top of page

The State Government is empowered to issue a notification in pursuance of the power conferred upon i

Managing Director Chhattisgarh State Co-Operative Bank Maryadit Versus Zila Sahkari Kendriya Bank Maryadit & Ors.Civil Appeal No. 1961 of 2020 Arising out of SLP (C) No 28165 of 2018.

“This Court must ensure that neither provision –Section 49-E(2) nor Sections54(3)(a) and (b) is reduced to a dead letter of law.It cannot be said that the carving out of Cooperative Banks for the appointment of their CEO from the enabling power conferred upon the State Government under Section 54(3) applies in equal measure to those Cooperative Banks that are Central Societies within the ambit of Section 49-E(2). We hold that the State Government is empowered to issue a notification under Section 54(3) for Cooperative Banks which are Central Societies falling within the ambit of Section 49-E(2).”

The bench encompassing Justice Dr Dhananjaya Y Chandrachud and Justice Ajay Rastogi collectively pronounced the judgement on section 54(3) of the Madhya Pradesh Cooperative Societies Act 1960 specifying that such Cooperative Bank shall appoint its CEO from the cadre maintained by the Apex Society as notified therein.

Learned counsel appearing on behalf of the first respondent urged that:

  1. Section 57-B of the 1960 Act was inserted by the Chhattisgarh Cooperative Societies (Amendment) Act 20129 . Sub-section (19) of Section 57-B provides that the CEO of State Cooperative Banks and Central Cooperative Banks shall be appointed by the members of the board of the State Cooperative Bank and the Central Cooperative Bank, as the case may be, from among a panel of names not exceeding three persons eligible to hold the office of CEO in accordance with the criteria stipulated by the RBI. The aforesaid panel was to be recommended by a “2012 Amendment Act” 14 selection board consisting of the following persons, all of whom shall be the members of the Board of the State Cooperative Bank or the Central Cooperative Bank, as the case may be: a) The nominee of the State government on the board; b) The nominee of the National Bank on the board; and c) One other member of the board, whether elected or co-opted.

  2. Section 57-B of the 1960 Act was omitted by the 2016 Amendment Act and clauses (a) and (b) were inserted in sub-section (3) of Section 54 of the 1960 Act, whereby the power was given to the Cooperative Bank to appoint the CEO within a specified time period and in default, the Registrar is empowered to appoint such eligible officer of the bank as the CEO;

  3. The language of the 1960 Act indicates that the CEO of Cooperative Societies, be it a Primary Cooperative Society, Central Cooperative Society or State Cooperative Society, can be appointed by that Cooperative Society only. A plain reading of Section 54(3) (a) and (b) makes it crystal clear that the power to appoint a CEO lies with the Cooperative Society and not with the Apex Society. It is also clear from the reading of the provision that the CEO of the Cooperative Bank shall be appointed from the eligible officers of the said Cooperative Bank. This can also be inferred from the fact that the said power was earlier given under section 57-B of the 1960 Act but by the 2016 Amendment Act, Section 57- B was omitted and the provision of appointment was inserted in Section 54(3)(b);

  4. Clause (b) of sub-section (2) of Section 49-E enumerates that a CEO shall be appointed from among the Officers of the cadre maintained under Section 54, if such a cadre has been created. Section 54(1) provides that the “no society shall appoint a Manager, Secretary, Accountant and other paid officer unless he holds such qualifications as may be prescribed”. The word “Society” mentioned in sub-section (1) of Section 54 includes Primary Cooperative Societies, Central Cooperative Societies and State Cooperative Societies, which means that every society shall appoint its Manager, Secretary, Accountant and other paid officers;

  5. The notification dated 12 January 1971 issued by the State Government under Section 54(3) will be considered to be nullified by the 2012 Amendment Act and subsequently by the 2016 Amendment Act. The said notification is not applicable in appointing a CEO in view of the omission of Section 57-B of the 1960 Act and the subsequent insertion of Section 54(3)(a) and (b). The 1960 Act does not mention that the CEO of the Central Cooperative Bank shall be appointed by the State Cooperative Bank from the cadre officers of the State Cooperative Bank. What is not provided in the statute cannot be read into it. This is more so when the language of section 54(3)(b) is plain, clear and unambiguous that the Cooperative Society shall appoint the CEO;

  6. It is settled law that if the language of the statute is clear, plain and unambiguous and admits of only one meaning, then no question of interpretation arises. The appellant cannot be permitted to add words in the statute to make it workable for it; and

  7. The action of the State Cooperative Bank in appointing the CEO of the Central Cooperative Bank is arbitrary and illegal as it is beyond the powers of the State Cooperative Bank under the 1960 Act.

The learned counsel for the first respondent has contended that clause (a) and (b) of Section 54(3) were intended to carve out Cooperative Banks from the enabling power conferred upon the State Government and vest with them the exclusive power to appoint their CEOs. It was been urged that were this Court to hold that there is an obligation upon a Cooperative Bank, as a notified society under Section 54(3), to accept from the Apex or Central Society as specified in the notification a deputed 22 cadre officer as its CEO, clauses (a) and (b) would be rendered otiose.

In the present case, it was not disputed that the first respondent is a Central Society falling within the ambit of Section 49-E(2) of the 1960 Act. In exercise of the power conferred by Section 54(3) of the 1960 Act, the State Government issued a notification dated 12 January 1971 specifying that Central Cooperative Banks were obligated to employ officers, according to their availability, only from the cadres created by the State Cooperative Bank.

A similar notification was issued on 26 June 1971 in terms of which, Central Cooperative Banks were permitted to maintain cadres of officers and, it was stipulated that Village Cooperative Societies including Large Sized Agricultural Credit Societies would have to employ officers drawn only from the cadres maintained by the Central Cooperative Bank. Similarly, by another notification dated 26 June 1971, Central Cooperative Banks were directed to maintain cadres of officers for the appointment of managers in rural cooperative societies including Large Sized Agricultural Credit Societies.

The seventh respondent is not an officer from the cadre maintained by the appellant. Consequently, the action of the first respondent in seeking to appoint the seventh respondent as the CEO is not sustainable in law. The appointment of the sixth respondent as CEO was ratified by the Registrar of Societies by his reply dated 21 August 2017 and accepted by the BoD of the first respondent on 25 August 2017.

The court accordingly allows the appeal and sets aside the impugned judgment and order of the High Court dated 7 August 2018. In consequence, the court upholds the order of the learned Single Judge dismissing the Writ Petition, though for the reasons that we have indicated above. There shall be no order as to costs.

– Karthik K.P

Comments


Articles

bottom of page