G.B. Patnaik, J.
1. The decision of the Managing Director exercising the power of the Committee of Society by virtue of the deeming provision under Sub-section (2) of Section 32 of the Orissa Co-operative Societies Act (hereinafter referred to as the "Act") for inclusion of 46 new members of (he Society is under challenge in this writ application, inter alia, on the ground that this being a policy decision could not have been taken by the Managing Director and also on the ground that it is a mala fide exercise of power.
2. The petitioners have averred in the writ application that the Orissa Co-operative Housing Corporation Limited (opposite party No. 4) is the apex Society within the ambit of Section 2(a) of the Act. The Committee of the said Society has been superseded since October, 1990, and the Registrar of Cooperative Societies in exercise of his power under Sub-section (1) of Section 32 of the Act has been appointing different persons to manage the affairs of the Society. One Shri Prasant Mohapatra was appointed as the Administrator of the apex Society by the Registrar and the said appointment was assailed in this Court in O.J.C. No. 873 of 1994, inter alia, on the ground that the appointment has been made by the Registrar not in exercise of his statutory power under the provisions of Section 32(1) of the Act, but at the instance of the Chief Minister of the State. This Court by its order dated 12-4-1994 quashed the appointment and directed the Registrar to make a fresh appointment without being influenced by any extraneous consideration. On the very next day of the order of this Court, i.e. on 13-4-1994, the Registrar again appointed the very same person as the Administrator of the apex Society. The subsequent appointment was again challenged by the members of the Jaipur Sub-Divisional House Building Cooperative Society Limited in O.J.C. No. 3025 of 1994 and this Court issued notice in the matter and stayed the appointment of Shri Mohapatra and directed that it would be open to the Registrar to permit the Managing Director to carry on the affairs of the apex Society. Pursuant to the aforesaid observation made by this Court, the Managing Director was permitted by the Registrar to exercise the powers of the Managing Committee of the Society and while exercising the powers of the Committee of Society has passed orders on 16-5-1994 admitting 46 new members to the apex body. It is alleged in the writ application that not only the Managing Director could not have taken the decision of admission of members to the apex body even though by virtue of the deeming provision he exercised the power of the Committee of Society, but also the said decision of the Managing Director is vitiated by mala fides and it is intended only to get the nominated Director Shri Mohapatra as the elected President. It is further stated that the apex Society being a Society consisting of Primary House-Building Co-operative Societies as its members, inclusion of different organisations and persons having no connection with the house-building itself is an example of gross malice. It is further stated that indiscriminate admission of the firms and private limited companies as the members of the apex body without examining the requirement of sound, business of those non-housing primary societies, firms and private limited companies, is contrary to Section 7 of the Act and such decision on the eve of the election notice, election notice having been issued on 17th of May, 1994, and the order admitting new societies having been made on 16th of May, 1994, is nothing but a malicious act on the part of the Managing Director for expousing the cause of Shri Mohapatra who had been installed twice, but has been prevented because of the orders of the Court from functioning as the President of the apex body. The petitioners also have stated that even if these new societies could be admitted as members of the apex body, but in accordance with the provisions of the Act, the Rules and the Bye-laws, they cannot have any voting right and they would be merely nominal members. The petitioners have also stated that prior to 16-5-1994, the apex body had 68 members and on 16-5-1994, the 46 new members were included.
3. Opposite parties 2 and 3 have filed a return stating therein that the power of admitting members to the apex body lies with the Committee of management under Section 28(1) of the Act and the Registrar has no role to play therein. It has been further stated that if there is any inconsistency between the provisions of the Act and the Bye-laws, then the Act would prevail.
4. On behalf of the Managing Director who was exercising the powers of the Committee of Management under Section 32(1} of the Act, a detailed counter-affidavit has been filed. It has been stated therein that any society which is registered under the Orissa Co-operative Societies Act can apply for membership of the apex society and once such societies are admitted they can exercise their electoral rights. It is only the non-cooperative body corporates or other individuals though are eligible to be members of the apex society, but would be nominal members and cannot exercise the electoral rights. Accordingly both 'A' and 'B'categories of members of the apex body have the electoral rights. It has been further averred that Section 16 of the Act provides as to who can be members of the co-operative Societies and Section 16(l)(b) deals with membership of the Central and apex Societies. So far as the inclusion of new members to the apex body is concerned, it has been averred that the Managing Director was exercising the powers of the Committee of Management and admitted the members on the basis of their applications as the applicants were found to be eligible and qualified to be the members of the apex body. With regard to the allegation that non-housing co-operative societies have also been members of the apex body, it has been stated that such members were there since 1986 and it is not for the first time that such members have been admitted. According to the counter-affidavit, the 46 members were admitted as per the Resolution dated 16-5-1994, annexed as Annexure-G/4 to the counter-affidavit. It has been averred that admission or refusal of membership is within the powers and functions of the Committee and it needs no approval of the Registrar or the General Body and, therefore, the Managing Director who was exercising the powers of the Committee of the apex body has admitted the members on 16-5-1994. It is to be noticed that though in the writ application several allegations of malice on the part of the Managing Director in the matter of admission of the new members had been made, and the Managing Director himself has filed the return, but no denial to those allegations is there.
5. On behalf of some of the other opposite parties affidavits have been filed denying the allegations made by the petitioners and stating therein that there has been no infirmity with the admission of the new members or in the preparation of the electoral roll for election to the Committee of Management and the right of the newly admitted members cannot be taken away.
6. In the aforesaid premises, the following questions crop up for our consideration :--
(i) Whether a Managing Director exercising the powers of the Committee of Management under Sub-section (1) of Section 32 of the Act and being the Committee itself by virtue of the deeming provision in Sub-section (2) of Section 32, could admit new members to the apex body, or he was entitled to only discharge the routine matters leaving the question of admission of new members to the elected body itself?
(ii) Even if it is held that the Managing Director had the right to admit new members, from the circumstances under which the new members were admitted on 16-5-1994, can it be said that the Managing Director admitted those members with a mala fide intention to espouse the cause of Shri Prasanta Mohapatra who had been appointed as the Administrator at the behest of the party in power which appointment stood annulled by this Court?
(iii) Whether the newly admitted members can exercise all the rights of the members of a Society including the electoral rights or can only be taken as nominal members having no right of voting at the election?
7. Before answering the aforesaid questions, it would be appropriate to notice some of the provisions of the Act, the Rules and the Bye-laws, which would be necessary for the adjudication of the questions. Section 2(a) of the Act defines the "apex Society" to mean a society having the whole of the State of Orissa as its area of operation and consisting of societies as its members, and declared as such by the Registrar. The proviso to Section 2(a) states that such society may have individuals and other body corporates as nominal or associate members, as the case may be. A 'primary Society' has been defined in Section 2(h-2) to mean, a Society, membership of which consists of individuals and may include the State or Central Government, or both such Governments, as the case may be, or a person admitted as joint or a nominal member. Section 16(l)(a) provides as to who can be admitted as a member of a primary society. Sub-section (2) of Section 16 provides that no society shall, without sufficient cause, refuse admission as a member to any person who is duly qualified there for and the decision refusing admission shall be communicated by the Society to the person concerned with reasons for such refusal within ninety days from the date of the application for membership failing which such person shall be deemed to have been admitted as a member of the Society with effect from the date following the date of expiration of the said period of ninety days. The provisions of Section 16(1) and (2) are extracted herein below in extenso :--
"16. Persons who may become members.-
(1) No person shall be admitted as a member of-
(a) a Primary Society, except individuals competent to enter into a contract under Section 11 of the Indian Contract Act, 1872, residing in the area of operation of the Society as specified in its Bye-laws, and the State or Central Government, or both such Governments, as the case may be :
Provided that nothing in this clause shall debar a student, who is a minor, from becoming a member of a society formed for the benefit of the students of an educational institution, or a person who is not an individual, from becoming a nominal member,
Provided further that more than three individuals from the same family shall be admitted as members.
Explanation :-- A Joint Member consisting of two individuals related to each other as husband and wife shall be deemed to be one individual for the purpose of this clause;
(b) a Society other than a Primary Society, except the following, namely :--
(i) any Society;
(ii) the State Government;
(iii) the Central Government; and
(iv) any other person as may be prescribed :
Provided that an individual may be admitted only as a nominal member.
(2) No society shall, without sufficient cause, refuse admission as a member to any person who is duly qualified therefor and the decision refusing admission shall be communicated by the society to the person concerned with reasons for such refusal within ninety days from the date of the application for membership failing which such person shall be deemed to have been admitted as a member of the society with effect from the date following the date of expiration of the said period of ninety days."
Section 16A provides that no person shall be eligible for being admitted or for continuing as a member of the society if he does not satisfy the requirements of the Act, the Rules and Bye-laws made thereunder. Section 18 deals with nominal or associate members and under Sub-section (2) of Section 18, a nominal member is not entitled to any share in any form whatsoever in the assets or profits of the society nor is he entitled to attend the General Body of the Society nor can he be elected to the Committee of the Society. Sub-section (1) of Section 18 provides that a nominal member shall have privileges and rights and subject to such liability as may be specified in the Bye-laws of the Society. Section 28 provides that the management of a Society vests in a Committee constituted in accordance with the Act, the Rules and the Bye-laws and the Committee so constituted has the power to admit members and dispose of applications for shares. Section 32 provides for supersession of a Committee and appointment of one or more Administrators or any other society to manage the affairs of the society by the Registrar. Sub-section (2) of Section 32 by legal fiction and the deeming provision stipulates that the Administrator so appointed shall have all the rights of the Committee of Management and is deemed for all purposes of the Act, the Rules and the Bye-laws to be the Committee of such Society. Sub-sections (1) and (2) of Section 32 are extracted herein below in extenso :
"32. Supersession of Committee and power to disqualify officers of the society-
(I) If in the opinion of the Registrar, the Committee of any society persistently makes default or is negligent in the performance of the duties imposed on it by this Act or the bye-laws, or commits any act which is prejudicial to the interest of the society or its members, or is otherwise not functioning properly the Registrar may, after giving the committee a reasonable opportunity of being heard within twenty-one days from the date of issue of the notice in that behalf and after consulting the Financing Bank of the Society by order in writing stating reasons therefor, remove the Committee and appoint-
(a) a new committee consisting of not less than three and not more than five members of the society in its place.
(b) one or more Administrators who need not be members of the society; or
(c) any other society with its consent;
to manage the affairs of the society for a period not exceeding two years as may be specified in the order and the said period may, at the discretion of the Registrar, be extended from time to time, so however that, the aggregate period does not exceed four years;
Provided that, for any sufficient-cause to be recorded, the Registrar may, in any case, extend the aforesaid period of twenty-one days so however that the total period does not exceed thirty days from the date of issue of the notice.
(2) The committee or the Administrator or Administrators of the society so appointed shall, subject to the control of the Registrar and to such instructions as he may from time to time give, have power to exercise all or any of the functions of the committee or of any office-bearer of the society and take all such action as may be expedient in the interest of the society and shall be deemed for all purposes of this Act and the rules and bye-laws to be the committee of such society."
The Bye-laws of the Orissa Housing Corporation Limited, the apex body, provides for different categories of members in Bye-law 2(e) which is extracted herein below in extenso:--
"2.(e) 'Member' means three categories of members 'A' category consists of Sub-Divisional Housing Building Co-operative and Town/Urban/House Building Co-operative Society registered under the Act.
'B' category consists of Co-operatives other than House Building Society and body corporate registered under State-Co-operative Act or Companies Act, any State or Central Government Undertakings with minimum of 20 employees, interested in financing house building loans to their employees.
State Government shall be special class members."
Bye-law 7 is relevant in the context of deciding whether the newly included members could be only nominal members or not which is extracted herein below in extenso :--
"7.(a) Membership of the Corporation shall be open to the following :--
(i) Sub-divisional H.B.C.B. and Town H.S.C.S./Urban H.B.C.S. at 'A' category.
(ii) Any Co-operatives other than House Building Co-operatives, any body Corporate registered under the State Co-operative Act or Companies Act, any State or Central Government Undertaking with minimum 20 employees interested in financing House Building loans for their employees can be admitted as member of the Corporation under 'B' category. Such institutions are required to remit at least Rs. 1,OOO/- towards share subscription and Rs. 100/- towards entrance fee along with application for membership.
(iii) State Government as special class member. No entrance fee will be necessary.
(iv) Individuals, Firms, Trust, Building Company, Investment Companies as associated or nominal members."
Bye-laws 7(f) disentitles a nominal or associate member to attend the General Body Meeting or to be elected to the Board of the Corporation.
8. Coming to the first question, the power to admit members of a Society vests with the Committee of Society as contained in Section 28( I )(a)(i) of the Act. After supersession of the Committee of Management of a Society by the Registrar under Sub-section (1) of S.-32 of the Act, when an Administrator is appointed to manage the affairs of the Society, such Administrator exercises all or any of the functions of the Committee of the Society and is entitled to take all such actions as may be expedient in the interest of the Society and he is deemed for all purposes of the Act and the Rules and Bye-laws to be the Committee of such Society, as provided in Sub-section (2) of Section 32. Thus, by virtue of the deeming provision contained in Sub-section (2) of Section 32 of the Act, the Administrator becomes the Committee of such Society.
A crucial question thus arises for consideration as to whether a person who by virtue of a deeming provision of a statute becomes the Committee of Society can or should exercise all the powers of the Committee under the Act or should exercise only day to day administration of the Society until an elected Committee is brought into action. In the case of Padma Charan Samantsinghar v. The Registrar of Co-operative Societies. Bhubaneswar, AIR 1981 Orissa 150, a Bench of this Court was considering the status of an Administrator appointed under Sub-section (I) of Section 32 of the Act and was examining the question whether such a person can be equated with the Committee defined in Section 2(c) of the Act. Construing Sections 32(1) and 2(c) of the Act, the learned Judges came to hold (at page 151 and 152) : --
"....... Sub-section (2) does not have the effect of converting the Committee of Administrators to a Committee in terms of the bye-laws. Sub-section (I) must be confined to the 'Committee' in which under the Act or the Bye-laws, the management of the affairs of the society vests. The Administrator of the Committee of Administrators is not such a Committee. The effect of Sub-section (2) is only in regard to exercise of powers and the deeming provision therein cannot be extended to make the Committee of Administrators a Committee referred to in Sub-section (1) and in terms of the definition in Section 2(c) of the Act.
A somewhat similar question in the context of Sections28 and 32(2) of the Act came up for consideration in the case of Janarden Rout v. Election Officer, Cuttack Central Co-opera- . live Bank Ltd., 1990 (2) OLR 511. The learned Judges came to hold :--
"........... Hence, though in the election to the apex or the central body, the co-operative societies who are the members are to be represented by delegates duly authorised in that behalf by their committees, yet so far as either an Administrator or Authorised Officer is concerned, they are subject to the control of the Registrar even in the matter of functioning as Committees of management while sending the delegates. There cannot be any denial of the fact that the Administrators or Authorised Officers are not the Committee of management themselves but are mere substitutes for them by way of a deeming provision which is even absent so far as Section 28(1-a) is concerned. ......."
In the case of Satyanarayan Patnaik v. State of Orissa (O.J.C. No. 1667 of 1986, disposed of on 29-9-1986), this Court was considering the question as to the person in whom power of a municipal council is vested after dissolution of the municipal council under subsection (5) of Section 401 of the Orissa Municipal Act. In that case it had been observed that discharging the powers of an elected body temporarily does not make the person so discharging the duties, the elected body itself.
In a statute when the expression 'deemed to be' is used, it create a fiction and a thing is treated to be that which, in fact, it is not. A (fiction is a legal assumption that a thing is true which is either not true, or what is probably false as true. Therefore, a legal fiction has to be strictly confined to the area in which it operates. When a person is deemed to be something, the only meaning possible is that whereas he is not in reality that something, the Act of Parliament requires him to be treated as if he were. The legal fiction must be limited to the purposes indicated by the context and cannot be given a larger effect. The context is vital. When a statute enacts that something shall be deemed to have been done, which in fact and truth was not done, the Court is entitled and bound to ascertain for what purposes and between what persons the statutory fiction is to be resorted to and full effect must be given to the statutory fiction and it should be carried to its logical conclusion.
The Committee or the Administrator or Administrators of the Society appointed under sub-section (1) of Section 32 of the Act to manage the affairs of the Society, by virtue of sub-section (2) thereof "shall be deemed for all purposes" of the Act and the Rules and Bye-laws to be the Committee of such Society. Sub-section (2) of Section 32 further provides that the exercise of power by such deemed committee shall be subject to the control of the Registrar and to such instructions as he may from time to time give. The appointment of such deemed Committee is also for a specified period and does not exceed the aggregate period of four years. From this it follows that the legislature has created such legal fiction for definite purpose, namely, to manage the affairs of the society till a properly constituted Committee comes into being on being elected. In the case of Bengal Immunity Co. Ltd. v. State of Bihar, AIR 1955 SC 661 at page 680, the Supreme Court held that legal fiction is created only for some definite purpose and the same is to be limited for the purpose for which it was created and should not be extended beyond that legitimate field. The Administrator having been appointed for a limited purpose, the legal fiction created for him under sub-section (2) of Section 32 of the Act should not be allowed to operate beyond the limited field of day to day running of the business of the Society.
In this view of the matter of a statutory fiction by which an Administrator is deemed to be a Committee of Society under subsection (2) of Section 32 and exercises the power of the Committee, the first question posed, requires answer as to whether the purposes of the Act enjoin upon the Administrator to exercise all the functions of the Committee of Society or merely some functions of the Committee could be exercised by him. The Administrator is appointed when a Committee of Society is under supersession to manage the affairs of the Society as provided in sub-section (1) of Section 32. It would, therefore, be reasonable for us to construe that while the elected body has been superseded by the Registrar and an Administrator is appointed, such Administrator is called upon by statute to manage the affairs of the society in the interregnum until a fresh Committee of Society is constituted. Keeping in view the co-operative movement and the object of having co-operative societies under the control of a Registrar, it would not he proper to hold that the Administrator appointed by the Registrar to manage the affairs of a Society though by virtue of the deeming provision is the Committee of Society, can take a policy decision in relation to the society in question. We are of the considered opinion that a Managing Director being appointed as the Administrator of the Committee of Management can only discharge the duties and normal functions of the society white the society is under supersession and is not entitled to take any policy decision in relation to the society in question which power west on the elected body itself, inasmuch as the Administrator is not the 'society' itself, but by virtue of the deeming provision is deemed to 'be a society'.
This being the position, the further question which requires a probe is whether admission of members of a society tant-amounts to a policy decision or is an ordinary function relating to the affairs of the society. Under section 16-A of the Act, no person shall be eligible for being admitted as a member of the society if he does not satisfy the requirements of the Act and the rules and Bye-laws 'thereunder. Under Section 16(l)(b) of the Act, no person is entitled to be admitted as a member of a society other than a primary society except any society; the Stale Government; the Central Government, and any other person as may be prescribed. The proviso to the aforesaid clause indicates that an individual may be admitted only as a nominal member. Under the definition of 'apex society' in Section 2(a). only societies can be its members. Under the Proviso to Section 2(a), individuals or body corporates may be taken as nominal or associate members. Under the Bye-laws of the apex society, three categories of members could be its members an contained in Bye-law 2(a) and Bye-law 7(a) provides as to whom the membership of the Corporation is open. Thus, whether admission of certain categories of persons as members of the apex society would at all be congenial to the interest of the society or not and whether applications being made, the applicants could be refused admission for sufficient reasons, are all in the nature of a policy decision which has to be taken bearing in mind several germane factors and cannot be brought within the expression of "normal affairs of the society and, therefore, an Administrator who has been appointed to manage the affairs of the society though by virtue of the deeming provision contained in Sub-section (2) of Section 32 becomes the Committe of Society, yet is not entitled to decide the question of admission of members to the society. Therefore, in our considered opinion, the decision of the Administrator (dated 16-5-1994 to admit 46 members to the 'apex body cannot be construed to be within the power of the said administrator who has merely become a Committee of Society by a deeming provision and as such the said decision is invalid and inoperative and is liable to be struck down.
9. Coming to the second question posed by us, we are also persuaded to accept the submission of Mr. Acharya for the petitioners that the Administrator admitted 46 persons on 16-5-1994, the day before the election notification for the Committee of Society was notified in a hush-hush manner with unusual haste without application of his mind fully to the relevant materials and without examining the applications of the several applicants and, therefore, such decision must be held to be an abuse of power of the administrator. It is in this context the conduct of the Administrator and the earlier decisions of the registrar assume significance. As has been held by this Court in O. J. C. No. 873 of 1994, the Registrar appointed Shri Prasant Mohapatra as the Administrator not in exercise of his statutory power but at the instance of the Chief Minister and, therefore, that decision was quashed making it clear that it would be open for the registrar to pass a fresh order appointing a proper person as the Administrator of the apex body without being influenced by any extraneous consideration. This order was passed by this Court on 12-4-1994. On 13-4-1994, the Registrar of Cooperative Societies, appointed the self-same person as the Administrator of the apex body and the said decision was challenged in O. J. C. No. 3025 of 1994 and this Court by an interim order stayed the appointment of said Shri Mohapatra and permitted the Registrar; either to revoke the order of appointment or to permit the Managing Director to carry on the affairs of the Corporation or ihe Registrar may himself manage the affairs of the apex body and it is pursuant to this interim direction, the Managing Director was permit-ted to exercise the power under Sub-section (1) of Section 32 of the Act. On the face of the aforesaid blatant abuse of power by the Registrar, when the Managing Director was appointed as the Administrator by the Registrar and then that Managing Director admits as many as 46 members to the apex body one day before the notification for election to the -Committee of Society of the apex body was given and such admission having been undertaken by the Administrator without any scrutiny or without any application of mind, as the file produced before us indicates, it can safely be concluded that the impugned decision of the Managing Director is not the outcome of elimination of all relevant and germane materials in the interest of the apex body, but is calculated and is an attempt to support the candidature of said Shri Moha-patra for whom the Registrar has already exhibited his bias, and is a deliberate attempt to push the cause of said Shri Mohapatra in the forthcoming election to the Committee of society. Such an order of the Managing Director, therefore, must be held to be a grossly malicious action intended to espouse the cause of a particular individual whom the Registrar has been trying to thrust arbitrarily, but has been prevented from so doing because of the Court's intervention. In the aforesaid premise, the order of the Managing Director dated 16-5-1994 admitting 46 new members to the apex body cannot be sustained and we accordingly quash the same.
10. In view of the aforesaid conclusions of ours, it is not necessary for us to examine the third question posed by us.
11. In the net result, therefore, we quash the order of the Managing Director dated 16-5-1994 admitting 46 new members to the apex body. If in the meantime, the election to the Committee of Society has already been held but because of the interim order of this Court dated 27th of June, 1994, the result of the election could not have been declared, we direct that while declaring the results of election the votes given by three 46 newly included members should be excluded and after excluding the same, the results of the election can be declared.
12. The writ application is accordingly allowed with the aforesaid direction and observation. There would be no order as to costs.
R.K. Patra, J.
13. I agree.