Bombay High Court
Keshaorao Narayanrao Patil vs District Deputy Registrar And Ors. on 16 April, 1987
Equivalent citations: 1987(3)BOMCR225
JUDGMENT V.A. Mohta, J.
1. Maharashtra Act No. 20 of 1986 (brought into force with effect from 12-5-1986), the Maharashtra Co-operative Societies Act, 1960 (the Act) has been amended and section 73-FF has been added. It deals with the subject of disqualification for membership of the Committee. Sub-section (2) of section 73-FF mentions that A member who has incurred any disqualification under sub-section (1), shall cease to be a member of the Committee and his seat shall thereupon be deemed to be vacant." The principal point raised in this petition is whether such cessation takes place automatically or has to be preceded by a hearing and thereafter an order as required under section 78 of the Act dealing with the power of Registrar to remove a member, on the ground of incurring a disqualification.
2. The point arises against the following backdrop. Petitioner Keshaorao Patil, while he was holding the office of the President-Director of Vikas Khand Sahakari Shetki Kharedi Vikri Samiti Limited, Barshi Takli, had purchased goods on credit from the said society, between 23rd June, 1976 to 17th December, 1977. The Auditor reported these outstanding dues, on the basis of which inquiry under section 83 of the Act was started by the Sub-Divisional Assistant Registrar, in which a sum of Rs. 36,123.91 was found due. Show-Cause notice was issued. No payment was made and hence a dispute under section 91 was ordered to make a payment of Rs. 29,181/- vide order dated 12-2-1986. The petitioner carried an appeal before the Maharashtra State Appellate Court, which was pleased to grant the stay of operation of the order of Co-operative Court on 1-7-1986.
3. Election of the District Loan Committee of the Maharashtra State Land Development Bank Limited was scheduled. The petitioner filed nomination paper from Barshi-Takli Murtizapur Constituency. An objection was raised to the nomination paper that the petitioner had incurred disqualification within the meaning of section 73-FF(1)(c)(ii), and, therefore, was not eligible for being elected as a member of the Committee. Objection to the nomination paper was rejected on the ground that on that day the order of directing payment by the Co-operative Court was stayed by the Appellate Court. Thereafter the election was held on 22-10-1986, the petitioner was elected as one of the 7 delegates from the District. On 29-10-1986 the appeal filed by the petitioner before the Co-operative Appellate Court came to be dismissed and the stay granted on 1-7-1986 stood automatically vacated. Election of the Chairman of the District Loan Committee as contemplated under section 112-A was scheduled to be held on 12-11-1986 in the first meeting of the Committee. Notices for the same were issued by the Collector on 4-11-1986. The petitioner was not given such notice and hence he wrote a letter to the District Deputy Registrar and the Collector on 5-11-86, making a grievance and seeking information as to why no notice was issued to him. After some correspondence the Collector informed the petitioner that the District Deputy Registrar vide his confidential letter has informed the office of the Collector that the appeal before the Co-operative Appellate Court was dismissed on 29-10-1986 in view of which the petitioner had incurred disqualification and had ceased to be a member under section 73-FF(2).
4. These decisions are impugned in this petition. On 7-11-1986 notice before admission was issued by the Court. On 12-11-1986 ad interim order was issued, permitting the petitioner to participate and vote in the election meeting. The petitioner had made a statement that he would not contest the post of Chairman. The result of the election was to be declared only if there was a difference of two or more votes. On 21-11-1986 this petition was admitted and the result of the election was ordered to be declared and was made subject to the result of the petition. The result was declared Laxmikant Mahakal (respondent No. 3) defeated his nearest rival by difference of 1 vote. Motiram Lahane, who had raised objection to the nomination and was defeated in the election of the Member of the Committee and Madhukar Bhukbhar who had contested and lost the election of the Chairman, were allowed to intervene in this petition. The order passed by the Co-operative Appellate Court was challenged in the High Court. Ultimately the order of payment was confirmed and the petitioner accordingly made the payment on 22-1-1987. The intervenor Lahane has filed a dispute under section 91 of the Act challenging the election of the petitioner as a Member of the Committee and the said dispute is pending.
5. Several contentions, factual as well as legal, are raised in this petition, first and foremost being that section 73-FF(2) does not operate automatically and unless the order of removal for incurring disqualification is passed by the Registrar, after giving an opportunity to the member to state his objections to the proposed action as contemplated under section 78 of the Act, a member continues to have his status.
6. It seems to us that this contention is well founded. Section 78(1), as substituted by Maharashtra Act No. 20 of 1986, reads thus :
"78. (1) If, in the opinion of the Registrar, the Committee of any society or any member of such committee makes default, or is negligent in the performance of the duties imposed on it or him by this Act or the rules or the bye-laws, or commits any act which is prejudicial to the interests of the society or its members, or wilfully disobeys directions issued by the State Government, or by the Registrar for the purposes of securing proper implementation of co-operative policy and development programme approved or undertaken by the State Government or is otherwise not discharging its or his functions properly and diligently and the business of the society has or is likely to come to a stand-still, or where any member of such committee stands disqualified by or under this Act for being a member, the Registrar may, after giving the committee or the member, as the case may be, an opportunity of stating its or his objections, if any, within 15 days from the date of receipt of notice, and after consultation with the federal society to which the society is affiliated, by order---
(a)(i) remove the committee, and
(ii) appoint a committee consisting of three or more members (who shall not be the members of the committees so removed) of the society in its place, or appoint one or more Administrators who need not be members of the society, but who shall not be the members of the committee so removed to manage the affairs of the society for a period not exceeding six months which period at the discretion of the Registrar, be extended by a further period not exceeding three months so however, that the total period does not exceed nine months in the aggregate :
Provided that the Registrar shall have the power to change the committee or any member thereof or the administrator or administrators appointed under paragraph (ii) at his discretion even before the expiry of the period specified in the order made under this sub-section ;
(b) remove the member and appoint any person as member of such committee in his place, or direct the society to elect or appoint a member in his place, for the remainder of the term of office of the member so removed."
From Legislative history it appears that section 78 as it originally stood did not bring within its fold the power of removal of a member of Committee on the ground of disqualification. Such a power was introduced by Maharashtra Act No. 3 of 1974. Section 73-FF(1) sets out various disqualifications for being a member. Sub-section (2) refers to the disqualification incurred after being a Member of Committee.
7. Now, provisions of section 73-FF cannot be read in isolation and the same will have to be read with provisions of section 73 on the basis of the principle of harmonions construction of Statutes. Section 78 refers to disqualifications which means all varieties thereof. It is difficult to carve out any exception in the matter of disqualifications referred to in section 73-FF(1).
8. It is significant to notice that notices under section 78(1) have in fact been issued by the Assistant Registrar in other cases of disqualification incurred by members of the other committees. Copies of such notices have been annexed as document Nos. 3 and 4 by the petitioner. We may also notice that in the case of Babasahab Sonbaji Wasade v. Director of Agricultural Marketing, Pune, Writ Petition No. 5152 of 1986 vide order dated 4-12-1986 and in the case of Shabir Ahmed Haji Gulam Rasul v. A.A. Nate and others, Writ Petition No. 5633 of 1986 vide order dated 8th December, 1986, a Bench of this Court at Bombay has held that order under section 73-FF(2) cannot be passed unless a show-cause notice is issued to the member and he is heard.
9. Our attention was invited on behalf of the contesting respondents to a decision in Roha Ashtami Co-operative Urban Bank Ltd. v. The Judge Co-operative Court, Alibagh, in which disqualification incurred under Rule 58 of the Maharashtra Co-operative Societies Rules, 1961 (the Rules) fell for consideration. In that case, a member had not repaid the loan even within the extended time as provided under Rule 58(1)(a) which time expired on 24-12-1976. The amount was repaid on 21-1-1977. The managing Committee in its meeting dated 23-1-1977 declared that defaulter had ceased to be a member 24-12-1976. The said resolution was challenged by a dispute under section 91 before the Co-operative Court, which held that as the amount was paid before the resolution of the Managing Committee, the disqualification was cured and the said member has not ceased to be a member of the Committee. The Managing Committee challenged the said decision in appeal. The appellate Court refused to go into the merits of the controversy observing that the period of Managing Committee was soon to come to an end. The Managing Committee filed a writ petition which came to be allowed. It was held that disqualification had incurred on the expiry of the extended period and subsequent payment made could not cure the same. It was further held that "the provisions of sub-rule (2) are prima facie self-operative and they do not require some authority, officer or the committee of the Society itself has to decide the fact of having incurred a disqualification." Now the context of that decision is somewhat different. Moreover, it is plain that attention of the Court was not drawn to the provisions of section 78 and thus the judgment is rendered per in-curiam.
10. Murlidhar Tukaramsao Bhandekar v. The Nagpur District Central Co-operative Bank Ltd., 1986 Mh.L.J. 599 is another decision dealing with the said Rule 58. The factual background of the second decision is that the petitioner as a representative member of one society was elected to the office of the Director of a Co-operative Bank. On 1st July, 1978 he had taken, after giving surety, a crop loan from the society which was repayable in terms of Clause 60 of the bye-laws of the society on or before 31st March, 1979. The amount was not paid but by resolution dated 20th April, 1978 the society extended the time of period of repayment by one year. For such extension neither the permission of the respondent bank nor the consent of the sureties as required by the bye-laws was taken. Bye-law of the society does not fix any period for repayment failure to pay within which incurs disqualification for membership. The petitioner was nominated on the Managing Committee of the Nagpur Vikas Khand Shetki Kharedi Vikri Sahakari Sanstha, Nagpur by the Assistant Registrar. This nomination was cancelled by the Deputy Registrar on the ground that the petitioner had incurred disqualification as the amount was not paid within the extended period. The petitioner filed a revision before the Divisional Joint Registrar under section 154 of the Act which was dismissed. The said order became final and conclusive. Thereafter the Chairman of the Bank wrote a letter dated 12th May, 1980 to the effect that the petitioner could not continue as a Director of the said Bank. The communication by the Chairman was unsuccessfully challenged in the writ petition. Thus it will be seen that the background of that decision is also entirely different. Indeed there was an order of the Deputy Registrar which was confirmed in revision and the order had become final. No doubt, the case of Roha Ashtami Co-operative Urban Bank Ltd. (supra) was noticed in the said decision and followed. No doubt further that there are concurring observations about automatic operation of Rule 58(2). But in that case also the provision of section 78 were not brought to the noticed of the Court. Moreover it will also have to be noticed that section 73-FF did not fall for consideration in any of those decisions.
11. We, therefore, hold that the passing of order of removal as required under the provisions of section 78 in the matter of incurring disqualification under section 73-FF(1) is mandatory and the cessation of membership under section 73-FF(2) is not automatic. As the said provisions has not been complied with, the assumption on the part of the Collector/Assistant Registrar that the petitioner has ceased to hold the office of the Member of the Committee and was, therefore, was not entitled to a notice of the meeting dated 12-11-1986, was erroneous. The petitioner continues to be a member on 12-11-1986 and also till order of removal as required under section 73 is passed. As we are disposing of the petition only on this ground, it will not only be unnecessary but improper to adjudicate upon the various other points on merits, which can be raised before the District Deputy Registrar.
12. Before parting with the case we must take note of the application for amendment filed before us on 3rd April, 1987, long after hearing commenced on 25th March, 1987. By this amendment, the State of Maharashtra is sought to be added as a new respondent on the ground of mala fides of Minister for State for Co-operation. Allegations are factual and cannot be permitted to be raised at such a late stage. Grant of amendment by addition of new party in this matter which is being disposed of only on pure question of law, will even otherwise be unnecessary and not in the interest of justice. We, therefore, reject the same.
13. In the result, we hold that the petitioner had not ceased to be a member of the District Loans Committee and was entitled to participate and vote in the meeting dated 12-11-1986. Necessary consequence of our decision is that the election of respondent No. 3 as a Chairman, which was subject to the result of the petition also continues to be valid. Respondent No. 3 has made no secret of the fact that he supports the case of the petitioner.
Needless to mention that the District Deputy Registrar, respondent No. 1 , is free to initiate action as contemplated under section 78 and to arrive at his own conclusion about the petitioner having incurred disqualification or not. Rule absolute accordingly. No order as to costs.