Bombay High Court
Central Railway Divisional Office ... vs Union Of India (Uoi) And Ors. on 6 September, 2007
Equivalent citations: 2008(1)BOMCR229, 2007(6)MHLJ737
Author: A.H. Joshi
Bench: A.H. Joshi, R.C. Chavan
JUDGMENT A.H. Joshi, J.
1. Rule. Rule is made returnable forthwith by consent of parties. The affidavits by the respondents No. 1 to 3 as well of respondents No. 4, 5 and 7 are already filed. Respondent No. 6 arrayed in personal capacity need not be heard as no relief is sought against him.
2. The petitioner is the Employees' Consumer Co-operative Society. It renders various services to the employees of Central Railway. The society has been incorporated under Maharashtra Co-operative Societies Act, 1960 in furtherance to the policy of respondents 1 to 3 to promote co-operative movement.
3. The petitioner has challenged the letter (Annexure-6) dated 5-7-2007, however, it need not be gone in, as learned Advocate for petitioner does not press it with liberty to keep it open for challenge by persons affected before appropriate forum. For this, liberty as prayed is granted.
4. Due to various complaints, the Railway Administration has taken a decision to "close the Central Railway Divisional Office Employees Consumer Co-operative Society, Nagpur" with immediate effect, and consequently, advice and directions have been issued through order dated 13-7-2007 the 'Annexure-7. Its copy has been given to the Divisional Registrar, Co-operative Societies Nagpur, for information and necessary action. Based on Annexure-7, the respondent No. 4 has passed the order dated 16-7-2007 Annexure-9 appointing the provisional Liquidator under Section 102(2) of Maharashtra Co-operative Societies Act, 1960 (hereinafter referred to as the said Act), with a notice of show cause as to why the order should not be made absolute. Both these orders are challenged in this petition.
5. A grievance of the petitioner, as it is seen, can be summarized as follows:
(a) There is no mis-management, however, due to the complaints of certain rival group, in exercise of purported administrative power of Railway Authorities have issued impugned order.
(b) That the petitioners were liable to be heard before passing order Annexure-7.
(c) The impugned order which has a very serious and adverse effect on the facilities, and services available to the members, however, prejudice to these persons is not attended to.
(d) Annexure-7 results in putting to an end of the existing Co-operative Society, which act is contrary to policy of railway administration of promoting activities of the Co-operative Societies.
(e) If there is mis-management by the persons in the reins of management of society, the remedy is by way of action against the members of Committee according to law, and not by way of putting to an end to the very existence of Society.
(f) The remedy resorted by the Railway administration is more injurious than the disease alleged.
(g) Present managing Committee was served with a notice under Section 78(1) of the Maharashtra Co-operative Societies Act, and two members of the Committee were found responsible, and were removed from the post, and remaining members of the Managing Committee are continued to manage the affairs of the Society, and there are in fact, no complaints against them.
6. The defence of the Railway administration is that:
(a) It has come to the notice of the Railway Administration is that the accounts of the Society have not been audited at all by the Office bearers.
(b) The very formation of the Consumer Society of the Railway employees is for the welfare of the employees, and the Society has to act according to the policies and advice of the Railway administration, and to run the society effectively, efficiently and according to the rules.
7. It is not shown from Annexure-7 or any averments contained in the affidavit that the petitioner, and the members of the Managing Committee were heard.
8. As we can see from the contents of the affidavit of the railways, it reveals that audit is not conducted at all, however, it conducted through a private Auditor which has been objected by the railway administration.
9. It is also seen that there are factions, and there is a group complaint against the existing group of persons at the reins of the management.
10. In this situation, we find that the communication issued by the Railways (Annexure-7) which is the sole foundation of the order under Section 102 of the Act, is thus issued by the Railway Administration being unmindful as to its consequences, and in a haste and without observing basic rule of principles of natural justice.
11. The language contained in the affidavit of Railway administration suggests that:
In fact, appointment of Administrator by Jt. Registrar will not harm the interest of shareholders and effect of the said order will at least save some of their share capital.
(Quoted from para 11 while replying para 8 of the petition at page 121 of W.P. Paper Book) This suggests that the society is not to be closed down, yet order un-ambiguiously suggests closing down. This adds to the proof of lack of application of mind.
12. In this situation, we hold that the lapses, if any, on the part of the members of the Managing Committee of the Society need not go un-checked and un-controlled, yet the Railway Administration, who is seriously interested, in cooperative movement as well as orderly organization, and functioning of petitioner society should certainly be entitled to invoke the jurisdiction of the Registrar of Maharashtra Co-operative Society, and proper action can be initiated. Nevertheless, before taking any serious action, it would be appropriate to meet the obligation required to be inherently followed in the observance the principles of natural justice, which in fact, in case on hand, is not shown as complied with.
13. In this background, present is a fit case where without going into the question of alternate remedy before the Railway Administration as well as against the provisional order of appointment of Liquidator should be appealed against, this Court should interfere.
Considering the haste with which the respondents have acted, it would be a matter of empty formality to direct the petitioner to the statutory remedy. Moreover, when Annexure-7 is to be set aside, the foundation of Annexure-9 is automatically lost.
14. In this situation, we make rule absolute and set aside Order dated 13-7-2007 Annexure-7 i.e. the communication at page 79 of Writ Petition Paper Book issued by ADRM Nagpur, and also as its necessary consequence, quash and set aside the order appointing provisional Liquidator passed by the respondent No. 4 i.e. Annexure-9 as well.
15. We make it clear that this does not create any barrier on the authority of the Railway Administration to take appropriate steps after issuing the show cause notice, for applying to the Registrar for ensuring proper management, and administration of the petitioner society. With these directions, rule is made absolute. In the circumstances, parties shall bear own costs.