Kerbaji Marotirao Shinde vs State of Maharashtra

C.S. Dharmadhikari, A.C.J.

The petitioner was elected as a Chairman of Harbal Seva Sahakari Society in the election held on 15th of August, 198L for a term of three years. He was also elected as a Director of Kandhar Taluka Shetkari Sahakari Kharedi Vikri Sangh in the year 1982 for a term of rive-years. The petitioner had taken loan from respondent No. 5 -- the Maharashtra State Co-operative Land Development Bank Ltd. for purchase of electric motor in the year 1971 which was re-payable in 10 yearly instalments. According to the petitioner the last such instalment was due in the year 1981-82. In the year 1973 he again took a loan of Rs. 6,300/- for construction of a. well and this loan was also re-payable in 10 equal instalments within a period of 10 years and last such instalment will become due in the year 1987-88. It is his case that earlier loan of Rs. 3,000/- was paid back within the period of 10 years and he was paying the instalments regularly. Petitioner is also a shareholder of Kalambar Vibhag Sahakari Sakhar Karkhana Ltd. The Respondent No. 5 -- the Mahasashtra State Co-operative Land Development Bank Limited had given instructions to the Sakhar Karkhana that the amount due from the petitioner towards1 the loan instalments, should be deducted from the bills payable to him towards the price of sugar-cane supplied by the petitioner. This arrangement was made as per the approved practice recognised by Section 48A of the Maharashtra Co-operative Societies Act, 1960. Thus, it is his case that he was not a defaulter under Rule 58 of the Maharashtra Co-operative Societies Rules, 1961. However, at the instance of persons interested, the Deputy Registrar of the Co-operative Societies, vide letter dated August 9, 1983, informed the petitioner that he has ceased to be a director of respondent No. 4 -- the Kandhar Taluka Shetkari Sahakari Kharedi Vikri Sangh under Rule 58(2) of the Rules. It is this intimation issued by the Deputy Registrar, which is challenged in this writ petition on various grounds.

Shri Godhamgaonkar, learned Counsel appearing for the petitioner, contended before us that in fact and in law the petitioner was not a defaulter under Rule 58. Further, no order or intimation could have been issued under Rule 58(2) by the District Deputy Registrar, without taking recourse to Section 78 of the Maharashtra Co-operative Societies Act. According to the learned Counsel Rule 58(2) only lays down the consequences or result of disqualifications and does not confer any power upon the Deputy Registrar to pass such an order. Rule 58(2) is not self operative. An order in that behalf could only be passed by the competent authority u/s 78 of the Act which deals with the removal of a member of a society and unless recourse was taken to Section 78 it was not open to the District Deputy Registrar to pass the impugned order. In support of this contention he has placed strong reliance upon the decision of this Court in Keshavrao Narayanrao Patil v. District Deputy Registrar, Cooperative Societies, Akola [1987] Mh. L.J. 709 (Nagpur Bench) and a decision of Supreme Court in Mool Chand Sharma Vs. State of Uttar Pradesh, . It is also contended by the petitioner, that if it is held that no enquiry or order u/s 78 is necessary in a case covered by Rule 58, then the said rule is arbitrary and unreasonable.

On the other hand, it is contended by Mr. A.S. Bobade, learned Advocate General, and Shri J.V. Sawant, learned Government Pleader, that Rule 58(2) is self-operative and no further action u/s 78 is contemplated. In support of this contention they have placed reliance upon the earlier decisions of this Court in Roha Ashtami Co-operative Urban Bank Ltd. Vs. The Judge, Co-operative Court, Alibagh (Kolaba) and Others, and Murlidhar Tukaram Bhandekar v. The Nagpur District Central Co-operative Bank Ltd. [1986] Mh. L.J. 599.

For properly appreciating the controversy raised before us it will be worthwhile if a reference is made to the relevant provisions of the Act and the Rules. Rules 58(1) and (2) which are relevant for our purpose and deal with the disqualification for membership of the committee, read as under:--

DISQUALIFICATION FOR MEMBERSHIP OF COMMITTEE:

(1) No person shall be eligible for appointment or selection as a member of the committee of a society, if--

(a) he is in default to any society in respect of any dues from him, either as a borrower or as a surety for such period as is specified in this behalf in the by-laws of the concerned society, or for a period exceeding three months, whichever is less, or

(b) he is, in the opinion of the Registrar, persistently and. deliberately committing breach of the Co-operative discipline with reference to linking up of credit with co-operative marketing or co-operative processing, or

(c) he has been, held responsible u/s 79 or 88 or has been held responsible for payment of costs of inquiry u/s 85.

(2) A member of the committee of a society shall cease to hold office if he incurs any of the disqualifications mentioned in Sub-rule (1).

It is not disputed that Rule 58, applies to all the co-operative societies, including specified societies. By Maharashtra Act No. 20 of 1986, Section 73FF was inserted in the Statute Book. It also deals with the disqualification for membership of the Committee. Certain disqualifications in Rule 58 and Section 73FF are overlapping. Sub-section 2 of Section 73FF lays down that the member who has incurred any disqualification under Sub-section I shall cease to be a member of the committee and his seat shall be deemed to be vacant. This provision is akin to Sub-rule 2 of Rule 58. Section 78 then confers a power upon the Registrar to remove a member of a society if he stands disqualified by or under the Act for being a member. The Registrar is empowered to remove the member if he has incurred a disqualification and appoint any person as a member of such committee in his place or direct the society to select or appoint a member in his place for the remainder of the term of the office of a member so removed. Section 73FF and Section 78 fell for consideration of this Court in Keshavrao Narayanrao Patil v. District Deputy Registrar, Co-operative Societies, Akola (supra), where, the Division Bench took a view that the passing of an order of removal as required u/s 78 of the Act in the matter of incurring disqualification u/s 73FF(1) is mandatory. The cessation of membership u/s 73FF(2) is not automatic and a person does not cease to be a member unless an order of removal as required under the said provision is passed. In the said decision earlier decision of this Court in Roha Ashtami Co-operative Urban Bank Ltd. v. The Judge Co-operative Court, Alibag (supra) was referred to and considered. The Division Bench held that the said judgment is rendered per incuriam as the provisions of Section 78 were not noticed not were brought to the notice of the learned Judges who decided the Roha Ashtami Co-operative Urban Bank Ltd.''s case. In Murlidhar Tukaram Bhandekar''s case (supra) the earlier view of this Court in Roha Ashtami Co-operative Urban Bank''s case was merely referred to and followed. Decision in Keshavrao''s case was subsequently followed by another Division Bench in Murlidhar Malu v. Sudhakar Patil (1987) W.P. No. 4470 of 1986 decided on September 8, 1987 (Unrep.) by Dharmadhikari and Sugla JJ. Now reported at (1987) Mh. L.J. 944.

Therefore the only question which requires consideration in the present writ petition is to find out as to whether the law laid down by this Court in Keshavrao''s case (supra) will apply even to Rule 58(2) of the Act. We would like to make it very clear that in this case we are concerned with Rule 58(2) which deals with the cessation of membership after the person is selected as a member of the society which is akin to removal of a member from the membership of the committee of the society in view of incurring a disqualification mentioned in Sub-rule 1 of Rule 58. In our view, if Section 78 is read in its context and harmoniously with the other provisions of the Act, including Section 72FF, a conclusion is inevitable that the law laid down by this Court in Keshavrao''s case must apply even to an action contemplated by Rule 58. Rule 58(1) lays down the disqualifications and Rule 58(2) provides consequence or the result of disqualification. Though in a given case a declaration -- could relate back to the date of the disqualification itself, that does not mean that no adjudication or order is necessary. When a disqualification has been incurred by a member, is in itself, in doubt or disputed then an adjudication is obviously necessary. An enquiry in that behalf is not administrative but is judicial or quasi-judicial in nature. This seems to be the reason why a provision is made u/s 78 of the Act, for removal of member if he stands disqualified by or under the Act for being-a member, after giving the member an opportunity of being heard. In substance, after the person is elected as a member of the committee if he is to cease as a member, an order of removal u/s 78 of the Act is necessary. That seems to be the view taken by this Court in Keshavrao''s case, though in the context of Section 73FF of the Act. In this context it is pertinent to note that Rule 58(1) and (2) also applies to the specified societies. The provisions of Section 73FF are in addition to, and without prejudice to other provisions of the Act and rules made thereunder in relation to disqualifications. Therefore provisions of Section 73FF, Rule 58 and Section 78 will have to be read and construed harmoniously so as to make them consistent and reasonable. So1 construed, in our view, unless an action u/s 78 of the Act is taken a person cannot cease to be the member of the committee even under Rule 58 of the Rules. The learned Advocate General Shri Bobade fairly conceded this position.

In the present case it is an admitted position that no action u/s 78 of the Act was taken against the petitioner though there was a dispute about it. In view of this it cannot be said that the petitioner has ceased to be the Director of Kandhar Taluka Shetkari Sahakari Kharedi Vikri Sangh. Therefore, the order passed or intimation issued vide letter dated August 9, 1983, by the Deputy Registrar of the Co-operative Societies, Kandhar, must get vitiated and, therefore, deserves to be set aside.

In the result, therefore, Rule is made absolute. The order incorporated in the letter dated August 9, 1983, written by the Deputy Registrar, Co-operative Societies, Taluka Kandhar is quashed and set aside. However, in the circumstances of the case, there will be no order as to costs.