Managing Director Chhattisgarh State Co-Operative Bank Maryadit v. Zila Sahkari Kendriya Bank Maryadit
Background
After the CEO of a District Central Cooperative Bank was arrested on corruption charges, the apex State Cooperative Bank (the appellant) appointed a replacement CEO from its own officer cadre, relying on a decades-old government notification requiring District Banks to appoint CEOs only from the Apex Bank's cadre. The District Bank's own Board instead wanted to confirm its internally appointed interim CEO, relying on a 2016 amendment to the Chhattisgarh Cooperative Societies Act that gave cooperative banks the power to appoint their own CEO (subject to RBI eligibility norms) unless they failed to do so in time. The Chhattisgarh High Court's Division Bench ruled in favour of the District Bank, holding the Apex Bank had no role to play, and the Apex Bank appealed to the Supreme Court.
Decision Breakdown
The Supreme Court held that the 2016 amendment (allowing cooperative banks to appoint their own CEO) and an older provision (Section 49-E) requiring banks that have received State Government financial support to appoint their CEO from the Apex Bank's cadre, were not irreconcilable: they had to be read harmoniously rather than treating one as cancelling out the other. It held that where a cooperative bank falls within the government-funded category covered by Section 49-E, the Apex Bank must still forward a panel of eligible, RBI-compliant cadre officers, from which the District Bank then makes its appointment, preserving both the District Bank's role and the State's regulatory oversight through the Apex Bank's cadre system. Applying this to the facts, since the officer the District Bank wanted to retain was not drawn from the Apex Bank's cadre, his appointment could not stand. The High Court's judgment was set aside and the Single Judge's order (which had upheld the Apex Bank's appointee) was restored.
Lesson Learnt
When two provisions of the same law appear to conflict, courts try to read them together so that both retain meaning, rather than letting a later or more specific-sounding provision wipe out an earlier one entirely: a lesson relevant to anyone dealing with overlapping cooperative, corporate or regulatory rules.