Interim findings by an authority should not influence the merits of a case, and procedural compliance in meetings is essential for valid resolutions.

ORDER :

Mr. Anant Ramanath Hegde, J. - Heard the learned counsel appearing for the petitioners and the learned counsel appearing for the respondents.

2. Though this case is listed for orders on the application for vacating the interim order, with the consent of both the learned counsels for the parties, the petition is heard on merits and taken up for final disposal.

3. The petitioners are aggrieved by the order dated 22.05.2023 passed by the first respondent. The dispute was raised before the first respondent, challenging the resolution dated 13.09.2022 passed in the Emergency Board Meeting of the second respondent - Souharda Credit Sahakari Niyamitha. In the said Board Meeting, in addition to the various decision, the decision is taken to induct 405 members and apart from that, the decision is also taken to waive a part of the loan availed by one of the borrowers of the second respondent.

4. In the said proceedings before the second respondent raised under Section 39 of the Karnataka Souharda Sahakari Act 1997, an application is filed under Section 41 seeking interim measure. The petitioners prayed for an interim order to stay the operation of the resolution dated 13.09.2022. The authority after considering the submissions of both sides refused to grant the interim measure and consequentially rejected the interim application. Aggrieved by the said order, the petitioners are before this Court.

5. Sri. Sridhar Prabhu, learned counsel for the petitioners, would contend that the Special General Body Meeting alleged to have been scheduled on 13.09.2022 is illegal and contrary to the mandatory Rules. The procedures as contemplated for convening the meeting are not followed and the agenda has not been properly notified and sufficient time contemplated under the Rules has not been given and notice is not sent in the manner prescribed. It is also his contention that without mentioning two matters on the agenda namely, the induction of new members and waiver of loan to one of the borrowers, the decision is alleged to have been taken by the Board on 13.09.2022 admitting 405 persons as the new members of the second respondent - Sahakari Bank and a loan waiver of Rs. 53,00,000/- is granted without any justification to one of the borrowers. He would further point out that instead of granting interim order as prayed for, to ensure that there is no further obligation pursuant to the resolution under challenge, the authority has dismissed the application by giving a finding that the Board has the power to pass the impugned resolution. Hence, he would contend that the impugned order be set aside and the operation of the impugned resolution be stayed.

6. The learned counsel for the respondents would contend that the Board has the power to induct new members by calling the Special General Body Meeting and also has the power to waive the loan availed by one of the borrowers as the borrower does not have any means to repay the amount and the property belonging to the borrower/guarantor was auctioned and the amount of Rs. 72,00,000/- was realized and waiver is granted to the tune of Rs18,00,000/-. Thus, the authority is justified in rejecting the application seeking interim prayer.

7. This Court has considered the contentions raised at the Bar.

8. As could be seen from the contentions raised, the petitioners are aggrieved by the two decisions of the Board of the second respondent namely induction of 405 new members and waiver of loan granted to one of the borrowers/guarantors. Admittedly, the members, who were allegedly inducted as members, are not parties before the authority. It is stated that the newly inducted members have availed the loan from the respondent. At this juncture, this Court is of the view that since the members are not made parties to the proceedings before the authority, no interim order can be granted which would affect the interest of the members who are allegedly inducted in the meeting pursuant to the resolution dated 13.09.2022.

9.