Subhash Sitaram Raghtate v. State of Maharashtra & Ors.

Brief facts giving rise to the present petition can be summarized as follows : The petitioner, an elected representative of Indira Ginning, Pressing and Oil Processing Society Ltd., was sent as delegate by the society to the Chandrapur District Central Cooperative Bank Ltd. (hereinafter referred to as the respondent no.5-Bank). The general elections of the respondent no.5-Bank took place on 22.04.2007. The petitioner was elected as a Member of Board of Directors of respondent no.5-bank on 26.04.2007. It was the contention of the petitioner that the petitioner continued to be the 3 W. P. No. 2507/12 Director of the respondent no.5-bank. On 25.07.2007, the District Deputy Registrar superseded the body of Indira Ginning, Pressing and Oil Processing Society on account of non-holding of the election by the said society and appointed an Administrator. It is submitted by the petitioner that though, the society made a request to the authorities to conduct the elections, no attention was paid to the request of the petitioner and the authorities failed to issue any directions in that behalf. The petitioner was constrained to file W.P. No. 3863/2010 before this Court seeking directions to hold elections of the society. This Court by order dated

16.08.2010 directed the authorities to hold the elections of the society. On 18.10.2010, the elections of said Indira Ginning and Pressing society was held and the petitioner was elected unopposed in the said election. It is the contention of the petitioner that in the meanwhile, to the surprise of the petitioner, he received a Show Cause Notice under Section 78 of the Maharashtra Cooperative Societies Act, 1960, (hereinafter referred to as ‘the MCS Act’) thereby informing the petitioner that since the body of Indira Ginning and Pressing society has been superseded, why the petitioner should not be removed from the Board of Directors of respondent no.5-bank in accordance with the provisions of 4 W. P. No. 2507/12 Section 73 EA(3) of the MCS Act. The petitioner filed his reply on 16.11.2010. It was submitted by the petitioner that the entire process of election was complied with and the petitioner was re-elected as the President of the Society and in view of this fact, there was no question of initiating action under Section 78 read with Section 73 EA(3) of the MCS Act. It was also submitted that as the petitioner was re-elected, he continued to be a delegate of said society. It was submitted that in view of this, the notice issued to the petitioner was misplaced. It is the further contention of the petitioner that the respondent no.3 -Divisional Joint Registrar passed the order thereby removing the petitioner fro the Board of Directors of respondent no.5-Bank. Being aggrieved by the order of the respondent no.3, the petitioner preferred an appeal under Section 152 of the MCS Act before the respondent no.2-Hon’ble Minister along with an application for stay to the order impugned in the appeal. As no orders were passed on the said application for stay, the petitioner left with no choice, but to approach this Court by filing the writ petition. The writ petition was allowed with a direction to hear the appeal on the question of stay and to decide the appeal in a time bound period. The petitioner was expecting that in view of the directions by this Court, the application for 5 W. P. No. 2507/12 stay moved by the petitioner will be decided by the respondent no.2. Since no order was passed on the said application in spite of directions of this Court, the petitioner filed Contempt Petition. In the reply-affidavit filed by the State Government a statement was made that the order is already passed on 15.9.2011 on the stay application. In view of the statement, the contempt proceedings were dropped. It was the contention of the petitioner that as the petitioner continued to be the Director, there was no question of lying the post of Director vacant. The term of Board of Directors of respondent no.5-bank was to come to an end on 09.05.2012. However, the State Government passed an order on 04.04.2012 and by taking recourse to the provisions of 73-IB of the MCS Act, postposed the elections. The petitioner and the other directors approached the respondent no.4-Collector, Chandrapur by making representation to hold elections. The State Government by communication dated 02.05.2012 issued clarification stating that the postponement of the term of the Directors will have to be read as postponement of the term of office bears also. Being aggrieved by the said communication dated

02.05.2012, the petitioner filed W.P. NO. 2044/2012 before this Court. This Court quashed the impugned order/ 6 W. P. No. 2507/12 communication in the petition and further directed to hold the elections. The respondent no.5-bank, by filing an application in said petition sought stay to the order. The matter came up before the Vacation Judge and the equest for stay was rejected. The respondent o.4-Collector issued notice of meeting dated 14.05.2012. The petitioner was apprehending that some adverse order may be passed against the petitioner so as to disqualify him. The petitioner submitted an application to the respondent no.2-Hon’ble Minister on 14.05.2012 to submit that he should be heard in the matter. The apprehension of the petitioner became true. The petitioner being aggrieved by the orders passed by the respondent no.3-Divl. Joint Registrar and the respondent no. 2- Hon’ble Minister, is before this Court. 4] Perusal of the record shows that some interim orders were passed by this Court during the pendency of the petition looking to the urgency claimed by the parties to the petition. It will be suffice to say that this Court, looking to the fact that the elections were scheduled on 22.05.2012 and the petitioner should not be deprived from exercising his right of vote, permitted the petitioner to participate in the election, which was scheduled on 22.05.2012 and cast his 7 W. P. No. 2507/12 vote in the same and further made it clear that his vote shall be kept in sealed envelope. This Court also made certain observations in respect of how the vote of the petitioner is to be treated. 5] Initially Mr. P.C. Madkholkar, learned counsel appeared for respondent no.5- bank. Subsequently, he withdrew his power. Thereafter, Shri R.J. Kankale, learned counsel represented the respondent no.5-bank. The preliminary submissions on behalf of respondent no.5-bank are placed on record. It is stated in the submissions that initially the bank was not made party to the proceedings though the caveat was filed, but subsequently in view of the orders passed by this Court, the respondent no.5-bank was added as party to the present proceedings. 6] Mr. Ghare, learned counsel for the petitioner raises various grounds in challenge to the orders impugned in the present petition. The grounds are namely no opportunity of hearing was given to the petitioner by the respondent no.3-Divl. Jt. Registrar, there was no notice issued to the Maharashtra State Co-operative Bank, Mumbai i.e. the Federal society and as per the mandate of Section 78 8 W. P. No. 2507/12 of the MCS Act, the federal society was not consulted. In his submissions, Mr. Ghare, learned counsel for the petitioner referred to the provisions of the MCS Act in details. 7] Mr. N.W. Sambre, learned Government Pleader supported the order by the respondent no.3 as well as respondent no.2-Hon’ble Minister. The learned Government Pleader submitted that the Indira Ginning society failed to conduct the elections for a considerable long period and as such the order of appointment of Administrator was rightly passed. 8] Section 73 of the MCS Act deals with constitution of Committee, its powers and functions of the Committee and Section 73A deals with disqualification. The learned counsel for the petitioner submitted that the disqualification as referred to in Section 73A does not contemplate supersession and as such action of the State authority seeking disqualification of the petitioner on the ground of supersession of the Committee, in turn the petitioner was also superseded and thus, the petitioner was disqualified, is unsustainable. Section 73EA is the provision recently introduced in the statute. Section 73EA reads thus : 9 W. P. No. 2507/12 “73EA -Disqualification for being director of District Central Cooperative Bank or State Cooperative Bank - Without prejudice to the other provisions of this Act or the rules made thereunder in relation to the disqualification of being a member of a committee, no person shall be eligible for being appointed, nominated, co- opted or, for being a director of a District Central Cooperative Bank or of the State Co- operative Bank, if he - (i) is a person who represents a society other than a primary agricultural credit co-operative society on the board of a District Central Co- operative Bank or State Co-operative Bank, if the society to whom he represents has committed a default towards the payments of such Bank for a period exceeding ninety days ; (ii) is a person who is defaulter of a primary agricultural credit co-operative society or is an office bearer of a defaulting primary agricultural co-operative credit society. (iii) is a person, who represents a society whose Managing Committee is superceded ;] 9] As the controversy in the present petition revolves around the action of supersession of the Committee for not holding the election, it will be useful to refer to Section 73H, 10 W. P. No. 2507/12 which reads thus - “73H – Responsibility of Committee to hold election before expiry of term - (1) It shall be the duty of the committee of every society to arrange for holding the election of its members before the expiry of its term. 2) Where there is a wilful failure on the part of the committee to hold the election to the committee before the expiration of its term, the committee shall cease to function on the expiration of its term and the members thereof shall cease to hold office and the Registrar may himself take over the management of the society or appoint an Administrator (who shall not be from amongst the members of the committee the term of which has so expired) and the Registrar or Administrator shall hold election within a period of six months and the committee shall be constituted before the expiration of that period. Provided that, in the case of co-operative credit structure entity, the Registrar or administrator shall hold election within a period of two months from the date of taking over the management of the society. 10] Section 78 deals with the power of removal of the 11 W. P. No. 2507/12 Committee or member thereof. By referring to the said provision, the learned counsel for the petitioner vehemently submitted that the order passed by the respondent no.3 – Divl. Joint Registrar under Section 73EA was bad in law. It was also submitted by the learned counsel for the petitioner that the respondent no.2-Hon’ble Minister also erred in dismissing the appeal. The learned counsel for the petitioner vehemently submitted that the authorities namely the Divl. Joint Registrar and the Hon’ble Minister utterly failed to consider that the act specifically provides the effective consultation with the federal body prior to taking an action for removal of the Committee or its member. The learned counsel for the petitioner by placing reliance on various judgments further submitted that this Court Court as well as the Apex Court held the consultation as referred to in Section 78 of the MCS Act means an effective consultation. The learned counsel then submitted that in the present matter, there is no consultation with the federal society. The learned counsel for the petitioner placed reliance on the following judgments - 1] 1998(1) Mh.L.J. 206 [Shalikram Shivram Khobragade and others .vs. Divisional Co-operative Joint Societies, Nagpur and others] Registrar, 12 W. P. No. 2507/12 2] 2002(5) Mh.L.J. 464 [Ravindra V. Gaikwad and others .vs. State of Maharashtra and others] 3] Unreported judgment of this Court in W.P. No. [Sadashiv Ganpatrao Mahajan .vs. The Hon’ble Minister for Co-operation and Textile and others] 11] Mr. Ghare, learned counsel for the petitioner further submitted that respondent no.2-Hon’ble Minister while passing the order on the application for stay during the pendency of the appeal has specifically observed that prima facie, there seems no consultation with the federal society as provided under Section 78 of the MCS Act. The learned counsel for the petitioner was right in submitting that the mandate of Section 78 is consultation with the federal society and he was also right in placing reliance on the judgments of this Court in Shalikram’s case (supra), wherein this Court has observed that the consultation contemplated under Section 78 is mandatory and it should be meaningful and effective. 12] Though, the learned Government Pleader tried to support the orders passed by the respondent no.3 and the respondent no.2 by submitting that show cause notice was 13 W. P. No. 2507/12 issued to the petitioner by the respondent no.3 – Divil. Joint Registrar under Section 78(1) on 24.08.2010 and though the period of 15 days was granted to the petitioner to submit his reply, the petitioner failed to submit the reply within the stipulated period and submitted the reply at a belated stage i.e. after 84 days. The learned Government Pleader further submitted that a copy of the notice dated 24.08.2010 was forwarded to the federal society i.e. Maharashtra State Co- Operative Bank, Mumbai and an opinion was sought from the federal society. The federal society sought time of month and as in spite of seeking time of one month no opinion was received from the federal society, the respondent no.3 authority passed the order dated 25.01.2011 and the same was upheld by the Hon’ble Minister. The learned Government Pleader, therefore, submitted that the necessary compliance of Section 78 was followed by the State authorities. 13] On the backdrop of the judgment of this Court, wherein this Court in clear terms observed that the consultation contemplated under Section 78 of the MCS Act should be meaningful and effective, it should not be a mere formality, it will be useful to refer the observation of this 14 W. P. No. 2507/12 Court in the case of Ravindra Gaikwad’s case (supra). This Court relying on the Apex Court judgment in Kewalram’s case, held that “the law being well settled by the decision of the Apex Court in Kewalram’s case, which clearly requires the authority not only to place the materials before the Federal Society for consultation but, to insist upon expression of opinion of the Federal Society one way or the other before proceeding to take action under section 78 of the said Act, it cannot be said that in the absence of opinion in one way or other being expressed by the Federal Society, there would be an effective consultation in the matter.” 14] On the backdrop of the judgments of this Court if we consider the orders passed by the respondent no.3 – Divl. Joint Registrar and respondent no.2 – Hon’ble Minister, it reveals that the respondent no.3 stated that copy of the show cause notice was forwarded to the Federal Society and opinion from the Federal Society was sought within a period of 15 days. On the request by the Federal Society extension of time for giving opinion was granted, but as no opinion was received even for more than one month, the order of disqualification against the petitioner was passed. Now, this observation of the respondent no.3 is absolutely contrary to 15 W. P. No. 2507/12 the provision of the Act as well to the judgments of this Court. I have no hesitation to say that leave apart the effective consultation as expected in the judgments of this Court, there is no consultation with the Federal Society in the present matter. Mr. Ghare, learned counsel for the petitioner was also justified in submitting that the respondent no.2 – Hon’ble Minister in the order of grant of stay had rightly observed that prima facie it is revealed that there is no failure of any effective consultation as contemplated under Section 78 of the MCS Act. The Hon’ble Minister while deciding the appeal has not considered this aspect at all. The Hon’ble Minister held that in view of the provisions of Section 73EA and Section 78 of the MCS Act, the petitioner stood disqualified. There is also considerable merit in the submission of the learned counsel for the petitioner that the petitioner was elected as a member of Board of Directors in the elections held on 26.04.2007. The provisions of Section 73EA came on the Statute Book on 29.10.2007. Thus, it was submitted by the learned counsel for the petitioner that said provision seeking disqualification of the petitioner under Section 73EA(iii) i.e. “a person, who represents a society whose Managing Committee is superceded”, cannot be made operative retrospectively. Though, this point has been 16 W. P. No. 2507/12 raised by the petitioner and though there is substance in the submissions of the learned counsel for the petitioner, in view of the fact that there is breach of provisions of Section 78 i.e. effective consultation with the Federal Society, which is clearly established by the petitioner. I feel it not necessary to dwell upon the aspect of applicability of Section 73EA. 15] In view of above, the petitioner has made out a case for interference in the matter at the hands of this Court in writ jurisdiction. The orders impugned in the present petition passed by the respondent no.3 – Divisional Joint Registrar and the respondent no.2 - Hon’ble Minister for Cooperation, are clearly unsustainable. The said orders deserve to be quashed and set aside. However, the State authority may initiate fresh action against the petitioner by necessary compliance of the provisions of the MCS Act, if it thinks fit. 16] The writ petition is thus partly allowed. The orders passed by the respondent no.2 – Hon’ble Minister for Cooperation, dated 16.05.2012 in Appeal No. 242/2011 and the order passed by the respondent no.3 -Divisional Joint Registrar dated 21.01.2011 17 W. P. No. 2507/12 are quashed and set aside. Needless to say that the State authority may initiate fresh action against the petitioner by necessary compliance of the provisions of the MCS Act, if it thinks fit. 17] Rule is made absolute in the aforesaid terms. Writ petition is disposed of. No order as to costs. Diwale JUDGE