Holding

Where a Central Co‑operative Bank is covered by Section 49‑E(2), its CEO must be appointed from the cadre maintained under Section 54, and the State may notify that the cadre be supplied by the apex society; thus the appointment of the sixth respondent was valid.

Summary

The apex body, Chhattisgarh State Co‑operative Bank, appointed the sixth respondent as CEO of Zila Sahkari Kendriya Bank, a District Central Co‑operative Bank, after the incumbent CEO was arrested. The bank challenged the appointment, arguing that under the 2016 amendment to the Chhattisgarh Co‑operative Societies Act, only the bank itself could appoint its CEO, and that the State Government's 1971 notification obligating the bank to accept a cadre officer from the apex bank was no longer valid. The Supreme Court examined the interplay between Section 49‑E(2), which mandates appointment of a CEO from the cadre maintained under Section 54 for Central Societies receiving State aid, and the special clauses (a) and (b) inserted in Section 54(3) by the 2016 Amendment Act. Applying the principle of harmonious construction, the Court held that where a Central Society falls within Section 49‑E(2), the CEO must be chosen from the cadre, and the State can notify that the cadre be supplied by the apex society. Consequently, the appointment of the sixth respondent, ratified by the Registrar, was lawful. The Division Bench’s finding that the apex body had no role was set aside and the appeal was allowed.

Issues considered

The scope of power to appoint the CEO of a Central Co‑operative Bank under Section 49‑E(2) versus the special provisions (a) and (b) of Section 54(3) inserted by the 2016 Amendment Act.
Whether the 1971 State Government notification under Section 54(3) obliges the Central Bank to accept a cadre officer appointed by the apex bank.
Whether the Registrar’s ratification validates the appointment made by the apex bank.
Whether the Division Bench erred in holding that the apex body had no role in the CEO appointment.

Legislation cited

Chhattisgarh Cooperative Societies Act, 1960s. 49-E(2), s. 54(1), s. 54(2), s. 54(3)
Chhattisgarh Cooperative Societies (Amendment) Act, 2012s. 57-B
Chhattisgarh Cooperative Societies (Amendment) Act, 2016s. 54(3) – insertion of clauses (a) and (b)
Prevention of Corruption Act, 1988

Subjects

statutory interpretationcooperative societiesappointment of CEOSection 49-ESection 54apex cooperative bankcentral cooperative bankharmonious constructionnon‑obstante clauseRBI eligibility criteriaregistrar appointment

Judgment

[2020] 5 S.C.R. 307 307

MANAGING DIRECTOR CHHATTISGARH STATE A
CO-OPERATIVE BANK MARYADIT
v.
ZILA SAHKARI KENDRIYA BANK MARYADIT & ORS.
(Civil Appeal No.1961 of 2020) B
MARCH 04, 2020
[DR. DHANANJAYA Y CHANDRACHUD AND
AJAY RASTOGI, JJ.]
Chhatisgarh Cooperative Societies Act, 1960 - ss.49-E(2),
C
56(3) – Appellant, a State Cooperative body is the apex body of
Cooperative Banks in the State of Chhatisgarh – First respondent
is a District Central Cooperative Bank – Appointment of the CEO
of the first respondent – Division Bench of High Court held that in
terms of s.54(3), appellant had no role in the appointment of the
CEO and the power to appoint a CEO could only be exercised by D
the Registrar upon the failure of the District Central Cooperative
Bank to make an appointment within a specified time period – Held:
Sub-section (1) of s.49E deals with appointment of CEO of an Apex
Society while sub-section (2) with CEO of Central Society – s.54
talks about the cadre of officers – Sub-section (3) of s.54 makes it
E
obligatory upon such class of societies to accept and appoint cadre
officers on cadre posts as and when they are deputed by the Apex
or Central Societies – Provisions of s.54(3) was amended by
Amendment Act 2016 – Present dispute arose by virtue of the 2016
Amending Act which inserted clauses (a) and (b) in s.54(3) of the
1960 Act – Clause (a) of sub-section (3) stipulated that the eligibility F
criteria for the post of CEO of a Cooperative Bank are those
prescribed by the RBI in this regard and clause (b) stipulated that if
the concerned Cooperative Bank failed to appoint a CEO under
the eligibility criteria within a specified period, the Registrar may
appoint an eligible officer of the Bank – The term ‘class of societies’
G
in s.54(3) excluded Cooperative Banks for the limited purpose of
the appointment of their CEO – However, where a Cooperative Bank
is a Central Society within the ambit of s.49-E(2), the CEO shall be
appointed from among the officers of the cadre constituted and
maintained under s.54, where such cadre has been constituted –
H
307
308 SUPREME COURT REPORTS [2020] 5 S.C.R.

A State Government is empowered to issue a notification in pursuance
of the power conferred upon it under s.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 Cooperative Bank a panel of officers,
from which the Cooperative Bank shall appoint its CEO, subject to
B
such officer possessing the eligibility criteria as stipulated by the
RBI; and where no cadre has been constituted under s.54, the CEO
of a Cooperative Bank which is a Central Society under s.49-E(2)
shall be appointed with the prior approval of the Registrar as
stipulated in s.49-E(2)(b)(ii) – In the instant case, first respondent
C is a Central Society falling within the ambit of s.49-E(2) of the 1960
Act – In exercise of the power conferred by s.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 – Seventh respondent is not an officer
D
from the cadre maintained by the appellant – Consequently, the
action of the first respondent in seeking to appoint the seventh
respondent as the CEO was not sustainable in law – Appointment
of sixth respondent by the appellant as the CEO of first respondent
was ratified by the Registrar of Societies and accepted by the BoD
E of the first respondent – Thus, appointment of sixth respondent was
in terms of s.54(3) and was legally sustainable – Order of Division
Bench of High Court set aside.
Interpretation of Statutes: Harmonious construction – Held:
In interpreting two provisions of a statute, courts must adopt the
F interpretation which does not defeat either provision and advances
the remedy envisaged by their enactment – It is 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 – Where two provisions of an
enactment appear to be in conflict, courts do not readily presume
G an ‘either/or’ situation – Courts must construe the provisions
harmoniously to ensure, as far as possible, the effective operation
of both provisions in a manner that furthers the purpose of the
enactment – Every provision, phrase, clause and word must be
interpreted in a manner to further the object of the enactment – No
H word or part of a statute should be construed in isolation –
Chhatisgarh Cooperative Societies Act, 1960.
M. D. CHHATTISGARH STATE COOP. BANK MARYADIT v. ZILA 309
SAHKARI KENDRIYA BANK MARYADIT

Allowing the appeal, the Court A
HELD: 1. Section 54 contains provisions for the
appointment of Managers, Secretaries and other officers of
societies. Sub-section (1) stipulates that a Manager, Secretary,
Accountant or other paid officer shall be appointed only if they
possess the prescribed qualifications. A reading of the sub-section B
denotes that the power to make appointments vests with the
society itself. Sub-section (2) of Section 54 casts an obligation
upon Apex and Central Societies to maintain such cadre of officers
as the State Government may, by order, direct. The Registrar is
empowered to frame the conditions of service of the members of
the cadre so constituted. [Paras 21, 22][327-E-F] C

2. Section 49-E of the 1960 Act deals specifically with the
appointment of Managing Directors and Chief Executive Officers
in certain circumstances. The provision deals only with the
appointment of the Managing Director and the CEO. It covers
appointments “in certain circumstances,” which are specified D
therein. Sub-section (1) of Section 49-E deals with the
appointment of the Managing Director of an Apex Society. Sub-
section (2) deals with the appointment of the Managing Director
(who shall be the CEO) of Central Societies. Section 49-E applies
to a situation where the State Government has: contributed to E
the share capital; or given loans or financial assistance; or
guaranteed the repayment of loans, debentures or advances; or
given grants in any other form. The provisions of both sub-
sections (1) and (2) of Section 49-E begin with an overriding non-
obstante stipulation. The provisions operate notwithstanding
anything contained to the contrary in the 1960 Act, rules F
thereunder or bye-laws of the society. Section 49-E thus carves
out an exception to the power vested in societies to make
appointments under Section 54(1). Sub-section (2)(a) stipulates
that for every Central Society, there shall be a Managing Director
not below the rank of a Class-II officer, who shall be the CEO of G
the society. Clause (b) of Section (2) stipulates that the CEO
would be appointed from among the officers of the cadre
maintained under Section 54, if such a cadre has been constituted
and in all other cases, with the prior approval of the Registrar of

H
310 SUPREME COURT REPORTS [2020] 5 S.C.R.

A Cooperative Societies. Thus, for Central Societies which fall
within the purview 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
B
Director or General Manager with the prior approval of the
Registrar of Cooperative Societies. [Para 23][327-G-H;
328-A-E]
3. A pre-requisite to bring a Central Society within the fold
of Section 49-E(2) is that the State Government has contributed
C 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
D 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. [Para 24][328-F-G]
E
4. Sub-section (3) of Section 54 empowers the State
Government to specify, by notification, the class of societies which
shall employ officers from cadres maintained by Apex or Central
Societies as specified therein. The provision stipulates that upon
the issuance of such notification, it shall be obligatory for the
F class of societies notified therein to accept and appoint such cadre
officers on cadre posts as and when deputed by the Apex or Central
Society, as the case may be. Upon the issuance of a notification
under Section 54(3), an exception is carved to the power of
appointment conferred upon the notified class of societies under
G Section 54(1). Where a class of societies has been notified by the
State Government to employ officers from cadres constituted by
the Apex or Central Society, the power of appointment vests with
the Apex or Central Society, as specified in the notification. The
notified class of societies is under an obligation to accept and

H
M. D. CHHATTISGARH STATE CO-OPERATIVE BANK MARYADIT v. 311
ZILA SAHKARI KENDRIYA BANK MARYADIT

appoint cadre officers deputed to cadre posts by the Apex or A
Central Society, as the case may be. [Para 25][328-H; 329-A-C]
5. By virtue of the 2016 Amending Act, clauses (a) and (b)
was inserted in Section 54(3) of the 1960 Act. Clause (a) of sub-
section (3) stipulates that the eligibility criteria for the post of
CEO of a Cooperative Bank are those prescribed by the RBI in B
this regard. Clause (b) stipulates that if the concerned
Cooperative Bank fails to appoint a CEO under the eligibility
criteria within a specified period, the Registrar may appoint an
eligible officer of the Bank. While 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 C
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 the RBI will apply to officers holding D
the post of the CEO of a Cooperative Bank. Significantly, clause
(b) of Section 54(3) beings with the words “if the concerning co-
operative Bank fails to appoint” which denotes an intention to
vest with Cooperative Banks the power to appoint their CEO.
The provision also stipulates that where the Cooperative Bank
fails to appoint the CEO within a specified period, the Registrar E
may appoint an eligible officer of the bank. The stipulation that in
the case of default, the CEO shall be an officer of the bank and
not an officer from the cadre as notified under Section 54(3)
demonstrates the intention of the legislature to vest with
Cooperative Banks the power to appoint their CEO. Evidently, F
by virtue of the 2016 Amendment Act, clauses (a) and (b) were
inserted as specific provisions for the appointment of the CEO
of Cooperative Banks, vesting in them the power of appointment.
Where two interpretations of potentially conflicting provisions
are possible, courts must adopt the interpretation that furthers
the intention of the legislature as encapsulated in the maxim Verba G
ita sunt intelligenda ut res magis valeat quam pereat. In this view
of the matter, a harmonious construction of Section 54(3) and
clauses (a) and (b) of the 2016 Amendment Act leads to the

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312 SUPREME COURT REPORTS [2020] 5 S.C.R.

A conclusion that clauses (a) and (b) are special provisions
concerning the appointment of the CEO of Cooperative Banks
which are carved out of power of the State Government to issue
a notification under Section 54(3). This view is strengthened by
the deletion of Section 57-B(19) and the simultaneous insertion
of clauses (a) and (b) in Section 54(3). [Paras 26, 34, 35, 36]
B
[329-D-F; 335-C-G]
JK Cotton Spinning and Weaving Mills Co Ltd v. State
of Uttar Pradesh AIR 1961 SC 1170 : [1961] 3 SCR
185; Commercial Tax Officer, Rajasthan v. M/s Binani
Cements Ltd. (2014) 8 SCC 319 : [2014] 3 SCR 1;
C South Indian Corporation (P) Ltd. v. Secretary, Board
of Revenue AIR 1964 SC 207 : [1964] 4 SCR 280;
Paradip Port Trust v. Their Workmen AIR 1977 SC 36:
[1977] 1 SCR 537; Maharashtra State Board of
Secondary and Higher Education v. Paritosh Bhupesh
D Kumar Sheth (1984) 4 SCC 27; CCE v. Jayant Oil Mills
(1989) 3 SCC 343 : [1989] 2 SCR 291; P S Sathappan
v. Andhra Bank Ltd (2004) 11 SCC 672 : [2004] 5 Suppl.
SCR 188; Sarabjit Rick Singh v. Union of India (2008)
2 SCC 417 : [2007] 13 SCR 321; Pankajakshi v.
Chandrika (2016) 6 SCC 157 : [2016] 3 SCR 1018 –
E relied on.
7. 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
F 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
G 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
H
M. D. CHHATTISGARH STATE CO-OPERATIVE BANK MARYADIT v. 313
ZILA SAHKARI KENDRIYA BANK MARYADIT

(2)(c-i). The provisions contained in Section 49-E are intended A
to bring about regulatory control of the State Government by
requiring the appointment of the CEO from among the officers of
the cadre maintained under Section 54. The 2016 Amendment
Act which brought in the provision of clauses (a) and (b) of sub-
section (3) has not affected the operation of Section 49-E. Hence,
B
the appointment of a CEO of Central Society governed by Section
49-E(2) has to be from the officers of the cadre maintained under
Section 54. Significantly, sub-section (2) of Section 49-E contains
a non-obstante stipulation. As a consequence, notwithstanding
the 2016 Amendment Act, the CEO of a Central Society falling
within the description of sub-section (2) of Section 49-E has to C
be appointed from among the officers of the cadre maintained
under Section 54, if such cadre has been constituted.
[Para 38][336-C-G]
8. Section 49-E(2) is not a self-contained provision. Section
49-E(2)(b)(i) merely stipulates that the CEO of a Central Society D
that falls within its ambit, shall be appointed from among the
officers of the cadres maintained under Section 54. Thus, where
a cadre under Section 54 has been constituted, a Central Society
falling within the ambit of Section 49-E(2) is obligated to appoint
its officer from such cadre. Neither Section 49-E nor Section 54(2)
specify whether the appointment is to be made from the cadre of E
the Apex Society or Central Society as constituted under Section
54(2). Section 54(3) empowers the State Government to issue a
notification specifying the class of societies which shall employ
officers from such cadres maintained by Apex or Central Societies
as may be specified therein. In addition to conferring upon the F
State Government the general power to notify the class of
societies which would employ officers from the cadres maintained
by Apex or Central Societies, the notification under Section 54(3)
operationalizes the regulatory control of the State Government
envisaged in Section 49-E(2) in the manner specified therein.
[Para 39][336-H; 337-A-C] G

9. It is 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. No word or part of a statute can be construed in
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314 SUPREME COURT REPORTS [2020] 5 S.C.R.

A isolation. Courts must be mindful that an interpretation which
renders either provision otiose must be avoided unless the
conflict does not yield any possible reconciliation. In this view,
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
B
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). The State Government is
empowered to issue a notification under Section 54(3) for
C Cooperative Banks which are Central Societies falling within the
ambit of Section 49-E(2) specifying that the Cooperative Bank
shall appoint its CEO from the cadre constituted by the Apex
Society. At the same time, to ensure that clauses (a) and (b) of
Section 54(3) are given effect, the notified Apex Society shall
forward to the concerned Cooperative Bank a panel of officers
D
from which the it shall appoint its CEO, subject to the officer
satisfying the eligibility criteria prescribed by the RBI. In this
view, the regulatory control of the State Government over
Cooperative Banks which have received state funding in the
manner specified in Section 49-E(2) is retained, which furthers
E the object of the provision. [Paras 41, 45, 46][337-G-H;
338-D-E; 341-A-D]
Principles of Statutory Interpretation by Justice G P
Singh; Statutory Interpretation by Francis Benion –
referred to.
F 10. 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
G Cooperative Bank a panel of officers, from which the Cooperative
Bank shall appoint its CEO, subject to such officer possessing
the eligibility criteria as stipulated by the RBI; and Where no
cadre has been constituted under Section 54, the CEO of a
Cooperative Bank which is a Central Society under Section 49-
E(2) shall be appointed with the prior approval of the Registrar
H as stipulated in Section 49-E(2)(b)(ii). [Para 47][342-D-F]
M. D. CHHATTISGARH STATE CO-OPERATIVE BANK MARYADIT v. 315
ZILA SAHKARI KENDRIYA BANK MARYADIT

11. In the instant case, it was not disputed that the first A
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
B
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 C
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
D
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 and accepted by
the BoD of the first respondent. [Paras 48, 49][342-G-H; E
343-A-C]
Krishan Kumar v. State of Rajasthan (1991) 4 SCC
258 : [1991] 3 SCR 500; British Airways Plc v.
Union of India (2002) 2 SCC 95 : [2001] 5 Suppl. SCR
152 – relied on. F
Case Law Reference
[1961] 3 SCR 185 relied on Para 32
[2014] 3 SCR 1 relied on Para 33
[1964] 4 SCR 280 relied on Para 33 G
[1977] 1 SCR 537 relied on Para 33
(1984) 4 SCC 27 relied on Para 33
[1989] 2 SCR 291 relied on Para 33
H
316 SUPREME COURT REPORTS [2020] 5 S.C.R.

A [2004] 5 Suppl. SCR 188 relied on Para 33
[2007] 13 SCR 321 relied on Para 33
[2016] 3 SCR 1018 relied on Para 33
[1991] 3 SCR 500 relied on Para 42
B [2001] 5 Suppl. SCR 152 relied on Para 43
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1961
of 2020.
From the Judgment and Order dated 07.08.2018 of the High Court
of Chattisgarh at Bilaspur in WA No.96 of 2018.
C
Vikrant Singh Bais, Yogesh Tiwari, Advs. for the Appellant.
Sameer Shrivastava, Darpan K.M., D.K.Devesh, Rohit Singh,
Advs. for the Respondents.
The Judgment of the Court was delivered by
D
DR. DHANANJAYA Y CHANDRACHUD, J.
1. This appeal has arisen from a judgment of a Division Bench of
the High Court of Chhattisgarh dated 7 August 2018. Allowing a Letters
Patent Appeal, the Division Bench set aside the judgment of a Single
E Judge dated 19 January 2018. The Division Bench held that the
appointment made by the appellant on 11 August 2017 of the Chief
Executive Officer1 of the first respondent bank and its subsequent
ratification by the Registrar of Cooperative Societies, were without the
authority of law. Consequently, the decision of the appellant was held to
be not binding on the first respondent.
F
2. The appellant – Chhattisgarh State Cooperative Bank - is the
apex body of cooperative banks in the State of Chhattisgarh. The first
respondent is a District Central Cooperative Bank which is governed by
the provisions of the Chhattisgarh Co-Operative Societies Act 19602.
3. The CEO of the first respondent bank was arrested on 9 August
G
2017 by the Economic Offences Wing of the State of Chhattisgarh on
charges of corruption, under the Prevention of Corruption Act 19883.

1
“CEO”
2
“1960 Act”
H 3
“PC Act”
M. D. CHHATTISGARH STATE COOP. BANK MARYADIT v. ZILA SAHKARI 317
KENDRIYA BANK MARYADIT [DR. DHANANJAYA Y CHANDRACHUD, J.]

Upon being produced before the designated Court, he was remanded to A
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 Directors4. On 11 August 2017, the
appellant appointed the sixth respondent, who was discharging duties as B
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
India5. The appellant also sought to justify its action of appointing the
sixth respondent as the CEO of the first respondent with reference to C
Section 54(3) of the 1960 Act.
5. The sixth respondent was not given charge as the CEO of the
first respondent on the ground that a meeting of the BoD was scheduled
to be convened on 16 August 2017. On 16 August 2017, the BoD of the
first respondent approved the appointment of the seventh respondent, D
who was initially serving as the interim CEO, as the CEO. The first
respondent instituted a Writ Petition 6 before the High Court of
Chhattisgarh challenging the legality of the order dated 11 August 2017,
by which the appellant had appointed the sixth respondent as the CEO.
Essentially, the case of the first respondent is that the appointment of its E
CEO lies solely within its discretion and neither the appellant as the apex
society nor the Registrar has the power to appoint a CEO. The BoD of
the first respondent bank sought a clarification from the Registrar of
Cooperative Societies on 17 August 2017 regarding the appointment of
the sixth respondent as the CEO. By his communication dated 21 August
2017, the Registrar stated that the appointment made by the appellant of F
the sixth respondent was in accordance with law and that the order of
appointment should be complied with.
6. On 25 August 2017, the BoD of the first respondent resolved to
accept the appointment of the sixth respondent and directed that the
seventh respondent shall hand over charge of the post of the CEO to the G
sixth respondent.

4
“BoD”
5
“RBI”
6
W.P (C) 3875 of 2017
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318 SUPREME COURT REPORTS [2020] 5 S.C.R.

A 7. A learned Single Judge of the Chhattisgarh High Court by a
judgment dated 19 January 2018 dismissed the Writ Petition filed by the
first respondent holding that the appointment of the sixth respondent
was in terms of the provisions of Section 54(3) of the 1960 Act and was
legally sustainable. The Single Judge also noted that the appointment
had been ratified by the Registrar of Cooperative Societies and that the
B
appointment had also been accepted at a meeting of the BoD of the first
respondent.
8. Aggrieved by the order of the learned Single Judge, the first
respondent filed a Writ Appeal7 before the Division Bench, which was
allowed by the impugned order dated 7 August 2018. The Division Bench
C held that under the amended provisions of Section 54(3), which were
incorporated with effect from 14 December 2016, the appellant had no
role in the appointment of the CEO. In the view of the Division Bench,
the power to appoint a CEO could only be exercised by the Registrar
upon the failure of the District Central Cooperative Bank to make an
D 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
E 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
F 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:

G “49-E. Appointment of Managing Director and Chief Executive
Officer in certain circumstances.-
(1)(a) Notwithstanding anything contained in this Act or rules or
byelaws made thereunder for any Apex Society where

7
H Writ Appeal No. 96 of 2018
M. D. CHHATTISGARH STATE COOP. BANK MARYADIT v. ZILA SAHKARI 319
KENDRIYA BANK MARYADIT [DR. DHANANJAYA Y CHANDRACHUD, J.]

the State Government has contributed to its share capital A
or has given loans or financial assistance or has guaranteed
the repayment of loans granted in any other form, there
shall be a Managing Director, not below the rank of a
Class I Officer, who shall be selected by a committee
constituted at the State level consisting of the Agriculture
B
Production Commissioner, Chairman of the Apex Society,
Registrar Co-operative Societies and one Director
nominated by the Board of Apex Society:”
Provided that if the committee fails to select the Managing
Director unanimously, the matter shall be referred to the
State Government whose decision thereon shall be final. C

(b) The Managing Director shall be ex-officio member of the
committee.
(c) The Managing Director shall be the Chief Executive
Officer of the society and shall perform such duties and D
exercise such powers as may be prescribed.
(2)(a) Notwithstanding anything contained in this Act, or the
Rules or byelaws made thereunder for every Central
society where the State Government has contributed to
its share capital or has given loans or financial assistance E
or has guaranteed the repayment of loans, debentures, or
advances or has given grants in any other form, there shall
be a Managing Director or a General Manager not below
the rank of a Class II Officer who shall be the Chief
Executive Officer of the society and ex-officio member
of the committee: F
(b) The Chief Executive Officer shall be appointed:
(i) from among the Officers of the cadre maintained under
Section 54 if such a cadre has been created; (ii) in other
cases with the prior approval of the Registrar.
G
(c) The Chief Executive Officer shall perform such duties
and exercise such powers as may be prescribed.”
11. Sub-section (1) of Section 49-E deals with the appointment of
the Managing Director and CEO of an Apex Society. The expression
‘Apex Society’ is defined in Section 2(a-i) to mean H
320 SUPREME COURT REPORTS [2020] 5 S.C.R.

A “a society whose principal object is to provide facilities for the
operation of other societies affiliated to it and whose area of
operation extends to the whole State…”
Sub-section (2) deals with the appointment of a Managing Director
or a General Manager who shall be the CEO of a Central Society. The
B expression ‘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
C 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
D 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
E the Registrar.
13. Section 49-E(2)(b)(i) refers to the cadre of officers maintained
under Section 54. Section 54 is in the following terms:
“54. Appointment of Managers, Secretaries and other officers.-
F (1) No society shall appoint a Manager, Secretary, Accountant or
other paid officer unless he holds such qualifications as may be
prescribed.
(2) The Apex and Central Societies shall maintain such cadres of
officers and other servants as the State Government may, by order,
direct and the conditions of service of members of such cadre
G
shall be such as the Registrar may, by order, determine.
(3) The State Government may, by notification, specify the class
of societies which shall employ officers from such cadres
maintained by the Apex or Central Societies under sub-section
(2) as may be specified therein and it shall be obligatory on the
H part of such class of societies to accept and appoint such cadre
M. D. CHHATTISGARH STATE COOP. BANK MARYADIT v. ZILA SAHKARI 321
KENDRIYA BANK MARYADIT [DR. DHANANJAYA Y CHANDRACHUD, J.]

officers on the cadre posts as and when deputed by the Apex or A
Central Societies.”
Sub-section (1) of Section 54 provides that a society shall not
appoint a Manager, Secretary, Accountant or other paid officer unless
the person holds such qualifications as are prescribed. Under sub-section
(2), Apex and Central Societies have to maintain such cadres of officers B
and other servants as the State Government may, by order, direct. Under
sub-section (3), the State Government is empowered to issue a notification
specifying the class of societies which shall employ officers from the
cadres maintained by the Apex or Central Societies. Sub-section (3)
also makes it obligatory upon such class of societies to accept and appoint
cadre officers on cadre posts, as and when they are deputed by the C
Apex or Central Societies.
14. In exercise of the power conferred by sub-section (3) of Section
54, a notification was issued by the State of Madhya Pradesh (prior to
its reorganisation) on 12 January 1971. The notification is extracted below:
D
“Notification No. 258-413-Fifteen-1.71 dated 12.01.1971
By exercising powers under sub-section 3 of section 54 of Madhya
Pradesh Cooperative Societies Act 1960 (No. 17 of 1961), The
State Govt. vide this notification notifies that the cooperative
societies mentioned in column 3 of the schedule given below shall E
appoint officers from the cadre constituted by the Apex
Cooperative Society mentioned in column 2 of the schedule given
below in front of them as per their availability.
SCHEDULE
Sl. Name of Apex Name of Cooperative F
No. Cooperative Society Society
(1) (2) (3)
1 M.P. State Cooperative Central Cooperative Bank
Bank Ltd.
G
2 Madhya Pradesh State Primary Cooperative Land
land Development Bank Development Bank
3 Madhya Pradesh State Primary Cooperative
Cooperative Marketing Marketing Societies and
Federation Process Committee H

(Published in part-1 of Gazette of M.P. dated 19.02.1971)”
322 SUPREME COURT REPORTS [2020] 5 S.C.R.

A 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
B
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
C Chhattisgarh Cooperative Societies (Amendment) Act 20168, with effect
from 14 December 2016. The following provisions were inserted at the
end of Section 54(3):
“(a) The eligibility criteria to hold the office of Chief Executive
Officer of any Co-operative Bank shall be as such as may be
D prescribed by the Reserve Bank in this regard.
(b) If the concerning Co-operative Bank fails to appoint the Chief
Executive Officer under the eligibility criteria within a specified
period, in such a condition the Registrar may appoint such eligible
officer of the Bank.”
E
17. The present dispute has been occasioned by the insertion of
clauses (a) and (b) in Section 54(3) of the 1960 Act by virtue of the
Amending Act of 2016.
18. The appellant has urged the following submissions:
F (i) The CEO of the first respondent (which is a District Central
Cooperative Bank) is a paid officer whose appointment is
regulated by Section 54(1), which mandates the appointment
of only persons who possess the prescribed qualifications.
The appointment which was made by the first respondent
was of a person who did not fulfill the prescribed qualifications;
G
(ii) Section 54(2) mandates the first appellant to maintain cadre
of officers as the State Government may, by order, direct. In
exercise of the power conferred by Section 54(3), the State
Government issued a notification dated 12 January 1971
H 8
“2016 Amendment Act”
M. D. CHHATTISGARH STATE COOP. BANK MARYADIT v. ZILA SAHKARI 323
KENDRIYA BANK MARYADIT [DR. DHANANJAYA Y CHANDRACHUD, J.]

which stipulated that the Central Cooperative Bank must A
appoint officers from the cadre constituted by the State
Cooperative Bank. By virtue of Section 54(3) and the
notification dated 12 January 1971, the first respondent (as a
District Central Cooperative Bank) is obligated to accept and
appoint the officer deputed by the appellant (as the Apex
B
Society) as the CEO. In the present case, the person who
was appointed by the first respondent did not fulfill the
prescribed eligibility criteria. Hence, the sixth respondent was
appointed as CEO in exercise of the appellant’s authority
under Section 54(3) to make that appointment;
(iii) Pursuant to Section 54(3), a notification was issued on 26 C
June 1971 under which all Central Cooperative Banks in the
state were permitted to maintain cadres of officers from
whom appointments to Village Cooperative Societies,
including Large Sized Agricultural Credit Societies would be
made. By another notification dated 26 June 1971 also under D
Section 54(3), Central Cooperative Banks were permitted to
maintain cadres of employees from whom managers for rural
cooperative 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 E
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 F
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; G
(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 H
324 SUPREME COURT REPORTS [2020] 5 S.C.R.

A Director/General Manager/Manager shall be from the cadre
of officers maintained by the Apex Bank. If a cadre officer
is not available due to unforeseen circumstances, a temporary
appointment may be made by the first respondent with the
prior permission of the appellant, subject to such terms and
conditions as may be imposed;
B
(vi) The 2016 Amendment Act which amended Section 54(3) must
be read together with other provisions and not independently.
The amendment in sub-section (3) only deals with the eligibility
criteria and is equally applicable to both the Apex Society
and to any Central Society. Both the appellant and the first
C respondent are cooperative banks. The appellant is an Apex
Society while the first respondent is a Central Society;
(vii) Under sub-section (2) of Section 54, both Apex Societies
and Central Societies have to maintain cadres of officers
and other servants as the State Government may, by order,
D direct. Sub-section (3) makes it obligatory on the first
respondent (which is a Central Society) to accept and appoint
a cadre officer to a cadre post as and when deputed by the
appellant (which is the Apex Society). It is only if the CEO is
not appointed within a specified period, that the Registrar is
E empowered to appoint an eligible officer as the CEO.
(viii) In the present case, the earlier CEO of the first respondent
was arrested on a charge of corruption under the PC Act.
The Chairperson of the first respondent appointed a Manager
as an interim CEO, who was not from the cadre of officers
F maintained by the Apex Bank. Hence, the appellant in
exercise of its powers under Section 54(3) read with the
notification dated 12 January 1971, deputed the sixth
respondent as CEO of the first respondent on 11 August 2017
which appointment, the first respondent was bound to accept.
On a clarification sought by the BoD of the first respondent,
G the Registrar of Cooperative Societies, by his reply dated 21
August 2017 observed that the appointment made by the
appellant was in accordance with law. Consequently, the
BoDs accepted the appointment of the sixth respondent at a
meeting on 25 August 2017. The order deputing the sixth
H respondent as CEO was ratified by the Registrar and
accepted by the BoD of the first respondent; and
M. D. CHHATTISGARH STATE COOP. BANK MARYADIT v. ZILA SAHKARI 325
KENDRIYA BANK MARYADIT [DR. DHANANJAYA Y CHANDRACHUD, J.]

(ix) The learned Single Judge correctly dismissed the Writ Petition A
filed by the first respondent. The Division Bench allowed the
Writ Appeal on an erroneous appreciation of the applicable
legal regime. In the case of all Central Cooperative Banks in
Chhattisgarh, the CEO is an officer drawn from the cadre
maintained by the Apex Bank. This is in consonance with
B
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 C
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.
D
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
20129. Sub-section (19) of Section 57-B provides that the E
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. F
The aforesaid panel was to be recommended by a 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; G
b) The nominee of the National Bank on the board; and
c) Oneothermemberoftheboard,whetherelectedorco-
opted.
9
“2012 Amendment Act” H
326 SUPREME COURT REPORTS [2020] 5 S.C.R.

A (ii) 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
B
officer of the bank as the CEO;
(iii) 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
C 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
D 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);
E (iv) 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
F 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;
G (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
H Section 57-B of the 1960 Act and the subsequent insertion
M. D. CHHATTISGARH STATE COOP. BANK MARYADIT v. ZILA SAHKARI 327
KENDRIYA BANK MARYADIT [DR. DHANANJAYA Y CHANDRACHUD, J.]

of Section 54(3)(a) and (b). The 1960 Act does not mention A
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
B
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 C
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
under the 1960 Act. D

20. The rival submissions now fall for consideration.
21. Section 54 contains provisions for the appointment of Managers,
Secretaries and other officers of societies. Sub-section (1) stipulates
that a Manager, Secretary, Accountant or other paid officer shall be E
appointed only if they possess the prescribed qualifications. A reading of
the sub-section denotes that the power to make appointments vests with
the society itself.
22. Sub-section (2) of Section 54 casts an obligation upon Apex
and Central Societies to maintain such cadre of officers as the State F
Government may, by order, direct. The Registrar is empowered to frame
the conditions of service of the members of the cadre so constituted.
23. Section 49-E of the 1960 Act deals specifically with the
appointment of Managing Directors and Chief Executive Officers in
certain circumstances. The provision deals only with the appointment of
G
the Managing Director and the CEO. It covers appointments “in certain
circumstances,” which are specified therein. Sub-section (1) of Section
49-E deals with the appointment of the Managing Director of an Apex
Society. Sub-section (2) deals with the appointment of the Managing
Director (who shall be the CEO) of Central Societies. Section 49-E
applies to a situation where the State Government has: H
328 SUPREME COURT REPORTS [2020] 5 S.C.R.

A (i) contributed to the share capital; or
(ii) given loans or financial assistance; or
(iii) guaranteed the repayment of loans, debentures or advances;
or
B (iv) given grants in any other form.
The provisions of both sub-sections (1) and (2) of Section 49-E
begin with an overriding non-obstante stipulation. The provisions operate
notwithstanding anything contained to the contrary in the 1960 Act, rules
thereunder or bye-laws of the society. Section 49-E thus carves out an
C exception to the power vested in societies to make appointments under
Section 54(1). Sub-section (2)(a) stipulates that for every Central Society,
there shall be a Managing Director not below the rank of a Class-II
officer, who shall be the CEO of the society. Clause (b) of Section (2)
stipulates that the CEO would be appointed from among the officers of
the cadre maintained under Section 54, if such a cadre has been constituted
D and in all other cases, with the prior approval of the Registrar of
Cooperative Societies. Thus, for Central Societies which fall within the
purview 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
E 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
F 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
G 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 (3) of Section 54 empowers the State Government
H to specify, by notification, the class of societies which shall employ officers
M. D. CHHATTISGARH STATE COOP. BANK MARYADIT v. ZILA SAHKARI 329
KENDRIYA BANK MARYADIT [DR. DHANANJAYA Y CHANDRACHUD, J.]

from cadres maintained by Apex or Central Societies as specified therein. A
The provision stipulates that upon the issuance of such notification, it
shall be obligatory for the class of societies notified therein to accept
and appoint such cadre officers on cadre posts as and when deputed by
the Apex or Central Society, as the case may be. Upon the issuance of
a notification under Section 54(3), an exception is carved to the power
B
of appointment conferred upon the notified class of societies under Section
54(1). Where a class of societies has been notified by the State
Government to employ officers from cadres constituted by the Apex or
Central Society, the power of appointment vests with the Apex or Central
Society, as specified in the notification. The notified class of societies is
under an obligation to accept and appoint cadre officers deputed to cadre C
posts by the Apex or Central Society, as the case may be.
26. The present dispute has arisen by virtue of the 2016 Amending
Act which inserted clauses (a) and (b) in Section 54(3) of the 1960 Act.
Clause (a) of sub-section (3) stipulates that the eligibility criteria for the
post of CEO of a Cooperative Bank are those prescribed by the RBI in D
this regard. Clause (b) stipulates that if the concerned Cooperative Bank
fails to appoint a CEO under the eligibility criteria within a specified
period, the Registrar may appoint an eligible officer of the Bank. The
submission of the first respondent, which has found acceptance with the
Division Bench of the High Court, is that as a result of the amendment
which was made in 2016, the exclusive jurisdiction to appoint a CEO of E
a Cooperative Bank vests with the Bank itself. However, according to
the submission, the CEO must fulfill the eligibility criteria prescribed by
the RBI. Moreover, it is only where the Cooperative Bank fails to appoint
an eligible CEO within a specified period, that clause (b) of Section
54(3) empowers the Registrar of Cooperative Societies to appoint an F
eligible officer of the bank.
27. In the submission of the first respondent, clauses (a) and (b)
are special provisions enacted for Cooperative Banks and are intended
to have an overriding effect over: (i) the power of the State Government
to issue a notification in exercise of its powers under Section 54(3); and G
(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
H
330 SUPREME COURT REPORTS [2020] 5 S.C.R.

A 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-
B 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
C State Co-operative Bank or the Central Co-operative Bank, as the case
may be. The appointment was to be made from a panel of names eligible
to hold the post in accordance with the criteria stipulated by the RBI.
The constitution of the Selection Board was also set out in sub-section
(19). By virtue of this provision, an exception was carved out for the
D appointment of the CEO of Central Co-operative Banks and State Co-
operative Banks, subject to the conditions prescribed therein.
29. By the 2016 Amendment Act, Section 57-B was deleted and
clauses (a) and (b) were inserted in Section 54(3). Significantly, sub-
section (3) of Section 54 is not confined only to Cooperative Banks.
E Section 54(3) empowers the State Government to specify, 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). This
view is strengthened by Section 10 of the 1960 Act which mandates that
F the Registrar of Cooperative Societies shall classify all societies under
one or more of the following heads:
(i) Consumer Society;
(ii) Farming Society;
G (iii) Housing Society;
(iv) Marketing Society;
(v) Multipurpose Society;
(vi) Producer’s Society;
H
M. D. CHHATTISGARH STATE COOP. BANK MARYADIT v. ZILA SAHKARI 331
KENDRIYA BANK MARYADIT [DR. DHANANJAYA Y CHANDRACHUD, J.]

(vii) Processing Society; A
(viii) Resource Society;
(ix) General Society; and
(x) Industrial Society.
Section 10 also empowers the Registrar to further classify societies B
falling under any of the above classifications into:
(i) Apex Society;
(ii) Central Society; and
(iii) Primary Society. C
30. The 1960 Act covers a myriad of societies under its ambit.
Though the term ‘class of societies’ includes within its ambit Cooperative
Banks, 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 D
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
cadre officer as its CEO, clauses (a) and (b) would be rendered otiose.
E
31. It 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 F
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.”
G
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
H
332 SUPREME COURT REPORTS [2020] 5 S.C.R.

A 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 from the application of the general
B provision. The general provision operates, save and except in situations
covered by the specific provision. The rationale behind this principle of
statutory construction is that were there appears a conflict between two
provisions, it must be presumed that the legislature did not intend a conflict
and a subject-specific provision governs those situations in exclusion to
the operation of the general provision.
C
32. In an early decision of this Court in JK Cotton Spinning
and Weaving Mills Co Ltd v State of Uttar Pradesh10, a three judge
Bench of this Court considered whether the principle applied to conflicts
within the same enactment. Clause 5(a) of the Government Order dated
10 May 1948 conferred upon, inter alia, any employee or a registered
D trade union of employers the right to move the Board constituted under
the Order to initiate an enquiry into an industrial dispute. Clause 23
stipulated that where an enquiry is pending before the Regional
Conciliation Officer, notwithstanding the pendency of a case before the
Board or Industrial Court, no employer shall discharge or dismiss any
E workman. Under Clause 24, an order of the Board, unless modified in
appeal, was final and conclusive. The appellant, representing the
employer’s union, contended that once an order is made under Clause
5(a), Clause 23 has no application and the employer may proceed to
dismiss the workmen. The Court rejected the contention noting that any
employer could defeat the provisions of Clause 23 merely by an application
F under Clause 5(a). The Court held that Clause 23 was made with a
definite purpose. Consequently, where an enquiry was pending under
Clause 23, an application under Clause 5(a) was barred. The Court held:
“9…We reach the same result by applying another well-known
rule of construction that general provisions yield to special
G provisions. The learned Attorney-General seemed to suggest that
while this rule of construction is applicable to resolve the conflict
between the general provision in one Act and the special provision
in another Act, the rule cannot apply in resolving a conflict between
general and special provisions in the same legislative instrument.
H 10
AIR 1961 SC 1170
M. D. CHHATTISGARH STATE COOP. BANK MARYADIT v. ZILA SAHKARI 333
KENDRIYA BANK MARYADIT [DR. DHANANJAYA Y CHANDRACHUD, J.]

This suggestion does not find support in either principle A
or authority. The rule that general provisions should yield
to specific provisions is not an arbitrary 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
B
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 C
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 D
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. E
33. In Commercial Tax Officer, Rajasthan v M/s Binani
Cements Ltd.,11 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, F
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. By an
amendment, Entry 1E was inserted which covered ‘new cement units’
and stipulated that large-scale units would be entitled 25% tax exemption. G
A two judge Bench of this Court held:
“27. Before we deal with the fact situation in the present appeal,
we reiterate the settled legal position in law, that is, if in a Statutory
11
Civil Appeal No. 336 of 2003, decided on 19 February 2014. H
334 SUPREME COURT REPORTS [2020] 5 S.C.R.

A Rule or Statutory Notification, there are two expressions used,
one in General Terms and the other in special words, under the
rules of interpretation, it has to be understood that the special
words were not meant to be included in the general expression.
Alternatively, it can be said that where a Statute contains both a
General Provision as well as specific provision, the later must
B
prevail.
29…It is well established that when a general law and a special
law dealing with some aspect dealt with by the general law are in
question, the rule adopted and applied is one of harmonious
construction whereby the general law, to the extent dealt with by
C the special law, is impliedly repealed. This principle finds its origins
in the latin maxim of generalia specialibus non derogant...”
The Court held that where two provisions are in question – one of
general application and the other specific in nature, a harmonious
interpretation would mean that the general law, to the extent it is dealt
D with by the special law, is impliedly repealed. This Court, relying on the
principle generalia specialibus non derogant held that Item 1E is a
“subject specific provision”. The Court noted that the amendment
removed “new cement industries” from the non-eligible Annexure ‘B’
and placed it into Annexure ‘C’ amongst the eligible industries.
E Consequently, 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
F (P) Ltd. v Secretary, Board of Revenue12, Paradip Port Trust v
Their Workmen13, Maharashtra State Board of Secondary and
Higher Education v Paritosh Bhupesh Kumar Sheth14, CCE v
Jayant Oil Mills,15P S Sathappan v Andhra Bank Ltd16, Sarabjit
Rick Singh v Union of India17 and Pankajakshi v Chandrika18.

G 12
AIR 1964 SC 207
13
AIR 1977 SC 36
14
(1984) 4 SCC 27
15
(1989) 3 SCC 343
16
(2004) 11 SCC 672
17
(2008) 2 SCC 417
18
H (2016) 6 SCC157
M. D. CHHATTISGARH STATE COOP. BANK MARYADIT v. ZILA SAHKARI 335
KENDRIYA BANK MARYADIT [DR. DHANANJAYA Y CHANDRACHUD, J.]

34. While sub-section (3) of Section 54(3) deals with a class of A
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
B
that the eligibility guidelines prescribed by the RBI will apply to officers
holding the post of the CEO of a Cooperative Bank. Significantly, clause
(b) of Section 54(3) beings with the words “if the concerning co-operative
Bank fails to appoint” which denotes an intention to vest with Cooperative
Banks the power to appoint their CEO. The provision also stipulates that
where the Cooperative Bank fails to appoint the CEO within a specified C
period, the Registrar may appoint an eligible officer of the bank. The
stipulation that in the case of default, the CEO shall be an officer of the
bank and not an officer from the cadre as notified under Section 54(3)
demonstrates the intention of the legislature to vest with Cooperative
Banks the power to appoint their CEO.
D
35. Evidently, by virtue of the 2016 Amendment Act, clauses (a)
and (b) were inserted as specific provisions for the appointment of the
CEO of Cooperative Banks, vesting in them the power of appointment.
Where two interpretations of potentially conflicting provisions are possible,
courts must adopt the interpretation that furthers the intention of the
legislature as encapsulated in the maxim Verba ita sunt intelligenda ut E
res magis valeat quam pereat. Craies on Legislation states:
“…if two constructions of a provision are possible on its face, and
one would clearly advance the legislative purpose and the other
would clearly achieve little or nothing, the former is to be
preferred.” F

36. In this view of the matter, a harmonious construction of Section
54(3) and clauses (a) and (b) of the 2016 Amendment Act leads to the
conclusion that clauses (a) and (b) are special provisions concerning the
appointment of the CEO of Cooperative Banks which are carved out of
power of the State Government to issue a notification under Section G
54(3). We are strengthened in this view by the deletion of Section 57-
B(19) and the simultaneous insertion of clauses (a) and (b) in Section
54(3).
37. The difficulty in the present matters arises from the contention
of the first respondent that the exception carved out by clauses (a) and H
336 SUPREME COURT REPORTS [2020] 5 S.C.R.

A (b) of Section 54(3) also applies to Central Societies that fall within the
ambit of Section 49-E(2) of the 1960 Act. In this submission, where a
Cooperative Bank as a Central Society has received funds from the
State Government in the manner stipulated in Section 49-E(2), such
Central Banks may independently appoint a CEO and would not be
obligated to appoint its CEO from the cadre constituted under Section
B
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
C (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
D 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
E of the State Government by requiring the appointment of the CEO from
among the officers of the cadre maintained under Section 54. The 2016
Amendment Act which brought in the provision of clauses (a) and (b) of
sub-section (3) has not affected the operation of Section 49-E. Hence,
the appointment of a CEO of Central Society governed by Section 49-
F E(2) has to be from the officers of the cadre maintained under Section
54. Significantly, sub-section (2) of Section 49-E contains a non-obstante
stipulation. As a consequence, notwithstanding the 2016 Amendment
Act, the CEO of a Central Society falling within the description of sub-
section (2) of Section 49-E has to be appointed from among the officers
of the cadre maintained under Section 54, if such cadre has been
G constituted.
39. It is necessary here to note that Section 49-E(2) is not a self-
contained provision. Section 49-E(2)(b)(i) merely stipulates that the CEO
of a Central Society that falls within its ambit, shall be appointed from
among the officers of the cadres maintained under Section 54. Thus,
H where a cadre under Section 54 has been constituted, a Central Society
M. D. CHHATTISGARH STATE COOP. BANK MARYADIT v. ZILA SAHKARI 337
KENDRIYA BANK MARYADIT [DR. DHANANJAYA Y CHANDRACHUD, J.]

falling within the ambit of Section 49-E(2) is obligated to appoint its A
officer from such cadre. Neither Section 49-E nor Section 54(2) specify
whether the appointment is to be made from the cadre of the Apex
Society or Central Society as constituted under Section 54(2). Section
54(3) empowers the State Government to issue a notification specifying
the class of societies which shall employ officers from such cadres
B
maintained by Apex or Central Societies as may be specified therein.
In addition to conferring upon the State Government the general power
to notify the class of societies which would employ officers from the
cadres maintained by Apex or Central Societies, the notification under
Section 54(3) operationalizes the regulatory control of the State
Government envisaged in Section 49-E(2) in the manner specified therein. C
40. This is evident in the notification dated 12 January 1971 issued
by the State Government in exercise of the power conferred upon it
which stipulated that the first respondent (as a District Central
Cooperative Bank) is obligated to accept and appoint the officer deputed
by the appellant (as the Apex Society) as the CEO. Had Section 49- D
E(2) an inbuilt mechanism for the determination of the officer who would
be appointed as the CEO, 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 E
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 F
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.
G
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 provisions. Justice G P Singh in his seminal work Principles of
Statutory Interpretation states:
H
338 SUPREME COURT REPORTS [2020] 5 S.C.R.

A “…It is the duty of the court to avoid “a head on clash” between
two sections of the same Act and, “whenever it is possible to do
so, to construe provisions which appear to conflict so that they
harmonise.”
Francis Benion in his work Statutory Interpretation states:
B “Inconsistent enactments – A common application of the principle
is in relation to contradictory enactments within the same Act.
Enactment A may in itself be clear and unambiguous. So may
enactment B, located elsewhere in the Act. But if they contradict
each other, they cannot both be applied literally. A undoes B, and
C B undoes A. The court must do the best it can to reconcile them,
but this can be achieved only by giving one or both a strained
construction.”
Where two provisions of an enactment appear to be in conflict,
courts do not readily presume an ‘either/or’ situation. Courts must
D construe the provisions harmoniously to ensure, as far as possible, the
effective operation of both provisions in a manner that furthers the purpose
of the enactment. Every provision, phrase, clause and word must be
interpreted in a manner to further the object of the enactment. No word
or part of a statute can be construed in isolation. Courts must be mindful
that an interpretation which renders either provision otiose must be avoided
E unless the conflict does not yield any possible reconciliation.
42. In Krishan Kumar v State of Rajasthan,19 the Rajasthan
State Road Transport Corporation, Jaipur proposed a scheme in 1977
under Section 68-C of the Motor Vehicles Act 193920 for the exclusive
operation of the disputed road. Upon the enactment of the Motor Vehicles
F Act 198821, a Writ Petition was filed contending that due to undue delay
in notifying the scheme under 1939 Act, the scheme was not saved by
the 1988 Act. Section 100(4) of the 1988 Act stipulated that a draft
scheme must be finalized within one year from the date of its publication,
failing which it would lapse. Section 217(2)(e) stipulated that
G notwithstanding the repeal of the 1939 Act, a scheme proposed under
Section 68-C, if pending immediately before the commencement of the
1988 Act, shall be finalised in accordance with the provisions of Section
100 of the 1988 Act. The Court noted that, contrary to legislative intent,

19
(1991) 4 SCC 258
20
H “1939 Act”
M. D. CHHATTISGARH STATE COOP. BANK MARYADIT v. ZILA SAHKARI 339
KENDRIYA BANK MARYADIT [DR. DHANANJAYA Y CHANDRACHUD, J.]

no scheme under the 1939 Act would be saved if schemes under that A
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) B
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 C
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. D
11. It is settled principle of interpretation that where there appears
to be inconsistency in two sections of the same Act, the principle
of harmonious construction should be followed in avoiding a head
on clash. It should not be lightly assumed that what the Parliament
has given with one hand, it took away with the other. The provisions E
of one section of statute cannot be used to defeat those of another
unless it is impossible to reconcile the same.”
The Court held that where the Parliament confers a benefit, it
must not be readily assumed that it intends to withdraw a benefit at the
same time. Furthermore, the provisions of one section cannot be used to F
defeat another, unless there is no possibility of reconciling the two
conflicting provisions.
43. In British Airways Plc v Union Of India22, the appellant
was an aircraft carrier engaged in the business of international air transport
of passengers and cargo. It was contended that as they were not a G
“person-in-charge” as defined in Section 2(31) of the Customs Act 1962,
no penalty can be imposed upon them under Section 116 for shortages in
offloading the quantity of goods consigned. Section 42 required an officer
under the Act to issue a written order for the conveyance of the goods
21
“1988 Act”
22
(2002) 2 SCC 95 H
340 SUPREME COURT REPORTS [2020] 5 S.C.R.

A from the customs house. Clause (e) of sub-section (2) of Section 42
prescribes that no such order shall be given until the person-in-charge of
the conveyance has satisfied the proper officer that no penalty is leviable
on them under Section 116 or the payment of any penalty that may be
levied upon them under that section has been secured by such guarantee
or deposit of such amount as the proper officer may direct. The appellant
B
contended that once a clearance order is issued, no liability can be imposed
on them.
44. A two judge Bench of this Court noted held that while Section
42 operated to expedite the clearance of goods, Section 116 operated to
ensure the protection of cargo. Consequently, the two provisions
C subserved different purposes. Further, by an amendment in Section 148
which was a provision for the liability of an agent of the person in charge,
sub-section (2) was inserted which stipulated that any person who
represents himself to any officer of customs as an agent of any such
person-in-charge, and is accepted as such by that officer, shall be liable
D for the fulfillment of any obligation of the person-in-charge. The Court
held that effect 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
E 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
F 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.”
G 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 remedy envisaged by their enactment.
H
M. D. CHHATTISGARH STATE COOP. BANK MARYADIT v. ZILA SAHKARI 341
KENDRIYA BANK MARYADIT [DR. DHANANJAYA Y CHANDRACHUD, J.]

45. In this view, this Court must ensure that neither provision – A
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
the State Government under Section 54(3) applies in equal measure to
those Cooperative Banks that are Central Societies within the ambit of
B
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) specifying
that the Cooperative Bank shall appoint its CEO from the cadre
constituted by the Apex Society. At the same time, to ensure that clauses
(a) and (b) of Section 54(3) are given effect, the notified Apex Society C
shall forward to the concerned Cooperative Bank a panel of officers
from which the it shall appoint its CEO, subject to the officer satisfying
the eligibility criteria prescribed by the RBI.
46. In the view which we have taken, the regulatory control of
the State Government over Cooperative Banks which have received D
state funding in the manner specified in Section 49-E(2) is retained, which
furthers the object of the provision. The High Court was in error in
holding that in the matter of an appointment of the CEO, “the Apex
Body or the Central Society have no power or role to play”. The decision
of the High Court will have serious ramifications in terms of divesting
the regulatory control over the affairs of Central Societies. At the same E
time, conferring the power to the Cooperative Bank to appoint its CEO
from a panel gives effect to the special provision inserted by virtue of
clauses (a) and (b) in Section 54(3). This view is strengthened by virtue
of the fact that prior to its deletion, Section 57-B(19) was a provision in
Chapter VA of which sub-section (1) read thus: F
“Notwithstanding anything contained in this Act or Rules
framed there under or bylaws of any registered society or orders
issued there under, the provisions of this chapter shall have
overriding effect.”
(Emphasis supplied) G
Section 57-B(19), which was intended to have overriding effect,
was deleted and clauses (a) and (b) were inserted in Section 54(3) of
the 1960 Act. The absolute power conferred upon Cooperative Banks
to appoint the CEO was deleted. In this view, Section 49-E(2) and clauses
H
342 SUPREME COURT REPORTS [2020] 5 S.C.R.

A (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
B 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
C 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
D 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 Cooperative Bank a panel of officers, from
E which the Cooperative Bank shall appoint its CEO, subject to
such officer possessing the eligibility criteria as stipulated by
the RBI; and
(iii) Where no cadre has been constituted under Section 54, the
CEO of a Cooperative Bank which is a Central Society under
F Section 49-E(2) shall be appointed with the prior approval of
the Registrar as stipulated in Section 49-E(2)(b)(ii).
48. 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
G 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
H
M. D. CHHATTISGARH STATE COOP. BANK MARYADIT v. ZILA SAHKARI 343
KENDRIYA BANK MARYADIT [DR. DHANANJAYA Y CHANDRACHUD, J.]

Cooperative Societies including Large Sized Agricultural Credit Societies A
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.
B
49. 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 C
2017.
50. We accordingly allow the appeal and set aside the impugned
judgment and order of the High Court dated 7 August 2018. In
consequence, we uphold the order of the learned Single Judge dismissing
the Writ Petition, though for the reasons that we have indicated above. D
There shall be no order as to costs.

Devika Gujral Appeal allowed.

E

F

G

H