Harmonious reading of cooperative bank CEO appointment rules preserves cadre-based control for Central Societies.

Clauses (a) and (b) inserted in Section 54(3) by the 2016 amendment create a special mechanism for appointing a cooperative bank's Chief Executive Officer, but they do not displace the wider statutory notification framework in every case. The provision must be read harmoniously with Section 49-E(2), which governs Central Societies receiving State assistance and requires the CEO to be drawn from the cadre maintained under Section 54, where such cadre exists, or otherwise with prior approval of the Registrar. The notified cadre and RBI eligibility requirements therefore continue to control appointments in that setting, preserving both the bank-specific mechanism and regulatory supervision.

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Issues: (i) Whether Clauses (a) and (b) inserted in Section 54(3) by the 2016 amendment conferred on a cooperative bank the exclusive power to appoint its Chief Executive Officer and displaced the State Government notification issued under Section 54(3); (ii) whether a cooperative bank which is a Central Society falling within Section 49-E(2) must appoint its Chief Executive Officer from the cadre maintained under Section 54, in accordance with the State Government notification.

Issue (i): Whether Clauses (a) and (b) inserted in Section 54(3) by the 2016 amendment conferred on a cooperative bank the exclusive power to appoint its Chief Executive Officer and displaced the State Government notification issued under Section 54(3).

Analysis: Section 54(3) is a general enabling provision empowering the State Government to notify classes of societies and require them to accept cadre officers deputed by Apex or Central Societies. The 2016 amendment inserted Clauses (a) and (b) specifically for the appointment of Chief Executive Officers of cooperative banks, but those clauses were not intended to nullify the pre-existing regulatory framework in all situations. The amended provision must be harmonised with the rest of the Act so that both the general notification power and the special bank-specific mechanism remain effective. The legislative change removed the earlier special scheme under Section 57-B(19) but did not create an absolute and unqualified autonomy in every cooperative bank to appoint its CEO without regard to other provisions.

Conclusion: Clauses (a) and (b) of Section 54(3) do confer a special appointment mechanism for cooperative banks, but not an uncontrolled power overriding the statutory notification framework in every case.

Issue (ii): Whether a cooperative bank which is a Central Society falling within Section 49-E(2) must appoint its Chief Executive Officer from the cadre maintained under Section 54, in accordance with the State Government notification.

Analysis: Section 49-E(2) is a special non obstante provision governing Central Societies receiving State assistance. It mandates that the Chief Executive Officer be appointed from among the officers of the cadre maintained under Section 54, where such cadre exists, and otherwise with the prior approval of the Registrar. The State Government notification issued under Section 54(3) operationalises this scheme by specifying the source from which the Cooperative Bank must draw its CEO. Reading Section 49-E(2) with the amended Section 54(3) harmoniously, the Court held that the bank's special power to appoint its CEO under the amendment is subject to the statutory requirement that, where the bank is a Central Society under Section 49-E(2), the appointment must be from the notified cadre maintained by the Apex Society and the selected officer must satisfy the RBI eligibility criteria.

Conclusion: A cooperative bank that is a Central Society under Section 49-E(2) must appoint its Chief Executive Officer from the notified cadre maintained under Section 54, and the impugned appointment made otherwise was invalid.

Final Conclusion: The statutory scheme was construed harmoniously to preserve both the special bank-specific appointment mechanism and the regulatory control applicable to Central Societies, and the appointment challenged before the Court was held unsustainable.

Ratio Decidendi: Where two provisions of the same statute appear to overlap, they must be harmonised so that the special provision operates within its field without defeating a separate regulatory regime, and a Central Society governed by a special non obstante appointment scheme must still comply with the cadre-and-notification structure prescribed by the Act.

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