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Judgment
M. B. Shah, C. J.
These Letters Patent Appeals are filed against the judgment and order dated 16th Oct. 1996, passed in Writ Petition No. 4961 of 1996 and other allied matters.
Writ petitions were filed challenging the order dated 18th Sept. 1996, passed by the Collector, Satara, excluding more than 10400 members of the Karkhana as voters out of a total number of 10687 members in the election of the Board of Directors of Shriram Sahakari Karkhana Ltd.
At the time of the hearing of these appeals, it is not disputed that the Society is registered under the Maharashtra Co-operative Societies Act, 1960; out of 10400 members who are excluded by the order passed by the Collector 7,000 are founder-members of the Society.
For the becoming member of the Society, prior to the amendment of the bye-laws, a person was required to apply for share of the face value of Rs. 1,000.00 and was required to pay Rs. 250.00 along with the application. However, the in the annual general body meeting of the Society held on 14th July 1995, the bye-laws were amended by which the value of the share was increased from Rs. 1,000.00 to Rs. 2,000.00. The said amended bye-laws were approved by the Registrar of Cooperative Societies on 7th Sept.1995. On 16th Oct. 1995, the Managing Director of the Karkhana issued notices to the members calling upon them to pay the increased share money within one month from the receipt of the notice. Thereafter, on 18th Oct. 1995, the Board of Directors of the Karkhana passed a resolution and extended the time for payment of the increased value of the share money by one year. Subsequently, on 27th March 1996, in the annual general meeting of the Karkhana, a resolution was passed, extending further time to pay the balance share money by 31st July 1997.
It appears that as election to the Board of Directors was not held even though the prescribed time was over, Writ Petition No. 1237 of 1996 was filed before this Court. In that petition, by order dated 28th Feb. 1996, a Division Bench of this Court directed the District Collector to commence the election process for electing Board of Directors and complete the same as expeditiously as possible. It was also directed that meanwhile the existing Board of Directors will remain in office till the new Board of Directors is elected and take charge.
The District collector commenced the election process on 4th June 1996. However, Civil Application No. 3359 of 1996 was filed before this court praying for review of the order passed by the Division Bench. That review application was subsequently rejected.
The District Collector, Satara, by his order dated 5th July 1996 held that those members who have not made full payment of the share value and those members who do not cultivate sugarcane to the extent of half an acre land in the jurisdiction of the Karkhana will not be entitled to have their names included in the voters list. That order was challenged by filing Writ Petition Nos. 3038 of 1996 and 3040 of 1996. The said writ petition were dismissed on 1st August 1996. Thereafter, on 2nd August 1996, the final voters'' list was published by the District Collector.
Thereafter, in another writ petition filed before this Court, the learned single Judge of this Court upheld, one of the preliminary objections and disposed of the petition by directing the District Collector to decide the objections raised by the persons whose names were not included in the final list of voters without being influenced by the District Collector''s earlier order dated 5thJuly, 1996.
On 18th Sept. 1996, the District Collector passed the final order deciding the various objection raised before him under the provisions of Rule 6(4), (5) and (6) of the Maharashtra specified Societies Co-operative Societies Elections to Committees Rules, 1971.
Subsequently, present writ petitions were filed by various persons whose names were not include in the final voters'' list by the District Collector and in these writ petitions, the impugned orders were passed by the learned single Judge accepting the contentions raised by the petitioners and allowing the petitions. That order is challenged in these Letters Patent Appeals.
At the time of hearing of the appeals, the learned Counsel for the appellants as well as the learned counsel appearing on behalf of the State Government vehemently submitted that the orders passed by the learned single Judge are illegal and erroneous as Section 26 of the Maharashtra Co-operative Societies Act is erroneously interpreted. It is submitted that once the Society has passed a resolution increasing the value of the share from Rs. 1,000.00 to Rs. 2,000.00 and members have not paid the said increase amount, then they are not entitled to exercise their right of the membership.
In our view, this submission cannot be accepted because:
(a) Persons who are members of the Society since its inception are excluded from the voters'' list even though they have not ceased to be members as provided u/s 25 or section 25A of the Act, their membership is not cancelled.
(b) These persons have acquired membership interest in the Society and, as stated above, there membership is not cancelled. Hence u/s 26 they are not debarred from exercising such right as members.
(c) In any case, with regard to differential payment because of increase in the face value of the shares, time is prescribed for its payment up to 31st July 1997. Hence, there is no failure on their part to make such payment as prescribed by the bye-laws of the Society (prescription of membership amount plus prescription within time).
This would be clear by referring to Section 2(19)(a), 25A and 26 of the Maharashtra Co-operative Societies Act which are as under:--
"2(19)(a) "members" means a person joining in an application for the registration for a co- operative society which is subsequently registered, or a person duly admitted to membership of a society after registration and includes a nominal, associate or sympathiser member:
25A. Removal of names of members from membership register.
The committee of a society shall remove from the register of its members the names of person who has ceased to be a member or who stands disqualified by or under the provisions of this Act for being the member or continuing to be the member of a society:
Provided that, if the society does not comply with the requirement of this section, the Registrar shall direct such society to remove the name of such person, and the society shall be bound to comply with such direction.
No rights of membership to be exercised till due payments are made.
"No person shall exercise the rights of a member of society, until he has made such payment to the society in respect of membership, or acquired such interest in the society, as may be prescribed by the rules, or the bye-laws of such society".
u/s 26, before it is held that a person is not entitled to exercise the rights of membership of a Society, existence of either of the two conditions is required to be satisfied : (i) he must not have made payment to the Society in respect of membership as may be prescribed by the rules or by the bye-laws of such Society: (ii) he has not acquired such interest in the Society . In the present case, admittedly, the persons whose names are excluded from the voters'' list were members of the society since years and most of them were founder-members. Hence, they have acquired membership interest in the Society. There names appear in the register of members of the Society. There names are not removed for non-payment of any due and payable to the Society as provided under the Act. They have not ceased to be members as provided u/s 25 or 25A of the Act.
Further, Section 26 provides that no person shall exercise the rights of a member of a society, until he has made such payment to the Society in respect of membership, as may be prescribed by the rules, or the bye-laws of the Society. As stated above, for becoming a member, persons were required to pay Rs.250.00 at the time of submission of application as provided in bye-law 18 (4), (5), (6) and (7) of the Karkhana. The said bye-law provides that before becoming member, the person shall file a written application with an admission fee of Rs. 5.00 and should apply for minimum one share by paying Rs. 250.00 towards the share amount. At the relevant time, face value of the share was Rs.1,000.00 per share, Bye-law 8 provides how the share amount is to be paid. That bye-law is amended in1995 which provides as under :
"8. The amount of share should be paid as under :
Face value of each share will be Rupees 2000/- out of which Rs. 500/- is to be said along with application.
(Note -- After allotment of share, concerned member will be informed in writing separately).
After information of allotment of shares, amount of Rs. 1000/- for each share should paid within a period of one month so as to complete the amount of Rs.1500/-.
Balance amount of allotted share is to be paid within a month after written demand from Board of Directors.
(Note -- A Board of Directors have a right to extend the period of above sub-clauses 2 and 3).
If any share, held by more than one person, the responsibility of payment of share capital jointly and severally.
Whatever narrated in sub-clauses 2, 3, 4 as above, balance amount of share will be deducted form sugarcane bills of concerned share-holder".
Now, once the amount payable at the relevant time is already paid and the persons have become members of the Society, it will be difficult to holds that those members ceased to be members of the Society as the increased share amount was not paid on or before 31st December, 1995 which according to the petitioners is the cut-off date for deciding membership. As such, time to make payment towards the increased share value is admittedly extended up to 31st July, 1997. If that is so, then, there is no question of failure on the part of the members to make payment towards membership as prescribed by the bye-law of the Society. The amended bye-law itself provide for making payment on or before a particular date which may be extended by the Board of Directors. In the present case admittedly, the Board of Directors and thereafter the A.G.M. extended the time up to 31st July, 1997.
However, the learned Counsel for the appellants and the learned Counsel appearing for the State submitted that Section 26 is incorporated to infuse discipline in the Society to make the payment towards the membership before exercising the right as members. In our view, this submission would be of no avail in the present case because, admittedly, the persons whose names are excluded were members of the Society; they have paid the amount due at the relevant time and nothing was due for acquisition of the membership at the relevant time when they became members. Therefore, there is no question of disqualifying them from exercising their right as voters as Section 26 is not applicable in the present case. Further, considering Section 26 quoted above, it would be apparent that the member would not be entitled to exercise the right of the membership if he has not made payment in respect of the membership prescribed by the rules or bye-laws of the society. In the context, the phrase "payment prescribed by the rules or the bye-laws of the Society" would mean prescribed membership charges within the prescribed time. Prescribed time for payment of Increased amount, under the bye-law, is up to 31st July 1997.
Hence, there is no failure on the part of the members of the Society in making payment towards the increased amount of the face value of the share as the amount is to be paid before 31st July 1997 as resolved in the annual general body meeting of the Society.
In this view of the matter, there is no substance in these Letters Patent Appeals. Hence, the Letters Patent Appeals are dismissed. As the Letters Patent Appeals are dismissed, the Civil Applications do not survive and the same are accordingly dismissed.
Issuance of certified copy of his order is expedited.
With regard to the prayer of the learned counsel for staying the operation of the order passed by the learned single Judge, it requires to be rejected because, in our view, the election process should not be stalled as the term of the existing Board of Directors has expired in 1995.
Appeal dismissed.