Karnataka Co-operative Societies Act | All Director Posts Deemed Vacated If Few Members Resign And Board Falls Short Of Quorum: High Court

The Karnataka High Court has held that upon the resignation of few members of the Board of a Society as governed under the Karnataka Co-operative Societies Act, elections are required to be held to the posts of all the Directors including the posts of Directors who have not tendered their resignations, if the Board falls short of quorum.

A single judge bench of Justice C M Poonacha dismissed a batch of petitions challenging appointment of the Special Officer to administer the society and conduct of elections to all the posts of directors.

In the petition filed by H.T. Munikumar and others, it was said they were elected as Directors of Respondent No.3– Sakkaregollahalli Vyavasaya Seva Sahakara Sangha Niyamitha Sakkaregollahalli, for the term 2023 to 2028 in the elections held on 26.07.2023, wherein a total of 12 Directors were elected.

A meeting was held on 01.09.2023 and all 12 Directors were present and Petitioner Nos.1 and 2 were elected as the President and Vice President of the Society, respectively. Post their election, six Directors tendered their resignations and on 19.09.2023, a Special Officer was appointed.

It is in this backdrop that the Directors who did not tender their resignations approached the court, contending that elections to only those posts of Directors who have tendered their resignations were required to be held and not for entire Board of the Society. They argued that since the term for which they have been elected still remains, elections to the posts held by them are not required to be held.

Government advocate opposed the plea stating as per the deeming provision in Section 31(3) of the Act, all the Directors who constitute the Board are deemed to have vacated their offices upon the appointment of the Special Officer for conducting of elections.

The bench noted that Section 31(1) of the Act empowers the Registrar to appoint a Special Officer if the Society is not functioning on account of the number of members of the Board falling short of the required number to form a quorum. It is relevant to note that in Section 31(1) of the Act there is a specific non obstinate clause which specifically stipulates that the Registrar may 'notwithstanding anything contained in this Act, Rules or bye-laws' by order appoint a Special Officer.

Section 31(3) of the Act stipulates the members of the Board 'shall vacate' and “shall be deemed to have vacated offices' and the Special Officer shall be deemed to have assumed the charge of the affairs of the Co-operative Society.

Petitioners contended that the situation arising in the present cases are a deliberate attempt by a few persons to hold elections to the entire Board and an interpretation is to be adopted which does not create an anomalous situation of holding of repeated elections merely due to exigencies created out of political or other compulsion/s.

The bench however held, “it is clear that if upon occurrence of an eventuality as contemplated under Section 31(1) of the Act, the resultant situation as contemplated under Section 31(3) which specifically stipulates that members “shall vacate and shall be deemed to have vacated their offices” would automatically occur.”

Further it said “It is clear that consequent to a situation occurring as contemplated in Section 31(1) of the Act and a special officer being appointed, having regard to the specific wordings contained in Section 31(3) of the Act, the said situation would automatically occur and the question of exercising any discretion as sought to be contended by the Petitioners does not arise.”

Accordingly it dismissed the petition.

Appearance: Advocates Varun Jaykumar Patil, Sandesh T B for Petitioners.

AGA Siddharth Baburao FOR R1, R4 & R5.

Advocate T L Kiran Kumar for R2.

Citation No: 2024 LiveLaw (Kar) 15

Case Title: H T Munikumar & Others AND State of Karnataka & Others

Case No: WRIT PETITION NO.22398 OF 2023 C/W WRIT PETITION NO.23943 OF 2023 /W WRIT PETITION NO. 23318 OF 2023.

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