High Court
Facts
IN THE HIGH COURT OF JUDICATURE AT BOMBAYBENCH AT AURANGABADWRIT PETITION NO. 7305 OF 2020Aditya Subhaschandraji SardaVERSUSThe Divisional Joint Registrar Co-operative Societies Latur Region And OthersWITH CIVIL APPLICATION NO. 7157 OF 2020Kailash Babasaheb Nalawade And AnotherVERSUSAditya Subhashchandraji Sarda And OthersMr. V. D. Salunke, Advocate for PetitionerMr. D. J. Choudhari, Advocate for Respondent No. 2Mr. S. K. Shirse, AGP for Respondent Nos. 1 and 3/StateCORAM: R. M. JOSHI, J.DATE: 05 August, 2025PER COURT :-1.This Petition takes exception to the order dated 19.12.2019 passedby Divisional Joint Registrar Co-operative Societies, Latur and order dated14.10.2020 passed by the Hon’ble Minister for Co-operation and TextileDepartment, Mantralaya, Mumbai rejecting the appeal filed before theMinister.2.The facts which led to the filing of this petition can be narrated inbrief as under :WP-7305-20201 of 13 In the year 2015, petitioner was elected as a Director andChairman of DCC Bank, Beed. Said election was for a period of 5 years. On28.06.2017, GR was issued by the State Government promulgating ChatrapatiShivaji Maharaj Shetkari Sanman Yojana-2017 (herein called as “Scheme” forthe sake of brevity) extending monetary benefits to the agriculturist.Corrigendum was also issued on 05.07.2020 and 20.07.2017. The respondent-bank was called upon to implement the said scheme. In connection with thisGR, Writ Petitions were filed before this Court being Writ Petition No.11383/2015 and Writ Petition No. 35961/2016 wherein some directions werecame to be issued in respect of the recovery of dues and payment of money tothe depositors. It is claimed by the petitioner that the bank had followed thesaid directions issued by this Court. It is further claimed by the petitioner thatthe bank has received the amount under the scheme, and since no individualwas member of the bank, loan is given and repaid only through VKSSSocieties. It is thus claimed that amount received under Scheme is forwardedto the said societies to pay the same to the agriculturist. It is also claimed thatthere is no grievance made by any agriculturist in this regard.3.It is further case of the Petitioner that Respondent No. 1 –Divisional Joint Registrar of the Co-operative Society issued show-causenotice dated 15.11.2018, 31.12.2018 and 18.01.2019 under Section 79 (1) ofWP-7305-20202 of 13 the Maharashtra Co-operative Societies Act, 1960 (for short “the Act”) and thepetitioner was called upon to explain as to why the action under Section 79(3)of the Act should not be taken against him. Petitioner claims to have replied thesaid show cause notice with supporting documentary evidence. It is alleged bythe petitioners that owing to the political rivalry/equations, the Divisional JointRegistrar without considering the reply passed by order dated 19.12.2019 andremoved petitioner from the post of Chairman. It was further directed that theManagement to dismiss the Chief Executive Officer (for Short “CEO”) of theBank and appeal came to be filed against the said order before the Hon’bleMinister.4. Since, the said appeal was not heard, Writ Petition bearing No.19/2020 was filed before this Court. The said petition was disposed onrecording statement made by learned AGP that the appeal would be decided.The direction was issued to decide application for stay within a period of threedays by order dated 03.01.2020, and accordingly order came to be passed on08.01.2020, rejecting the application. This order was challenged by filing WritPetition No. 938/2020 and the order of removal of petitioner as a Chairman ofthe Bank by order dated 15.01.2020 came to be stayed. In view of the saidorder, petitioner continued to work as a Chairman. The appeal before theMinister was heard and Minister dismissed the said appeal by order datedWP-7305-20203 of 13
Legal Reasoning
more minds in respect of topic in order to enable them to evolve correctsolution. Thus, what was required for such consultation is that one partycommunicates all material he has during the course he proposes an action andintern. The consultee is also expected to collect necessary information and todeleberate upon the opinion expressed by the consultor. In the instant case, thefacts on record indicates that no such requirement of real consultancy has beenundertaken.17.Division Bench of this Court in case of Suresh Khumkar (citedsupra) while dealing with the provisions of the Act has held that when theRegistrar had sent only a copy of show-cause notice and no other relevantmaterial to the Federation so that it could form its opinion and sent it to theRegistrar within reasonable time. There would be no effective consultation andhence, the order passed was set aside.18. In the present case too, except for sending the copy of show-causenotice that too not under the provisions of Section 79(A) but under theprovisions of Seciton 79(1) of the Act, no other material is forwarded toFederal society. As contemplated to proviso of Sub-section 3 of Section79(A), opinion of the Registrar was not also communicated to the Federation inorder to respond to the same with application of mind. Thus, the secondWP-7305-202012 of 13
Arguments
14.10.2020. Hence, this petition.5.Learned counsel for petitioner submits that perusal of the show-cause notices indicate that the notices are issued under Section 79(1) of theAct. It is his contention that Section 79(2) provides for the procedure to beadopted before passing order under Section 79(3) of the Act. By referring tothe said provisions, it is submitted that Section 79(3) contemplates passing oforder of imposing penalties does not empower the Authority to remove anyperson from the post or to qualify him. It is his submission by referring to thesaid show-cause notice that petitioner was not called upon to show-cause as towhy he should be not removed from the post of Chairman as well as Directorof the Respondent-Bank. Thus, it is his contention that the said notice wasnever under Section 79(A) of the Act but was always under Section 79(1). It ishis further submission that Section 78 read with Section 64(2) of the Actrequires consultation with the federal society before removal of any employeeor the Director including Chairman. By relying upon the judgment of Hon’bleSupreme Court in case of Union of India Vs Sankalghand Himatlal Sheth1977 AIR(SC) 2328, it is argued that whenever a consultation is contemplatedthat would not be a formality but the consultation should be meaningful. It ishis submission that even accepting the fact that the copies of show-cause noticewere marked to the federal society, it cannot be said that there was consultationWP-7305-20204 of 13 as contemplated by Section 79(A) of the Act. To support his submissions heplaced reliance on following judgments :-i) Suresh Dnyandeo Khumkar & others Vs. State of Maharashtra & others1987 (3) Bom. C.R. 211ii) Ravindra V. Gaikwadand others Vs. State of Maharashtra and others2002 (5) Mh.L.J. 464iii) S. P. Gupta Vs. President of India and others AIR 1982 SC 1496.Learned counsel for Respondents-Bank supported the impugnedorder. It is his contention that merely because wrong provision is recorded inthe show-cause notice, it does not become so. According to him the action hasbeen initiated under Section 79(A) of the Act and in view of the amendmentand with introduction of Second proviso to Section 79(A), there is deemedpermission of Federal society if the proposal is not responded within a periodof 45 days. It is his submission by referring to the notices issued to thepetitioner that the copies of the said notice were duly marked to the Federalsociety and in absence of any response from the society, there is deemedsanction of the Federal society to the action of removal of the petitioner.7. Learned AGP has placed reliance on the judgment of Hon’bleSupreme Court in case of N. Mani Vs. Sangeetha Theatre and others (2004)WP-7305-20205 of 13 12 SCC 278 to contend that if an Authority has power in the law merelybecause while exercising the said power, a source of power is not specificallyreferred or a reservations made to a wrong provisions of law that by itself doesnot vitiate the exercises of the power.8.There cannot be any dispute made with regard to the propositionsought to be canvassed by the learned counsel for respondents that the wrongquotation of the provision of law by itself would not make such show-causenotice under different provision of law. However such intention of authoritymust be disclosed from bare reading of contents of the show-cause notice.Perusal of show-cause notice dated 15.11.2018 clearly shows that the show-cause notice is not only issued under Section 79(1) but it also contemplates thatthe action would be initiated under Section 79(3) of the Act. Even, otherwisethe said show-cause notice does not contemplate the removal of the petitionerfrom the post held by him. This Court, therefore, finds no reason to accept thecontention of learned counsel for the respondents that it was mere a mistake onthe part of Authority to issue notice by mentioning Section 79(1) instead ofSection 79(A). Having regard to the nature of show-cause notice, it cannot beheld that the notice intended was under Section 79(A) butwrongly/inadvertently mentioned under Section 79(1) of the Act. Needless tosay that in the exercise of powers under Section 79(1) to 79(3), RegistrarWP-7305-20206 of 13 cannot take action of removal of the Director or an employee.9.Assuming that the notice was issued under Section 79(A) of theAct, it needs to be seen as to whether there is compliance of the said provisionsin order to sustain impugned orders. At this stage, it would be relevant to takenote of the provisions of Section 79(A) which reads thus :-79A. [Government's power] to give directions in thepublic interest, etc.(1) If the State Government, on receipt of a report from theRegistrar or otherwise, is satisfied] that in the publicinterest or for the purposes of securing properimplementation of co-operative production and otherdevelopment programmes approved or undertaken byGovernment, or to secure the proper management of thebusiness of the society generally, or for preventing theaffairs of the society being conducted in a mannerdetrimental to the interests of the members or of thedepositors or the creditors thereof, it is necessary to issuedirections to any class of societies generally or to anysociety or societies in particular, the State Government mayissue directions to them from time to time, and all societiesor the societies concerned, as the case may be, shall bebound to comply with such directions.(2) The State Government may modify or cancel anydirections issued under subsection (1),and in modifying orcancelling such directions may impose such conditions as itmay deem fit.(3) Where the Registrar is satisfied that any person wasresponsible for complying with any directions or modifieddirections issued to a society under sub-sections (1) and (2)and he has failed without any good reason or justification,WP-7305-20207 of 13 to comply with the directions, the Registrar may by order--(a) if the person is a member of the committee of thesociety, declare him to be disqualified to be or to continue tobe a member of the committee of any society, for a period ofsix years from the date of the order;(b) if the person is an employee of the society, directthe committee to remove such person from employment ofthe society forthwith, and if any member or members of thecommittee, without any good reason or justification, fail tocomply with this order, declare them disqualified asprovided in clause (a) above :Provided that, before making any order under thissub-section, the Registrar shall give a reasonableopportunity of being heard to the person or personsconcerned and consult the federal society is affiliated.Provided further that, such federal society shallcommunicate its opinion to the Registrar within a period offorty-five days from the date of receipt of communication,failing which it shall be presumed that such federal societyhas no objection to take action under this section and theRegistrar shall be at liberty to proceed further to take actionaccordingly. Any order made by the Registrar under this section shall befinal.10.Section 79A(3) of the Act mandates recording of satisfaction byRegistrar of any person being responsible for complying directions, underSection 79A(1) and (2) has failed in its compliance without good/justifiedreasons. Here in this case, the petitioner has tendered explanation to the show-cause notice. The Registrar therefore, ought to have recorded its satisfactionWP-7305-20208 of 13 that Petitioner has not complied with directions without justification. It isthereafter the second stage would come in play. The Registrar thereafter shallform an opinion of disqualification of a member/Director and removal ofemployee. It is at this stage also such person to be disqualified gets opportunityof being heard. Similarly, it mandates consultation with Federal society beforeactual removal.11.Thus, this provision clearly requires Registrar to hear theconcerned member/Director/employee on the point of his removal from thepost/employment. It would therefore be obligation on the part of Registrar toissue notice to such person indicating his intention to take such action. Since,the consequence of such order is drastic in nature, the rule must be compliedwith strictly.12.In the instant case, at no point of time, petitioner was heard on thepoint of removal from Directorship or as Chairman of the society. Thus, thereis non compliance of the provision, which is mandatory in nature. Evenotherwise, unless notice is issued under Section 79(3) of the Act disclosingintention to take action under Section 79(3)(A) or (B) of the Act, it would notbe open for Registrar to claim subsequently that notice was issued underSection 79(A) of the Act, by issuing notice under Section 79(1) of the Act, asWP-7305-20209 of 13 both powers are to be exercised in two different situations.13.Suffice it to say that since no show-cause notice has been issued topetitioner for this removal and as no opportunity of hearing was rendered tohim, the order of removal cannot sustain.14.Now coming to the issue of the consulation with the Federalsociety and its implication is concerned, record indicates that the show-causenotice forwarded to the Federal society does not indicate action of removal ofpetitioner being contemplated therein. Even if it is accepted that in view ofSecond proviso on expiry of 45 days of communication by Registrar of itsopinion to remove Director/employee, if Federal society fails to communicateits opinion, then it shall be presumed that Federal Society has no objection totake action under this Section, but question is that whether such presumptionwould apply in this case. There is no need to emphasize that the consultationwith Federal society is not an empty formality. The provision clearly showsthat Registrar is required to commuicate his opinion of removal of theDirector/employee under Section 79(A)(3)(a) or (b) of the Act and it is onlywhen such opinion is communicated, question of application of deemingprovision would arise.15. It would be fruitful to take note of the Constitution Bench of theWP-7305-202010 of 13 Hon’ble Supreme Court in case of Union of India Vs. Sakalghand HimatlalSheth (cited supra) wherein the Hon’ble Supreme Court has held as to theamendment of consultation. Paragraph No. 29 of the said judgment isreproduced herein below :-“the word ‘consult’ implies a conference of two or; morepersons or, an impact, of two or more minds in respect of atopic in order to enable them to evolve a correct or at-leasta satisfactory solution” and added “In order that the twominds may be able to confer and produce a mutual impact,It is essential that each must have for its consideration fulland identical facts which can at once constitute both thesource and foundation of the final decision”. Krishna Iyer,J. speaking on behalf of himself and Fazal Ali, J. alsopointed out that “all the materials in the possession of onewho consults must be unreservedly placed before theconsultee and further a reasonable opportunity for gettinginformation, taking other steps and getting prepared fortendering effective and meaningful advice must be given tohim,” and “the consultant in turn must take the matterseriously since the subject is of grave importance.” Thelearned Judge proceeded to add: “Therefore, it follows thatthe President must communicate to the Chief Justice all thematerial he has and the course he proposes. The ChiefJustice, in turn, must collect necessary information throughresponsible channels or directly, acquaint himself with therequisite data, deliberate on the information he possessesand proceed in the interests of the adminstration of justiceto give the President such counsel of action as he thinkswill further the public interest, especially the cause of thejustice system.”16.It is thus clear from the above observations that the word“consult” implies a conference of two or more persons and an impact of two orWP-7305-202011 of 13
Decision
proviso to Sub-section 3 thereof would not apply to the present case.Consequently, the act of sending of the copy of the show-cause notice to theFederal society cannot be termed as a compliance as contemplated by provisoto Seciton 79(A)(3).19.The entire record more than sufficiently demonstrates that theaction taken against the petitioner even if is accepted to have been taken underSection 79(A), for want of mandatory compliance of Section 79(3), the orderimpugned passed by Divisional Joint Registrar is not tenable. The DivisionalJoint Registrar has failed to take into consideration the relevant provisions andthe Hon’ble Minister has also erred in dismissing the appeal.20.As a result of above discussion, petitioner has made out a case forcausing interference in the impugned orders. Consequently, impugned ordersare set aside and petition stands allowed in terms of prayer clause “B”.21. Pending Civil Application, if any, stands disposed of.(R. M. JOSHI, J.)bsjWP-7305-202013 of 13