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Judgment
Rule.
Rule made returnable forthwith and heard finally by consent of the parties.
The present petition takes exception to the orders dated 27.05.2019, 23.05.2017 and 05.11.2014 passed by the respondent No.1, respondent No.2
and respondent No.3 statutory authorities. The order dated 27.05.2019 impugned in the present petition has been passed in revision proceedings by the
respondent No.7 State. This order, interalia, upholds the order dated 23.05.2017 passed by the Divisional Joint Registrar, Mumbai, which in turn
upholds the order dated 05.11.2014 passed by the Deputy Registrar, Co-operative Societies, ‘D’ Ward, Mumbai. The impugned order has been
passed under the provisions of Section-79(3) of the Maharashtra Co-operative Societies Act, 1960 (hereinafter referred to as ""the Act"").
The facts in the present case are in a narrow conspectus. The petitioner Nos.1 and 2 are the erstwhile members of the managing committee of
Shripati Arcade Annexe-II Co-operative Housing Society, Mumbai -400 036 (hereinafter referred to as the “Societyâ€). The petitioner No.1 was
the chairman and the petitioner No.2 was the secretary during their tenure from the year 2008 to 2015. Sometime in the year 2007 an administrator
came to be appointed to administer the affairs of the society. In March-2008, the new managing committee came to be elected of which petitioner
No.1 was the chairman and petitioner No.2 was the secretary. Being the statutory officers of the society, the petitioners were required to up keep the
statutory records of the society as prescribed in the bye-laws. However, the tenure of the petitioners was effective from and on after the tenure of the
administrator came to an end in the year 2008 and lasted upto 2015.
At the then time there was a dispute in respect of Flat No.C/102 which belonged to one Makwana family. Respondent No.4 identified as Ms.
Nandini Makwana had a dispute with her brother Mr.Paresh Makwana in respect of the said fat. In the year 2009, respondent No.4 took inspection of
the record maintained by the society and until 2012 did not find any discrepancy or did not lodge any complaint whatsoever about any missing
documents. For the first time on 24.02.2012, respondent No.4 fled a written complaint before the Deputy Registrar that the society did not have the
records pertaining to fat No.C/102 i.e. the true copy of the registered agreement of sale.
Simultaneously, action was initiated in respect of the said fat under Section 101 of the Act for recovery of outstanding dues before the statutory
authority.
On the basis of the complaint filed by respondent No.4, respondent No.3 passed order dated 23.07.2012, interalia, directing that the documents
pertaining to fat No.C-102 were required to be obtained from the erstwhile member of the society viz. Smt. Julekha Jagmag. The then secretary of
the society Mr.Ashok Sawant had also given a specific statement before the Gamdevi police station that Smt. Julekha Jagmag the then member of the
society had taken away papers pertaining to Flat No.C/102 and therefore the same were missing from the records of the society.
Pursuant to the above order, respondent No.3 passed a further order dated 05.11.2014 under Section 79(3) of the Act thereby directing the
petitioners (who were the chairman and secretary at the then time) to pay a fine of Rs.100.00 per day to the society.
The petitioners fled appeal against the above order before the respondent No.2 Divisional Joint Registrar Co-operative Societies, Mumbai Division.
The petitioners’ statutory appeal came to be dismissed by order dated 23.05.2017.
Being aggrieved, the petitioners fled Revision Application before the Minister Co-operation Marking and Textile Department, Mantralaya, Mumbai
under the provisions of Section 154 of the Act. The Revision Application came to be dismissed by order dated 27. 05.2019, interalia, upholding the
order passed by the respondent No.3. Hence the present petition.
The provisions of the Section 79(3) of the Act may be quoted for completing the narration and read thus :
“Section 79:
(1) ….
(2) Where any society is required to take any action [including fling of returns] under this Act, the rules or the bye-laws, or to comply with an order
made under the [foregoing sub-sections], and such action is not taken -
(a) within the time provided in this Act, the rules or the bye laws, or the order as the case may be, or
(b) where no time is so provided, within such time, having regard to the nature and extent of the action to be taken as the Registrar may specify by
notice in writing the Registrar may himself, or through a person authorised by him, take such action, at the expense of the society; and such expense
shall be recoverable from the society as if it were an arrear of land revenue.
(3) Where the Registrar takes action under sub-section (2), the Registrar may call upon the officer or officers of the society whom he considers to be
responsible for not complying with the provisions of this Act, the rules or the bye-laws, or the order made under sub-section (1) and after giving such
officer or officers an opportunity of being heard, may require him or them to pay to the society the expenses paid or payable by it to the State
Government as a result of their failure to take action and to pay to the assets of the society such sum not exceeding [one hundred rupees] as the
Registrar may think ft for each day until the Registrar’s directions are carried out.
(4) …….
Ms.Goswami, learned counsel appearing on behalf of the petitioners has taken me through the order dated 05.11.2014 passed by respondent No.3.
She submitted that the petitioners being the chairman and secretary of the society had taken adequate steps in respect of taking action on the errant
erstwhile member Smt. Julekha Jagmag by fling a police complaint with the Gamdevi police station immediately pursuant to receipt of the show cause
notice dated 29.10.2013.
Mr.Goswami submitted that pursuant thereto investigation was carried out by the police authorities and it was concluded that Smt. Julekha Jagmag
had no authority or propriety to keep in her custody the papers and documents relating to fat No.C/102. She has drawn my attention to the statement
recorded in the order which relates to the police report dated 06.02.2014 which justifies the aforesaid conclusion. She therefore, submitted that the
petitioners were not at fault and immediately pursuant thereto the documents in respect of fat No. C/102 were retrieved by the society and were
received back in possession of the society. She submitted that respondent No.4, as also any member of the Makwana family did not raise any
grievance thereafter. Lastly, she submitted that in view of the gross misconduct on the part of a previous member, viz; Smt. Julekha Jagmag, though
the society was inclined and desirous of fling FIR against her, the same was not done because Smt. Julekha Jagmag was no longer a member of the
managing committee as also the documents pertaining to Flat No.C/102 having being retrieved, no cause of action survived thereafter. She, therefore,
submitted that the cause of action stated in the first show cause notice dated 23.07.2012 would not survive and the final order passed under the
provisions of Section 79(3), interalia, levying penalty was extremely highhanded and arbitrary in the facts and circumstances of the present case.
I have gone through the proceedings, the order dated 05.11.2014 passed by the respondent No.3, as also the order dated 23.05.2017 passed by the
respondent No.2 and the order dated 27.05.2019 passed by the respondent No.1. At the outset, I may state that the order passed under Section 79(3)
does not refect the tenure for which the said penalty has been levied. The said order merely states that since petitioners had not complied with the
directions contained in the show cause notice dated 23.07.2012 the petitioners were penalized and the petitioners were liable to pay penalty @
Rs.100.00 per day. Prima facie the very order dated 05.11.2014 passed under Section 79(3) itself gives a categorical finding that the documents
pertaining to fat No.C/102 were taken away by the erstwhile managing committee member Smt. Julekha Jagmag and in respect of which adequate
directions were passed for taking appropriate action. There is an admission to that effect also. The then Secretary of the society Mr.Ashok Satam
during whose tenure (prior to the tenure of the present petitioners) the documents were taken away by the said Smt.Julekha Jagmag had also given a
categorical statement to that effect which is mentioned in the order. Further, the said order also records that the respondent No.4 and/or any member
of the respondent No.4 family had made no grievance whatsoever in respect of the missing documents pertaining to fat No.C/102 during the relevant
period.
In view of the above, the finding given by respondent No.3 that the petitioners are liable for penal action in view of breach of the provisions of the
Act, Rules as well as the bye-laws for the period 2003-08 during which the said documents were not available is prima facie not sustainable. It has
been submitted that respondent No.4 became member of the society in the year 2009. Prior thereto Mr.Paresh Makwana (brother of the respondent
No.4) was the member of the society but due to diferences in the Makwana family pertaining to fat No.C/102, dispute had arisen which led to the then
managing committee member Smt. Julekha Jagmag keeping the documents pertaining to fat No.C/102 in her custody until returning the same in the
year 2012. It is pertinent to note that the petitioners being the chairman and secretary of the society elected subsequently would not have knowledge
about the documents which were in the custody of Smt. Julekha Jagmag, until and unless the entire controversy was blown up and investigation was
made pursuant to which police complaint was immediately fled and it was revealed that the said documents were with Smt.Julekha Jagmag.
Therefore, the finding given in the operative part of the order that the chairman and secretary were directly responsible for upkeep of the society
record as the property of the society in their custody in the present set of facts is arbitrary, highhanded and deserves to be quashed and set aside.
Ms. Bane fairly pointed out that the provisions of Section 79(3) have been followed by the respondent No.3 in as much as the directions contained
in the notice issued u/s. 79(2) have not been complied with by the petitioners.
This statement of Ms.Bane is on the basis of record in view of the fact that the original order impugned dated 05.11.2014 itself narrates the dates and
events. The said order states that adequate action as required by law on behalf of the statutory office bearers of the society had been taken by the
society. In fact, reading of the order suggests that petitioners being statutory office bearers of the society, no fault can be found with the conduct of
the petitioners being the chairman and the secretary of the society in intimating the police authorities and also conducting further action which has
been stated in the order dated 05.11.2014. It is pertinent to note that office bearers of cooperative housing society do a thankless job and when such
office bearers are elected / appointed (as in the present case when the office bearers were handed over charge of the property of the society by the
administrator in the year 2008), it cannot be assumed that the administrator must have handed over the documentation of each and every fat member
belonging to that society to petitioners. If that would have been the position, then at that time itself the missing documents of Flat No.C/102 would
have been known to the petitioners. Fortunately, that is not the allegation against the petitioner Nos.1 and 2 herein and, therefore, benefit of doubt is
required to be given to the petitioners.
In view of the above, the impugned order dated 05.11.2014 passed by respondent No.3 is hereby quashed and set aside to the extent that it levies
a penalty of Rs.100.00 per day on the petitioners, as also the further orders dated 23.05.2017 passed by respondent No.2 and the order in Revision
dated 27.05.2019 passed by the respondent No.1 upholding the order dated 05.11.2014 are hereby quashed and set aside.
Rule is discharged.
Writ Petition stands disposed of in the above terms with no order as to costs.