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TMI Blog2020 (3) TMI 1464X X X X Extracts X X X X X X X X Extracts X X X X ..... pecify, by notification, the class of societies which shall employ officers from cadres maintained by Apex or Central Societies. The term class of societies employed in Section 54(3) includes any type of society covered by the provisions of the 1960 Act, including Cooperative Banks (as resource societies). In Commercial Tax Officer, Rajasthan v. M/s. Binani Cements Ltd., [ 2014 (3) TMI 905 - SUPREME COURT ] the question concerned whether the Respondent-Assessee was entitled for the grant of an eligibility certificate for exemption from payment of Central Sales Tax and Rajasthan Sales Tax under Entry 4 in Annexure C of the Sales Tax New Incentive Scheme for Industries, 1989. Annexure C to the Scheme was titled the Quantum of Sales Tax Exemption under the new Scheme . Entry 4 of the Annexure stipulated that Prestigious Units would be entitled to a 75% exemption from tax liability with 100% in terms of Fixed Capital Investment. This Court must ensure that neither provision - Section 49-E(2) nor Sections 54(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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Chhattisgarh Co-Operative Societies Act 1960"1960 Act". 3. The CEO of the first Respondent bank was arrested on 9 August 2017 by the Economic Offences Wing of the State of Chhattisgarh on charges of corruption, under the Prevention of Corruption Act 1988"PC Act". Upon being produced before the designated Court, he was remanded to custody and placed under suspension from his office of the CEO. 4. On 10 August 2017, the seventh Respondent was appointed as an interim CEO by the Chairperson of the first Respondent, pending a formal decision by the Board of Directors "BoD". On 11 August 2017, the Appellant appointed the sixth Respondent, who was discharging duties as a 'Special Class Managing Director' at Raipur, as the CEO of the first Respondent. The Appellant purported to take this action as the first Respondent had been appointed an interim CEO and the person appointed did not fulfill the eligibility criteria prescribed by the Reserve Bank of India "RBI". The Appellant also sought to justify its action of appointing the sixth Respondent as the CEO of the first Respondent with reference to Section 54(3) of the 1960 Act. 5. The sixt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trar upon the failure of the District Central Cooperative Bank to make an appointment within a specified time period. This, the Division Bench held, flows from Clause (b) of Section 54(3). The Division Bench was of the view that there was no failure on the part of the first Respondent in making an ad-interim arrangement, pending the meeting of the BoD on 16 August 2017 to appoint a regular CEO. The Division Bench found fault with the Appellant for having stepped-in to fill a vacuum when none existed. Holding that this was a case of the usurpation of power by the Apex Body, the Division Bench held that the ratification of the appointment by the Registrar of Cooperative Societies was of no consequence. The judgment of the learned Single Judge was accordingly set aside. 9. Before we note the rival submissions, it is necessary to advert to the relevant provisions of law, as applicable to the present dispute. 10. Section 49-E of the 1960 Act deals with the appointment of a Managing Director and CEO, as its marginal notes indicates, "in certain circumstances". Section 49-E provides as follows: 49-E. Appointment of Managing Director and Chief Executive Officer in certain cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Society' is defined in Section 2(c-i) as follows: "Central Society" means a Co-operative Land Development Bank or any other society whose area of operation is confined to a part of the State and which has as its principal object the promotion of the principal objects and the provision of facilities for the operation of same type of societies and for other societies affiliated to it and not less than five members of which are societies. 12. Sub-section (1) applies to an Apex Society while Sub-section (2) applies to a Central Society. Sub-section (2), with which we are concerned, applies to a Central Society to which the State Government has: (i) contributed the share capital; or (ii) granted loans or financial assistance; or (iii) guaranteed the repayment of loans, debentures, or advances; or (iv) given grants in any other form. Sub-section (2)(b) provides that the CEO of every Central Society shall be appointed from among the officers of the cadre maintained Under Section 54, if such a cadre has been created and, in other cases, with the prior approval of the Registrar. 13. Section 49-E(2)(b)(i) refers to the cadre of officers maintained Under Section 54. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perative Society (1) (2) (3) 1. M.P. State Cooperative Bank Ltd. Central Cooperative Bank 2. Madhya Pradesh State land Development Bank Primary Cooperative Land Development Bank 3. Madhya Pradesh State Cooperative Marketing Federation Primary Cooperative Marketing Societies and Process Committee (Published in part-1 of Gazette of M.P. dated 19.02.1971) 15. In terms of the above notification, it was stipulated that a cooperative society specified in column (3) of the Schedule shall appoint officers from the cadre constituted by the Apex Cooperative Societies mentioned in column (2) of the Schedule. The first entry in the Schedule specifies the Madhya Pradesh State Cooperative Bank Ltd. as the Apex Cooperative Society and the Central Cooperative Bank as the Cooperative Society. In other words, the Central Cooperative Bank is required to appoint officers from the cadre constituted by the State Cooperative Bank. This notification, it is not in dispute, applies to the State of Chhattisgarh. 16. The provisions of Section 54(3) were amended by the Chhattisgarh Cooperative Societies (Amendment) Act 2016 "2016 Amendment Act", with effect from 14 December 2016. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operative societies would be appointed. Thus, all Central Cooperative Banks in the State of Chhattisgarh have to maintain a cadre of employees in terms of the above notifications dated 26 June 1971 and all Village Cooperative Societies including Large Sized Agricultural Credit Societies shall employ officers only from the said cadres; (iv) Sub-section (2) of Section 49-E specifically deals with the appointment of the Managing Director or a General Manager who shall be the CEO of Central Societies to which the State Government has made a contribution of share capital, furnished loans or granted financial assistance or any other grant. Sub-clause (b)(i) of Sub-section (2) clearly stipulates that the CEO shall be appointed from among officers in the cadre constituted Under Section 54; (v) Rule 3 of the Central Cooperative Bank Staff Services Rules 1982 stipulates that appointments to all posts classified as Class-I posts shall be made by the Apex Bank from the list of cadre officers maintained by it. The Bye-laws of the first Respondent stipulate that appointments to the post of Managing Director/General Manager/Manager shall be from the cadre of officers maintained by the Apex Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll Central Cooperative Banks in Chhattisgarh, the CEO is an officer drawn from the cadre maintained by the Apex Bank. This is in consonance with Sections 49-E and 54(3) of the 1960 Act and notifications issued from time to time. The consequence of the impugned decision would be to deprive the Apex Bank of its authority to monitor the affairs of Central Cooperative Societies. Financial control can be maintained through the power to appoint CEOs. Such a position was occasioned as huge amounts of public funds is at stake. The view of the Division Bench will have far-reaching repercussions in the cooperative set up and the beneficial purpose of the legislation would be defeated resulting in mismanagement and misappropriation of public funds. 19. On the other hand, learned Counsel appearing on behalf of the first Respondent urged that: (i) Section 57-B of the 1960 Act was inserted by the Chhattisgarh Cooperative Societies (Amendment) Act 2012 "2012 Amendment Act". 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 Cooperat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (v) 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; (vi) 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 (vii) 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 un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 49-E(2), the source of appointment for the Managing Director or the General Manager (who shall be the CEO) must be from the officers drawn from the cadre constituted Under Section 54, if such cadre has been constituted. In all other cases, the Central Society may appoint the Managing Director or General Manager with the prior approval of the Registrar of Cooperative Societies. 24. A pre-requisite to bring a Central Society within the fold of Section 49-E(2) is that the State Government has contributed to its share capital, given loans or financial assistance, guaranteed the repayment of loans, debentures or advances or has given grants in any other form. Evidently, this provision has been introduced by the legislature as an effort to maintain regulatory control over Central Societies to whom financial assistance has been extended by the State Government in the terms set out in the provision. For this reason, where the society is a Central Society that satisfies the requirements of Section 49-E(2), the general power vested in it to appoint its CEO Under Section 54(1) is limited to appointment from the cadres constituted and maintained Under Section 54. 25. Sub-section ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercise of its powers Under Section 54(3); and (ii) Section 49-E(2) which mandates that Central Societies shall appoint their CEOs from the cadre constituted Under Section 54. Clauses (a) and (b) of Section 54(3), it was contended, vests with Cooperative Banks the absolute power to appoint their CEOs, notwithstanding any other provision in the 1960 Act. The effect of the amended provision may be considered in two parts: first, its effect on the power of the State Government to issue a notification in pursuance of the power conferred upon it Under Section 54(3); and second, its effect on Section 49-E(2). 28. By virtue of the 2012 Amendment Act, Section 57-B was introduced as a new Chapter V-A with provisions for short term Co-operative Credit Structure Societies. The term 'short term Co-operative Credit Structure Societies' was defined as including "the State Co-operative Bank, a Central Co-operative Bank and a Primary Agricultural Credit Co-operative Society". Section 57-B(19) stipulated that the Chief Executive Officer of the State Co-operative Bank and a Central Co-operative Bank, shall be appointed by the members of the Board of the State Co-operative Bank or t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is a settled principle of law that where two provisions of an enactment appear to conflict, courts must adopt an interpretation which harmonises, to the best extent possible, both provisions. Justice G P Singh in his seminal work Principles of Statutory Interpretation states: To harmonise is not to destroy. A familiar approach in all such cases is to find out which of the two apparently conflicting provisions in more general and which is more specific and to construe the more general one as to exclude the more specific...The principle is expressed in the maxims Generalia specialibus non derogant and Generalibus specialia. Similarly, Craies in Statute Law states: The Rule is, that whenever there is a particular enactment and a general enactment in the same statute, and the latter, taken in its most comprehensive sense, would overrule the former, the particular enactment must be operative, and the general enactment must be taken to affect only the other parts of the statute to which it may properly apply. Where two provisions conflict, courts may enquire which of the two provisions is specific in nature and whether it was intended that the specific provision is carved out fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principle made by lawyers and Judges but springs from the common understanding of men and women that when the same person gives two directions one covering a large number of matters in general and another to only some of them his intention is that these latter directions should prevail as regards these while as regards all the rest the earlier direction should have effect. 10. Applying this Rule of construction that in cases of conflict between a specific provision and a general provision the specific provision prevails over the general provision and the general provision applies only to such cases which are not covered by the special provision, we must hold that Clause 5(a) has no application in a case where the special provisions of Clause 23 are applicable. This Court affirmed that the principle that the general excludes the specific is a tool of statutory interpretation even in cases of conflict within the same enactment. Where one of the conflicting provisions is general in nature and the other is specific, 'common understanding' dictates that the specific provision is given effect, while the general provision continues to apply to all other situations. 33. In Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quently, the Court rejected the contention of the Respondent-Assessee and held that as Item 1E concerned the more specific unit, it was excluded in its application from other general entries. The principle that the general provision excludes the more specific has been consistently applied by this Court in South Indian Corporation (P) Ltd. v. Secretary, Board of Revenue AIR 1964 SC 207, Paradip Port Trust v. Their Workmen AIR 1977 SC 36, Maharashtra State Board of Secondary and Higher Education v. Paritosh Bhupesh Kumar Sheth (1984) 4 SCC 27, CCE v. Jayant Oil Mills (1989) 3 SCC 343, P S Sathappan v. Andhra Bank Ltd. (2004) 11 SCC 672, Sarabjit Rick Singh v. Union of India (2008) 2 SCC 417 and Pankajakshi v. Chandrika (2016) 6 SCC 157. 34. While Sub-section (3) of Section 54(3) deals with a class of societies, Clauses (a) and (b), as inserted by the 2016 Amendment Act are specific in their application to only Cooperative Banks. Furthermore, while Section 54(3) deals with the appointment of deputed cadre officers on cadre posts, Clauses (a) and (b) deal only with the appointment of the CEOs of Cooperative Banks. Clause (a) contemplates that the eligibility guidelines prescribed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not be obligated to appoint its CEO from the cadre constituted Under Section 54, even if such cadre has been constituted. 38. As we have noted, both Sub-section (2) and Sub-section (3) of Section 54 are not provisions confined only to Cooperative Banks. However, Clauses (a) and (b) of Sub-section (3) specifically deal with the appointment of CEOs of Cooperative Banks. While introducing Clauses (a) and (b) into Sub-section (3) of Section 54 by the 2016 Amendment Act, the legislature has nonetheless left intact the provisions of Section 49-E. Section 49-E(2) stipulates that the CEO shall be appointed from among the officers of the cadre maintained Under Section 54, where such cadre has been constituted. Section 49-E is a provision governing Apex and Central Societies to whom financial assistance has been extended by the State Government in the forms stipulated therein. The expression "Central Society" is defined to mean a Cooperative Land Development Bank or any other society whose operation is confined to a part of the State, as noticed earlier in Section (2)(c-i). The provisions contained in Section 49-E are intended to bring about regulatory control of the State Gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no difficulty would arise given the use of a non-obstante provision therein. The difficulty arises precisely because of the link between Section 49-E and the notification issued by the State Government Under Section 54(3). To hold that Clauses (a) and (b) vest in Cooperative Banks which are Central Societies falling within the ambit of Section 49-E(2) the overriding power to appoint their CEO would render the provision inoperative. This would defeat the salient purpose of ensuring the regulatory control of the State Government over Societies to which it has made a financial contribution. On the other hand, to hold that a Cooperative Bank which is a Central Society within the ambit of Section 49-E(2) must accept and appoint the cadre officer deputed by the Apex Society, defeats the special provision inserted for Cooperative Banks in Clauses (a) and (b) of Section 54(3). Both Section 49-E(2)(b) and Clauses (a) and (b) of Section 54(3) deal with the appointment of a CEO. 41. As we have noted before, it is settled principal of law that where two provisions of an enactment appear to conflict, courts must adopt an interpretation which harmonises, to the best extent possible, both provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that, contrary to legislative intent, no scheme under the 1939 Act would be saved if schemes under that Act were to be assessed with reference to the date of their publication. Noting the apparent conflict between the two provisions, a two judge Bench of this Court interpreted both provisions harmoniously and held: 10. There appears to be some apparent conflict between Section 100(4) and Section 217(2)(e) of the Act. While Section 217(2)(e) permits finalisation of a scheme in accordance with Section 100 of the new Act Sub-section (4) of Section 100 lays down that a scheme if not finalised within a period of one year shall be deemed to have lapsed. If the Appellant's contention is accepted then Section 217(2)(e) will become nugatory and no scheme published Under Section 68-C of the old Act could be finalised under the new Act. On the other hand if the period of one year as prescribed Under Section 100(4) is not computed from the date of publication of the scheme Under Section 68-C of the old Act and instead the period of one year is computed from the date of commencement of the Act both the provisions could be given full effect. 11. It is settled principle of interpretat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffect must be given to the amendment, which would be rendered redundant if the contention of the Appellant was accepted. Relying on the principle of harmonious interpretation, the Court held: It is a cardinal principle of construction of a statute that effort should be made in construing the different provisions so that each provision will have its play and in the event of any conflict a harmonious construction should be given. The well-known principle of harmonious construction is that effect shall be given to all the provisions and for that any provision of the statute should be construed with reference to the other provisions so as to make it workable. A particular provision cannot be picked up and interpreted to defeat another provision made in that behalf under the statute. It is the duty of the court to make such construction of a statute which shall suppress the mischief and advance the remedy. This Court held that courts must ensure that every provision is construed in a manner to render seemingly contradictory provisions workable. In interpreting two provisions of a statute, courts must adopt the interpretation which does not defeat either provision and advances the rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anks to appoint the CEO was deleted. In this view, Section 49-E(2) and Clauses (a) and (b) of Section 54(3) are to be read harmoniously in the manner noted above. 47. The position of law that emerges from the above discussion is thus: (i) Clauses (a) and (b) of Section 54(3), as special provisions for the appointment of the CEO of Cooperative Banks confer upon them the power to appoint their CEO, subject to such officer satisfying the eligibility criteria prescribed by the RBI in this regard. The term 'class of societies' in Section 54(3) excludes Cooperative Banks for the limited purpose of the appointment of their CEO; (ii) However, where a Cooperative Bank is a Central Society within the ambit of Section 49-E(2), the CEO shall be appointed from among the officers of the cadre constituted and maintained Under Section 54, where such cadre has been constituted. The State Government is empowered to issue a notification in pursuance of the power conferred upon it Under Section 54(3) specifying that such Cooperative Bank shall appoint its CEO from the cadre maintained by the Apex Society as notified therein. The notified Apex Society shall forward to the concerned Coopera ..... X X X X Extracts X X X X X X X X Extracts X X X X
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