP(C) No.2775/2021 is no longer available to them. The respondents are, therefore, directed to hold elections in accordance with the directions of the Writ Court by next date of hearing failing which rule shall be framed against them for having violated the judgment of the Writ Court. JNF