Bombay High Court
Gaurav K. Desai vs The State Of Maharashtra And Ors on 6 February, 2015
Author: Anoop V. Mohta
Bench: Anoop V. Mohta
1 903-Final wp-11699-11700-14
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.11699 OF 2014
Gaurav K. Desai
Residing at Sion Kamgar CHS Ltd.
D-01, Bhandarwada, Sion (E),
Mumbai - 400 022 ....Petitioner.
Versus
1 The State of Maharashtra
Through Co-operation Department
Mantralaya, Mumbai.
2 The Divisional Joint Registrar
Co-operative Societies, Mumbai Division,
Malhotra House, 6th floor,
Opp: GPO, Fort, Mumbai-01
3 Moreshwar Koli,
Residing at Sion Kamgar CHS Ltd.
C-31, Bhandarwada, Sion (East),
Mumbai - 400 022
4 Narayan Sawant
Residing a Sion Kamgar CHS Ltd.
D-62, Bhandarwada, Sion (East),
Mumbai 400 022
5 Krishnaraj Ved
Residing at Sion Kamgar CHS Ltd.
C-43 Bhandarwada, Sion (East),
Mumbai 400 022 ....Respondents.
WITH
WRIT PETITION NO.11700 OF 2014
1 Smt. Shailaja Shetty (Chairman)
Residing at Flat No.C-1, Sion Kamgar
CHS Ltd., 126, Bhandarwada, Sion (East),
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Mumbai- 400 022
2 Shri Jitendra Tandav (Treasurer)
residing at Flat No.B-16, Sion Kamgar CHS
Ltd., 126, Bhandarwada, Sion (East),
Mumbai - 400 022 ...Petitioners.
Versus
1 The State of Maharashtra
Through Co-operation Department
Mantralaya, Mumbai.
2 The Divisional Joint Registrar
Co-operative Societies, Mumbai Division,
Malhotra House, 6th floor,
Opp: GPO, Fort, Mumbai-01
3 Moreshwar Koli,
Residing at Sion Kamgar CHS Ltd.
C-31, Bhandarwada, Sion (East),
Mumbai - 400 022
4 Narayan Sawant
Residing a Sion Kamgar CHS Ltd.
D-62, Bhandarwada, Sion (East),
Mumbai 400 022
5 Krishnaraj Ved
Residing at Sion Kamgar CHS Ltd.
C-43 Bhandarwada, Sion (East),
Mumbai 400 022
6 Sion Kamgar Co-operative Housing
Society Ltd.,
126, Bhandarwada, Sion (East),
Mumbai 400 022 ....Respondents.
Mr. P.S.Dani, Sr. Adv. With Mr. H.R.Pawar, advocates for the Petitioners
in both petitions.
Mr. Vijay D. Patil, advocate for the respondent nos.3 and 4 in both
petitions.
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Mr. S.D.Rayrikar, AGP for the respondent-State.
CORAM : ANOOP V. MOHTA, J.
DATED : February 6, 2015.
ORAL JUDGMENT :
Rule. Rule made returnable forthwith. Heard finally by consent.
2 Petitioners, who were ex-office bearers of respondent no.6- society called Sion Kamgar Co-operative Housing Society (The Society) situated at Bombay, have challenged the common order passed by the respondent no.2-Divisional Joint Registrar, Mumbai dated 28.11.2014 thereby partly confirmed order dated 27.5.2014 passed by the Assistant Registrar, Co-operative Societies, F/N Ward, Mumbai.
3 Operative part of order dated 27.5.2014:
egkjk"Vª lgdkjh laLFkk vf/kfu;e 1960 ps dye 75¼5½ vUo;s eyk izkIr >kysY;k vf/kdkjkUo;s eh vkj-,l- yks[kaMs lgk¸;d fuaca/kd] lgdkjh laLFkk] ,Q&,u foHkkx] eqacbZ] vlk vkns'k nsrks dh] lk;u dkexkj dks&vkWi gkSflax lks- e- 126] HkaMkjokMk] 'kho iwoZ] eqacbZ&22 ;k laLFksP;k psvjeu Jhe- 'kSytk Mh- 'ksVVh lfpo Jh- xkSjo 'kkarkjke nslkbZ o [kftunkj Jh- ftrsanz ,u rkaMo ;kaP;k Shivgan 3/18 ::: Downloaded on - 17/03/2015 21:09:51 :::
4 903-Final wp-11699-11700-14 fo:/n ;k dk;kZy;kdMwu mDr okpkos e/khy dz-2 vUo;s ctko.;kr vkysY;k dkj.ks nk[kok uksVhlhP;k vuq"kaxkus egkjk"Vª lgdkjh laLFkk vf/kfu;e 1960] fu;e 1961 o laLFksP;k eatwj mifof/krhy rjrwnhuqlkj oj uewn vfu;fersckcr QDr laLFskps lfpo Jh- xkSjo 'kkarkjke nslkbZ gsp tckcnkj Bjr vlY;kus laLFksps psvjeu Jhe- 'kSytk Mh- 'ksVVh o [kftunkj Jh- ftrsanz ,u rkaMo ;kauk dkj.ks nk[kok uksVhlhrhy vfu;ferrsP;k tckcnkjhrwu eqDr dj.;kr ;soqu R;kapsfo:/n mDr okpkos e/khy dz-2 vUo;s ctko.;kr vkysY;k dkj.ks nk[kok uksVhl ekxs ?ks.;kr ;sr vkgs- ijarq laLFskps lfpo Jh-
xkSjo 'kkarkjke nslkbZ ;kauk oj ueqn vfu;ferrsl tckcnkj /k:u o gkSflax njckjkrhy fu.kZ;kP;k vf/ku jkgwu ig egkjk"Vª lgdkjh laLFkk vf/kfu;e 1960 ps dye 75¼5½ e/khy rjrwnhuqlkj iq<hy ikp o"kkZalkBh O;oLFkkid lferhpk lnL; Eg.kwu fuoMwu tk.;kl vik= ?kksf"kr djhr vkgs-
Operative part of order dated 28.11.2014:
ORDER "1 The Revision Application No.193 of 2014 is dismissed.
2 The Revision Application No.318/2014 is partially allowed.
3 The impugned order dated 27/05/2014 passed by the Respondent Assistant Registrar, C.S., F/N Ward, Mumbai u/s 75(5) of the M.C.S.Act 1960 is hereby partially confirmed to the extent of disqualification of Mr. Gaurav S. Desai from the post of member of managing Shivgan 4/18 ::: Downloaded on - 17/03/2015 21:09:51 :::
5 903-Final wp-11699-11700-14 committee for a period of 05 years and the part order of releasing free the Chairman and Treasurer of the Respondent society is set aside.
4 The case is remanded back to the Respondent Deputy Registrar for reconsideration in the light of above observations and decision on merits in respect of the issue of disqualification of the Chairman & Treasurer of the Respondent Society, 5 No order as to costs."
4 Both the aforesaid orders resulted into a debarment of five years for the secretary, who is petitioner in Writ Petition No.11699 of 2014. For other officers/petitioners in Writ Petition No.11700 of 2014, the appellate authority has remanded the matter for reconsideration to pass the similar order as the basic order no where debarred them.
5 In view of the 97th Amendment to the Constitution of India, in the Maharashtra Co-operative Societies Act, 1960 (In short 'MCS Act') with effect from 14.2.2013, it was necessary to call for a Special General Body Meeting before 30.4.2013 and to adopt the model bye-laws. It was also mandatory to hold an Annual General Meeting (AGM) of the society on or before 30.9.2013 with no provision of extension. Admittedly, the society held Annual General Meeting on 28.9.2013.
Shivgan 5/18 ::: Downloaded on - 17/03/2015 21:09:51 :::6 903-Final wp-11699-11700-14 6 Both the authorities, therefore, in view of the above facts, invoked Section 75 of the MCS Act and specially Sub-sections (1), (4), (5) and (6), which are reproduced as under:
"Section 75 - Annual general meeting (1) Every society, shall within a period of four months after the close of the financial year, get its books of accounts audited and within six months after the close of financial year to transact its business as may be provided in this Act, call the annual general body meeting of its members Provided that, where such meeting is not called by the society, the Registrar or any officer authorised by him may call such meeting in the manner prescribed and that meeting shall be deemed to be a general body meeting duly called by the society, and the Registrar may order that the expenditure incurred in calling such a meeting shall be paid out of the funds of the society or by such person or persons who, in the opinion of the Registrar, were responsible for the refusal or failure to convene the general meeting.
............
(4) At every annual general body meeting the audited balance sheet, the audited profit and loss account, audit report of the preceding financial year submitted by the auditor appointed under section 81, rectification report of earlier audit and the committee's report shall be placed for adoption and such other business will be transacted Shivgan 6/18 ::: Downloaded on - 17/03/2015 21:09:51 :::
7 903-Final wp-11699-11700-14 as may be laid down in the by-laws, and of which due notice has been given.
(5) If default is made, in calling a [general body meeting within the period] prescribed under sub-section (1) or in complying with [with sub-section (2), (2A], (3) or (4) the Registrar may by order declare any officer or member of the committee whose duty it was to call such a meeting or comply [with sub-section (2), (2A)], (3) or (4) and who without any reasonable excuse failed to comply with any of the aforesaid sub-sections disqualified for being elected and for being any officer or member of the committee for such period [not exceeding five years], as he may specify in such an order and, if the officer is a servant of the society, impose a penalty on him to [pay] an amount not exceeding [five thousand rupees]. Before making an order under this sub-section, the Registrar shall give, or cause to be given, a reasonable opportunity to the person concerned of showing cause against the action proposed to be taken in regard to him.
(6) Any penalty imposed under sub-section (5) or under [section 76], may be recovered in the manner provided by the [Code of Criminal Procedure, 1973], for the recovery of fines imposed by a Magistrate, as if such fine was imposed by the Magistrate himself."
7 Petitioners in pursuance of the notice provided a detailed explanation by reply dated 17.3.2014. Respondents-Authorities, however, for the position recorded above confirmed the punishment so mentioned Shivgan 7/18 ::: Downloaded on - 17/03/2015 21:09:51 ::: 8 903-Final wp-11699-11700-14 in advance, basically against the secretary of the society. For other office bearers, no such punishment was imposed. However, the revisional authority remanded the matter for re-consideration for the punishment/penalty. The society in the statutory Annual General Body meeting is bound to appoint internal/statutory auditor and fix his remuneration also to consider the audit report and or it's rectification.
Such meeting in a given case might be extended by the Registrar, subject to permission, within the extended period as per earlier position of law unamended S.75. Now position is changed with effect from 14.2.2013.
8 The scheme of Section 75 needs to read not in isolation. All the sub-clauses are connected and interlinked. There are certain connected obligation of the authorities also (Registrar) in case no meeting convened or able to take decisions. No such steps were taken even by the authorities within the prescribed period. also (Registrar) Sub-section (5) of Section 75 itself provides that irrespective of earlier provisions of Sub-sections (1), (2), (2A), (3) and (4) in case of default, before imposing any penalty, reasonable opportunity needs to be given to the concerned parties. This section itself provides that the authority must give all the opportunities and ask for an explanation for the failure to comply with the provisions if any. This section itself provides the concept of natural justice - "who without any reasonable excuse" fail to comply with Shivgan 8/18 ::: Downloaded on - 17/03/2015 21:09:51 ::: 9 903-Final wp-11699-11700-14 the mandate of the provisions. It is also a mandate of Sub-section (5) of Section 75 that the authorities should give an opportunity to explain "reasonable excuse" even if any officer/servant fails to comply with the provisions. This itself follows that if a reasonable excuse and/or reasonable case is made out, the authority irrespective of earlier provisions of Section 75, may pass an appropriate order and/or may reduce penalty/punishment so proposed, and/or may impose "nil"
punishment or "nil" penalty. The principles of natural justice, therefore, which are otherwise inherent in any such provisions of law, specifically when it comes to taking any action or deciding civil rights of the parties, must be followed. In the present case, Sub-section (5) of Section 75 is very clear about the principles of natural justice to be followed in the strict sense.
9 The word "officer" is defined in Section 2(20), which is reproduced below:
"S.2(20) "officer" means a person elected or appointed by a society to any office of such society according to its bye-laws; and includes [any office bearer such as a chairperson, vice-chairperson, president, vice-president, managing director, manager, secretary, treasurer, member of the committee and any other person, by whatever name called,] elected or appointed under this Shivgan 9/18 ::: Downloaded on - 17/03/2015 21:09:51 :::
10 903-Final wp-11699-11700-14 Act, the rules or the bye-laws, to give directions in regard to the business of such society;"
Word "servant" of the society is not defined in the MCS Act. In this case, We are concerned with the "officer" and the "member of the committee".
The concept 'Managing Committee' 2(7) is defined under the Act and so also its role. There is no issue that the General Body of members of the society and its resolution, is final and binds on all members. The annual meeting was called and decision was taken to appoint auditors and to complete the formality of S.154 of the MCS Act. The postponement for reasons by the General body just cannot be overlooked. The Managing Committee is bound by it. S. 75(4) however used to punish only some officers and not all other. The society is not made party to such proceedings. The society is a necessary party, as its elected committee members have been debarred and/or intended to debar for a minimum and/or maximum period of five years. The provision is also silent about dissecting the each committee member/s from other for punishment/debarment. In such situation also hearing and opportunity need to be given to all the concerned, as the respondents authority if wants to punish some or all of the managing committee members and/or servants, who acted as per the general body decision, in the present case.
Shivgan 10/18 ::: Downloaded on - 17/03/2015 21:09:51 :::11 903-Final wp-11699-11700-14 10 Any co-operative society itself means its members and/or officers including third agency like auditor, chartered accountants and servants, etc. Even otherwise those are requirements of law in case the society falls within the ambit of the requirements. The mandate so required was not for the earlier period/years. It appears that the society took sometime to initiate proceedings/steps to comply with the provisions.
However, in the present case, for some reason they were unable to complete the stated formalities. This fact was very well known to the society as well as to the complainants/other respondents. They participated and agreed to postpone to take essential steps but ultimately, appointed an auditor. However, for the reason beyond their control they were unable to complete the procedure, which was based upon auditor's report/action. They have placed on record the material to say that the auditor was ill and unable to complete the accounting in time as required. This itself means that society/officers/members were not in a position to control the situation as they were definitely relying upon the third person/agency i.e. auditor to complete the formalities within the prescribed period. Office bearers and/or individual members, in such a situation, as helpless, cannot be punished in such a way of debarring the secretary for five years as done in the present case and/or insisted by the complainants for the other office bearers also.
Shivgan 11/18 ::: Downloaded on - 17/03/2015 21:09:51 :::12 903-Final wp-11699-11700-14 11 Reasonable cause and/or sufficient reason needs to be considered in the facts and circumstances of the case but in situation like this where the third person/parties are involved and when the petitioners/officers at the relevant time took steps within the prescribed period but unable to fulfill the same within the statutory period for the ground so referred, that itself cannot be the reason for the punishment of this nature. I am inclined to observe that if "sufficient cause" is made out, it is not the mandate of the provisions that the authority should impose the maximum punishment in every such default. The discretion and the power need to use/utilize in accordance with law. Reasonable and fair approach is required, if sufficient cause is made out and/or where there was no intentional delay and/or intended inaction to breach provisions, which are brought into with effect from 15.2.2013 and no prior steps/intimation/circular issued to the society in advance, about such mandate.
12 There is no material placed on record that there was any intentional default committed by the petitioners and the society.
Normally such new provisions need to be advertised, elaborated, crystalized, simplified and duly circulated by the concerned departments so that people at large be aware of the mandate and effect of the non-
compliance of the same. Assume for a moment, being declared Shivgan 12/18 ::: Downloaded on - 17/03/2015 21:09:51 ::: 13 903-Final wp-11699-11700-14 provisions of law, the concerned person, including the authorities, should be aware of the procedure and the mandate. The authorities still cannot read the provisions to use and utilize the power to the maximum extent by punishing the stated defaulter members of the society, by debarring them for five years.
The plain reading of Sub-section (5) of Section 75 itself shows that it has a foundation of "discretion to be exercised by the authority"
after the show-cause notice and/or provides a "reasonable opportunity" to the person concerned and specifically before the proposed action to be taken in this regard. Admittedly, there was no prior notice given, except the notice/show-cause notice dated 28.2.2014. The show-cause notice was given based upon the concluded facts. The explanation or the reasons called for non-compliances and straight away mentioned about the concluded 5 years' punishment. A statement is made by learned Senior Counsel appearing for the petitioners that before issuing show-
cause notice, there was no enquiry made of whatsoever nature and/or not inspected the record by the concerned department. Tenor of this show-
cause notice itself shows that the concerned authority has invoked Section 75(5) of the MCS Act and concluded to impose the maximum punishment. The punitive action by the registering authority was contemplated even prior to the amendment of 2013. The managing Shivgan 13/18 ::: Downloaded on - 17/03/2015 21:09:51 :::
14 903-Final wp-11699-11700-14 committee could not have forwarded the audit report to the authority concerned unless approved by the General body. The power and function of the managing committee cannot be against the general body decision.
Therefore, also such a drastic punishment of curtailing their tenure by five years is arbitrary, unjust, unfair, unrealistic, unsustainable. The punishment could have been nil to maximum 5 years ban or monetary penalty as prescribed. The authority has pre-judged the issue and decided to impose maximum punishment, since the inception of the proceedings itself.
13 The respondents, in my view, misread the provisions and imposed the maximum penalty without granting the opportunity and taking due steps as contemplated in Section 75, at every stage of the proceedings. The doctrine of opportunity "without reasonable reason" and "without any reasonable excuse" itself contemplates to exercise the discretion and/or power by the authority before imposing the maximum punishment and/or penalty amount so mentioned. Therefore, even if there is default noted but if a reasonable excuse is shown and/or pointed out, the authority needs to consider the same in accordance with law before taking such action of disqualification. All these concepts are not defined or elaborated in the MCS Act and the Rules made thereunder.
Therefore, these settled principles of law around these doctrines need to Shivgan 14/18 ::: Downloaded on - 17/03/2015 21:09:51 ::: 15 903-Final wp-11699-11700-14 be followed by the authorities, before taking such drastic action of disqualification even for a day or for maximum five years, as such action definitely affects the rights of the members, officers/servants and/or of the society.
14 This shall not in any way be read to mean that the office bearers or officers and/or servants of the society should not comply with the provisions so incorporated. However, the legislature considering the various backgrounds ig and practical part of the society intended and accordingly granted power and authority to the authorities to consider an individual case by calling and/or considering the explanation and/or the sufficient reason not to comply with the earlier provisions. Therefore, by respecting mandate of the earlier provisions concerned, the authorities at the same stroke must also follow and accept intent of giving full and reasonable opportunity to all the parties concerned before passing such order of disqualification/penalty. Therefore, I am inclined to observe that it is necessary for the respondents/authorities before imposing any penalty and/or punishment, to take essential steps and to comply with basic principles of natural justice at every stage of the proceedings.
15 Officer itself means all the elected officers of the society. One person cannot be held responsible if there are any such defaults unless Shivgan 15/18 ::: Downloaded on - 17/03/2015 21:09:51 ::: 16 903-Final wp-11699-11700-14 case is made out against the particular officer and/or servant. Joint and several liability and obligations of the Managing Committee need to be decided, based upon the provisions of the MCS Act/Rules and the society bye-laws.
16 Justification so given, therefore, in the present facts and circumstances, in my view, cannot be said to be unreasonable and/or insufficient to pass such punishment of five years debarment. Authorities ought to have exercised discretion fairly and reasonably including to consider to grant and/or impose penalty as contemplated under Section 75(5). Section 73(1AB) of the MCS Act read and referred so also a judgment to show its mandate, are of no assistance to interpret the provisions of Section 75 in view of sub-section 75(5) of the MCS Act itself. The questioned provision itself provides the authority to deal with the sufficient reason for the stated breaches/latches to follow earlier sections/provisions. The nature of default and related punishment and penalty are itself subject to show-cause/opportunity/hearing and reasoned order.
17 Learned counsel appearing for the complainants also submitted that power to impose penalty as contemplated under Section 75(5) can be used only if the officer is servant of the society. As noted Shivgan 16/18 ::: Downloaded on - 17/03/2015 21:09:51 ::: 17 903-Final wp-11699-11700-14 concept "servant" of the society is not specifically defined. However, "officer" is specifically defined. In the present case, however, without going further to the submissions raised by the complainants/respondent nos.3 and 4 ,as no reason whatsoever provided by the authorities before passing and/or imposing punishment of five years' debarment and not less than that or "nil" against the secretary. Now matter is remanded for re-consideration for other office bearers as if in every such matter the mandate is of five years punishment. No explanation and/or reason is also provided that the punishment should be of five years and can not be less than that. The term "not exceeding five years" itself means and incorporates that there may be "nil" and/or minimum punishment including penalty so provided not exceeding Rs.5,000/-.
18 Therefore, for the above reasons and in the facts and circumstances of the case, I am inclined to interfere with the orders passed by the authorities below with further direction to the concerned first basic authority (Assistant Registrar) to consider the cases based upon the above observations and to re-deal with the same including punishment if any, after giving opportunity to the petitioners, before treating them as defaulters and/or imposing punishment/penalty. I am inclined to observe that the department must follow to take steps from their side and basic principles of natural justice at every stage, before Shivgan 17/18 ::: Downloaded on - 17/03/2015 21:09:51 ::: 18 903-Final wp-11699-11700-14 invoking these provisions. They must take steps to make aware the mandate to all the concerned parties, by sending advance intimations, circulars to avoid such punishment and penalty as per the provisions.
Therefore, I pass the following order:
ORDER (1) Order dated 28.11.2014 passed by the Divisional Joint Registrar , Co-operative Societies, Mumbai Division is quashed and set aside.
(2) ig Order dated 27.5.2014 passed by the Assistant Registrar, Co-operative Society, F-N Ward, Bombay is quashed and set aside.
(3) The concerned Assistant Registrar/authority to decide the case/complaint as early as possible and preferably within a period of three months from today in accordance with law by giving equal opportunity to all.
(4) Parties are at liberty to file additional
affidavit or material, if any.
19 Both the petitions are allowed accordingly with no order as to
costs.
(ANOOP V. MOHTA, J.)
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