Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2009 Supreme(SC) 1070

Supreme Court of India
THE HONOURABLE MR. JUSTICE S.B. SINHA & THE HONOURABLE MR. JUSTICE CYRIAC JOSEPH
Pralhad & Others
Versus
Deorao & Others
CIVIL APPEAL NO. 3493 OF 2009 (Arising out of SLP (C) No. 13290 of 2008) WITH CIVIL APPEAL NO. 3494 OF 2009 (Arising out of SLP (C) No. 15898 of 2008)
Decided On : 12-05-2009

Advocates Appeared: For the Appellants :Shekhar Naphads, Sr. Advocate, Shivaji M. Jadhav, Lenin S. Hijam, Chintaman Deshmukh, Sanjay V. Kharde, Advocates. For the Respondents:Dr. R.R. Deshpande, Jitendra Kumar, Advocates

IMPORTANT POINT
Power under section 157 cannot be exercised arbitrarily.

Headnote:Maharashtra Cooperative Societies Act, 1960 – Section 73(1A) and 157 – Section 73(1A) mandates election of the society – Limits the tenure of administrator to three years – Instantly no election held in the respondent society since 1994 – First committee appointed in 1995 coming to an end in 1998 – Period extended up to 2000 – Continued till 2002 – Special General meeting in 2004 resolving to request State not to hold elections and to appoint an Administrative Board – State, by an order dated 29.6.2007 u/s 157 appointing a nominated Board of Administrators of the Society till 19.6.2009 – Order not produced in Court – Why the order was issued and by whom not known – Society not given any hearing – Order passed during pendency of writ petition seeking election – High Court rightly quashing the order – Constitution of India – Article 39(b) and (c). (Para 16)
       (1980) 1 SCC 340 – Relied upon
       Facts of the case:
       Respondent No. 3 is a society was registered under the Maharashtra Cooperative Societies Act, 1960 on or about 4.12.1991. The State of Maharashtra is holding share capital of Rs.26 lakhs therein. Its contribution is said to be running into several crores of rupees. No share was collected and no meeting was held.
       On or about 6.6.1995, the State of Maharashtra appointed a first Committee to manage the affairs of the society consisting of 13 persons for a period of three years. The term of the said Committee was extended by an order dated 6.7.1998 upto 3.6.2000. It was continued till 2002.
       The Assistant Registrar, Cooperative Society, Vasamat was thereafter appointed as an Administrator.
       Since 1994 no election was held. On or about 23.12.2004, a Special General Meeting was convened wherein a request was made to the State to grant financial assistance. A request was also made to appoint an Administrative Board. It was furthermore resolved that no election be held unless the respondent No. 3 -cooperative society becomes functional. Pursuant thereto, a proposal was forwarded to the Director of Handloom, Nagpur which in turn was sent to the Department of Textile of the State of Maharashtra on or about 18.1.2005.
       The State Government sanctioned a sum of Rs.544 lakhs towards erection of the spinning mill as the Government share capital.
       First Respondent filed a Writ Petition before the High Court for a direction upon the respondent No.5 herein to conduct election of the Board of Directors of the Society within a fixed time frame. The said writ petition was subsequently amended and a further prayer was added for quashing and setting aside an order dated 29.6.2007 passed by the respondent No. 6 herein appointing a nominated Board of Administrators of the Society till 19.6.2009.
       High Court quashed the said order dated 29.6.2007 directing the appellants herein to hold the election of the said Society.
       Finding of the Court:
       High Court rightly quashed the impugned order.
       Result:
       Appeals dismissed with cost.

Judgment :-

S.B. Sinha, J.

1.1. Leave granted.

2.2. These appeals are directed against a judgment and order dated 6.5.2008 passed by a Division Bench of the High Court of Judicature at Bombay bench at Aurangabad in Writ Petition No. 1056 of 2006 whereby and whereunder the Writ Petition filed by the first respondent herein was allowed.

3. Respondent No. 3 is a society registered under the Maharashtra Cooperative Societies Act, 1960 (for short, "the Act"). It was registered on or about 4.12.1991. The State of Maharashtra is said to have been holding share capital of Rs.26 lakhs therein. Its contribution is said to be running into several crores of rupees. No effort, however,

was made for running and managing its affairs for a long time. As no action had been taken for the said purpose, no share was collected and no meeting was held.

3.4. On or about 6.6.1995, the State of Maharashtra appointed a first Committee to manage the affairs of the society consisting of 13 persons for a period of three years. The said Committee is also said to have taken no step for effective functioning of the said cooperative society. No plant and machinery was acquired nor any other step was taken for erection of the mill. The term of the said Committee was extended by an order dated 6.7.1998 upto 3.6.2000. It was continued till 2002.

4.5. The Assistant Registrar, Cooperative Society, Vasamat was thereafter appointed as an Administrator. It is stated that some plants and machinery had been purchased in the year 2000 but they had been lying idle. Theft of articles belonging to the society had also taken place on several occasions. Indisputably, since 1994 no election was held. It is stated that on or about 23.12.2004, a Special General Meeting was convened wherein a request was made to the State to grant financial assistance. A request was also made to appoint an Administrative Board. It was furthermore resolved that no election be held unless the respondent No. 3 -cooperative society becomes functional. Pursuant thereto, a proposal was forwarded to the Director of Handloom, Nagpur which in turn was sent to the Department of Textile of the State of Maharashtra on or about 18.1.2005.

5.6. The State Government sanctioned a sum of Rs.544 lakhs towards erection of the spinning mill as the Government share capital.

6.7. First Respondent filed a Writ Petition before the High Court, which was marked as Writ Petition No. 1056 of 2006, inter alia, for a direction upon the respondent No.5 herein to conduct election of the Board of Directors of the Society within a fixed time frame. The said writ petition was subsequently amended and a further prayer was added for quashing and setting aside an order dated 29.6.2007 passed by the respondent No. 6 herein appointing a nominated Board of Administrators of the Society till 19.6.2009.

7.8. Indisputably, the State of Maharashtra during pendency of the said Writ Petition

issued a Government Order dated 27.06.2007, which was not produced before the High Court. However, after the judgment was reserved, the State had produced before us a copy of the said order dated 27.6.2007 issued by the Desk Officer, Cooperation Marketing & Textile Department, Government of Maharashtra, which is to the following effect:

"No. : Spinning Mill 1407/PK69/Tex.1(V) Mantralaya, Mumbai - 32, Dt.27.06.2007

Sub: Appointment of Administrative Board to the Rokdeshwar Sahakari Soot Girni Ltd. Basamathnagar.

Ref.: Your letter No. Desk-6(4)A/Soot Giri/7641/2007 dated 11th May 2007.

The Administrative Board appointed by the State Government vide order dated 04.10.2005 to the Rokdeshwar Sahakari Soot Girni Ltd., Basantnagar is hereby dissolved, and in exercise of powers u/s 157 of the Maharashtra Cooperative Societies Act, 1960 the State Government has appointed Administrative Board of following persons, who are eligible for appointment as Administrator, for a period of 2 years i.e. till 19.06.2009.

"Sr. Name Address

No.

1.1. Shri Prahlad Ramrao R/o Aral

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2009 Supreme(SC) 1070

IMPORTANT POINTPower under section 157 cannot be exercised arbitrarily.

Cases Referred (1)

IMPORTANT POINT
Power under section 157 cannot be exercised arbitrarily.