The
Punjab State Co-Operative Bank Limited Vs. Milkhan Singh & ANR [1997] INSC
748 (24 September 1997)
G. N.
RAY, G. B. PATTANAIK
ACT:
HEADNOTE:
G.N.
RAY, J.
Leave
granted. Heard learned counsel for the parties.
The
predecessor-in-interest of the respondents Sri Milkha Singh since deceased was
a senior accountant in the Gurdaspur Central Co-operative Bank Ltd. For alleged
misconduct of the said employee in misappropriating the finds of the appellant
Bank, Sri Milkha Singh was placed on suspension on 6.5.1974. A Criminal Case
under sections 409, 467, 468, 477A and 120B and 120B IPC was registered against
the said employee but he was discharged in the said case by the Chief Judicial
Magistrate Gurdaspur on 26.11.1977. Sri Milkha Singh was allowed to join duties
on 19.4.1978.
Subsequently,
a departmental proceeding was initiated against Sri Milkha Singh and a penalty
for stopping promotion for two years was imposed on the said employee vide
order dated 13.7.1984. The period from 6.5.1974 to 19.4.1978 was also regularised
against leave vide dated 6.2.1985.
Sri Milkha
Singh challenged the order of punishment and order regarding regularisation of
the period under suspension in a Civil Suit initiated on 23.4.1986. Such suit
was decreed with cost on 15.10.1990. The Managing Director of the appellant
Bank thereafter preferred an appeal against the said decree before the learned
District Judge. such appeal was dismissed as time barred on 9.9.1991. The
Judgment of the lower appellate court was challenged by the appellant in
revision petition filed before the High Court. The High Court allowed the
revision petition and the delay in preferring appeal was condoned and the was
remanded for disposal on merits. The appeal was, however, dismissed with cost
of affirming the decree of the trial court on merits. The Managing Director of
the appellant Bank thereafter preferred a second appeal before the High Court.
By the impugned order such second appeal has been dismissed on a finding that
the Managing Director was not competent to prefer the said appeal without the
approval by the Board of Directors of the Bank Such decision of the High Court
is impugned in this appeal.
The
short question that arises for decision in this appeal is whether the Managing
Director on its own had the authority to prefer appeal against a decision of
the Court in the absence of any resolution by the Board of Directors or by the
Bank on the general body of the society deciding to prefer such appeal. It may
be stated here that the learned counsel for the respondent has also contended
that in any event, the decision for file a special leave petition before this
Court can not be taken by the Managing Director of the appellant Bank even if
it is assumed for argument's sake that such Managing Director was competent to
prefer first or second appeal.
The
learned counsel for the appellant has contended that the appellant Bank is an
Apex Bank under the Punjab Co- operative Societies Act 1961. According to
Section 23 of the said Act, the final authority vests in the general body of
the members of co-operative society. The appellant Bank has framed bye-laws
which are duly registered with the Registrar of the Societies of Punjab.
Section 24 of the Punjab Co-operative Societies Act provides that the genera
body meeting of the co-operative societies is to be held at least once in a
year. The Bank has framed bye laws which provide powers of the Board of
Directors and of the Managing Director of the appellant Bank. Bye law 29
provides for the Constitution of the Board of Directors. There is nothing in
bye law 37 which empowered the Board of Directors to take a decision for
instituting any suit or for filing any appeal or revision petition. The High
Court has failed to appreciate that the Board of Directors have not been authorised
to take decision regarding institution of suit or preferring appeal or revision
petition in a court and it has erroneously held that unless a decision is taken
by the Board of Directors, no appeal can be preferred by the Managing Director.
The
learned counsel for the appellant has referred to bye law 46 and has submitted
that the said bye law provides for appointment of Managing Director and also
the powers conferred on such Managing Director. It is contended by the learned
counsel for the appellant that the Managing Director is the principal executive
officer of the appellant Bank and has been given wide powers to run the Bank by
taking various decisions for running day to day business including decision to
transfer, suspend, reinstate or punish an employee of the Bank Similarly, the
Managing Director is empowered to incur expenditure with the sanctioned budget.
In exercising all such powers as enumerated in various clauses, of bye law 46,
the Managing Director is not required to take my sanction of any other
authority. The learned counsel has referred to clause 8 of bye law 46 which
runs as follows:- "To institute, conduct, defend, compound or abandon any
legal proceedings by or against the Bank or it officers or otherwise concerning
the affairs of the Bank". It is contended by the learned counsel that the
Managing Director has been empowered to take the vital decision about
institution of suit and to compound or abandon such suit or any legal
proceeding by or against the Bank. The appeal is continuation of suit in a
higher forum and basically there is no difference in taking decision to
institute, abandon or compound a suit and to take a decision to take up the
list in a higher forum by way of appeal. The learned counsel has submitted that
the Board of Directors have no authority to take decision regarding filing of
suit or appeal and other legal proceedings. The general body is undoubtedly the
supreme body which can take any decision relating to the co- operative society.
But such general body cannot and do not meet very often to take various
decisions required to be taken urgently. Therefore, the Managing Director the
highest executive officer of the Bank had been clothed with wide powers in
various in clauses of bye law 46.
In
this connection, reference has been made to the decisions of this Court in
Civil Appeal No. 14568 of 1996 1.11.1996. The question that arose for decision
in the said appeal was whether the Registrar of the University was competent to
take a decision to prefer an appeal in the absence of any resolution b the
Syndicate of the University to prefer appeal. The High Court held that
Registrar was not competent to take a decision to prefer appeal. This Court has
held in the said decision that the Syndicate having resolved authorising the Registrant
to defend cases instituted against the University and to file suits in the law
courts on behalf of the University, except in cases relating to examination
matters, and authorising the Registrar to sign, verify plaints, written
statements, petitions, applications and to do all acts necessary for the
prosecution of the cases, the appeal filed by the Registrar was maintainable.
The learned counsel for the appellant has submitted that the bye laws have been
passed by the Co- operative Society and such bye laws are also registered with
the Registrar of Societies. The provisions of bye laws therefore must be held
to be decision of the Co-operative Society itself. Hence, the appeal was
maintainable and the High Court has erred in holding to the contrary.
The
learned counsel for the respondent has, however, disputed the aforesaid
contentions. It has been contended by the learned counsel for the respondents
that the Managing Director of the appellant Bank is a statutory authority and
therefore has only such power as has been conferred on such Managing Director
by the Co-operative Society. The Managing Director can not have any power which
has not been conferred n it. There is no mention in the bye laws that the
Managing Director may prefer appeal or special leave petitions Under order 29
Rule I.C.P. Code, any pleading may be signed or verified on behalf of the
Co-operative Society by the Secretary or by any Director or Principal officer
of the Society who is able to dispose about the facts of the case.
Therefore,
Managing Director being a Principal Officer of the Co-operative Society is
competent to sign or verify the pleadings on behalf of the Society. But such
authority does not confer on the Managing Director may power to take an
independent decision as to whether against an adjudication of a court of law an
appeal should be preferred. The power to institute legal proceedings and to
defend the same is entirely different from the power to take decision for
preferring any appeal or special leave petition against an adjudication made by
a law court against the co-operative society. Such decision being a matter of
policy decision, can not be exercised by the Managing Director in the absence
of specific authority in that regard in bye law 46.
The
learned counsel for the respondent has also contended that the decision of this
Court in Punjabi University's case since relied on by the learned counsel for the
appellant is distinguishable. In Punjabi University's case, the Syndicate had authorised
Registrar to take all decisions regarding legal proceedings, excepting cases
relating to examination matter. In view of such wide authorisation, this Court
has held that the Registrar was competent to prefer appeal even in the absence
of specific authorisation by the Syndicate to prefer an appeal. The learned
counsel for the Respondent has also contended that even if it is assumed that
appeal may be included within the authority to institute legal proceedings,
special leave petition before this Court is not a statutory appeal. The special
leave petition is within the absolute discretion of this Curt and a petitioner
cannot claim leave to appeal as of right. Hence, special leave petition before
this Court stands entirely on a different footing and unless any specific
authority is given by the co-operative society to the Managing Director to file
special leave petition, the Managing Director cannot take any independent
decision to file such special leave petition. Therefore, this appeal must fail
on that ground alone. The learned counsel has also submitted that in equity
also, the appellant does not deserve any leave from this Court. The poor
employee was sought to be harassed for no good reasons. The said employee being
dead, his legal heirs have been dragged before this Court for no just cause.
Therefore, the appeal should be dismissed with cost.
After
giving our careful consideration to the facts and circumstances of the case and
the submissions made by the learned counsel for the parties, it appears to us
that the Managing Director of the appellant bank is the Principal Executive
Officer of the Bank. The Board of Directors have not been authorised to take
decisions regarding institution of suits and legal proceedings and to defend
and compound the same. Th Co-operative Society has given such powers to its
Managing Director in the bye laws. Bye law 46 is quite wide in its amplitude
and it encompasses all powers relating to institution of legal proceedings and
consequential actions required to be taken in connection with such act legal
proceedings by or against the Society. it is not necessary to specifically
mention filing of appeal by the Managing Director. In our view, bye law 46 is
wide enough to include powers to prefer appeal and to take steps in such appeal
as a consequential measure in connection with a suit or legal proceeding. If
the Managing Director has been clothed with the authority to institute a suit
and abandon or compound a suit or legal proceedings, there is no reason to hold
that decision to prefer appeal is something so solemn and important that the
Managing Director should not and cannot take such decision on its own. It is
not a practical feasibility that the general body may meet frequently to take
various executive decision. As a matter of fact, the general body of a
Co-operative Society usually take broad policy decisions on one or two
occasions. As it is not practicable to take various executive decisions, some
of which require urgent decisions an implementations, the bye law has given
wide powers to the Managing Director. The Managing Director, in our view, has
authority to take decision in the matter of preferring appeal within the scope
and ambit of bye law 46. The said Managing Director has also the authority to
take a decision to prefer an appeal before this Court by praying for leave to
appeal by filing special leave petition We, therefore, allow this appeal and
set aside the impugned judgment and direct the High Court to dispose of the
appeal preferred by the appellant Bank on merits as early as practicable preferably
within a period of six months from the date of communication of this order. As
the High Court is directed to decide the appeal on merits, we do not think that
any observation on the merits of the case should be made by this Court even
though the respondents invited the court's attention on the merits of the case.
There will be no order as to cost.
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