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1971 Supreme(Bom) 27
IN THE HIGH COURT OF BOMBAY
K.K. Desai and V.S. Deshpande, JJ.
Appellants: Little Gibbs Co-op, Housing Society Ltd., Bombay and Anr.
Vs.
Respondent: The State of Maharashtra and Ors.
Spl. Civil Appln. No. 2127 of 1970 and Civil Appln. No. 3050 of 1970 Decided On: 25.02.1971
Counsels:
For Appellant/Petitioner/Plaintiff: H.G. Adwani and B.S. Chandnani, Advs.
For Respondents/Defendant: S.N. Naik, Adv., i/b., Little Co. Attorneys, D.R. Dhanuka and P.N. Tulsian, Advs.
The court emphasized the importance of providing an opportunity to the committee to state its objections and consulting the federal society before exercising the extraordinary powers under Section 78 of the Maharashtra Co-operative Societies Act, 1960, to ensure that such powers are not misused.
Headnote:
CO-OPERATIVE SOCIETIES - SUPERSESSION OF MANAGING COMMITTEE - SHOW CAUSE NOTICE - CHARGES - FINDINGS - NATURAL JUSTICE - SECTION 78 OF THE MAHARASHTRA CO-OPERATIVE SOCIETIES ACT, 1960.
Fact of the Case:
The petitioners, a co-operative housing society and its honorary secretary, challenged the legality and validity of an order passed by the Government of Maharashtra under Section 154 of the Maharashtra Co-operative Societies Act, 1960, superseding the society's managing committee and appointing an administrator.
Finding of the Court:
The court held that the findings recorded by the Government in its order were at variance with and on matters other than the charges levelled against the petitioners in the show cause notice. The court found that the petitioners were never called upon to explain the charges on which the findings were based, violating the principles of natural justice.
Issues: 1. Whether the findings recorded by the Government in its order were at variance with and on matters other than the charges levelled against the petitioners in the show cause notice? 2. Whether the petitioners were called upon to explain the charges on which the findings were based?
Ratio Decidendi: The court held that the provisions of Section 78 of the Maharashtra Co-operative Societies Act, 1960, which empowers the Registrar to remove the committee of a society and appoint an administrator, are extraordinary and abnormal powers that must be exercised only in abnormal situations and upon satisfaction of certain conditions, including providing an opportunity to the committee to state its objections and consulting the federal society to which the society is affiliated.
Final Decision: The court allowed the petition, set aside the order of the State Government, and restored the order of the Divisional Joint Registrar, which had allowed the society's appeal against the supersession order.
1. The two petitioners in this Special Civil Application challenge the legality and validity of order passed by the Government of Maharashtra on 8th November 1970 in exercise of their revisional jurisdiction under Section 154 of the Maharashtra Co-operative Societies Act, 1960, hereinafter referred to as "the Act". Petitioner No. 1 is a Co-operative housing Society registered under the Act in or about the year 1960. Petitioner No. 2 is one of the 13 shareholders of the said society and also Honorary Secretary appointed as such at the General Body meeting held on 27-10-1968. The facts, which gave rise to this special Civil Application, briefly are that on 3rd September 1964 the Assistant Registrar, Co-operative Societies, passed an order directing an inquiry in the affairs of this society under Section 83 of the Act. On 28-5-1968 the Inquiry Officer submitted his report and referred therein to several irregularities and malpractices. The Deputy Registrar then sent extracts of the said report to the society presumably in terms of subsection (4) of S. 83 on 28-6-1968. On 11-9-1968 the then Managing Committee of the Society resigned en bloc. The District Deputy Registrar thereupon convened a General Body meeting of the Society on 27-10-1968. Normally the balance-sheet and statements of accounts of this society for the year ending on 30th June 1968 should have been placed before the expiry of the month of September 1968. It, however, appears that for some reasons or the other the accounts of this society remained unaudited and such statements were not ready for placing before any such Annual General Meeting. At the said meeting on 27-10-1968 referred to as "Eighth Annual General Body meeting" an Adhoc Managing Committee was elected, and petitioner No.2 to this petition was elected as Honorary Secretary of the same. Some differences of opinion seem to have arisen between the Adhoc Managing Committee on the one hand and the District Deputy Registrar on the other hand in regard to the precise follow up actions to be taken to comply with the findings of the Inquiry Officer. It is unnecessary to make a detailed reference to all these differences. On 1-2-1969, the Honorary Secretary of the Society seems to have complained against the District Deputy Registrar to the Divisional Joint Registrar, Bombay, but he seems to have virtually refused to take any notice of the same and, on the contrary, by his letter dated 11-4-1969 asked the Secretary vaguely to proceed with the follow up action in compliance with the report of the Inquiry Officer.
2.On 26-4-1968 the District Deputy Registrar served a notice under Section 78 (I) of the Act on the Chairman and Secretary and all the Members of the Adhoc Committee of the Society calling upon them to show cause as to why the said Adhoc Committee should not be superseded "in the interest of smooth and proper functioning of the Society" as in his opinion "the Adhoc Managing Committee .............. has not been functioning properly." By explanation dated 8th May 1969 cause was shown against the said proposed action, by the Honorary Secretary. At the end of the said letter the Secretary had requested the District Deputy Registrar to give him and the members of the said Adhoc Committee a personal hearing. On 18-10-1969, however, the District Deputy Registrar without any further enquiry or hearing passed an order superseding the said Adhoc Managing Committee under sub-section (1) of S. 78 of the Act and appointed one B.S.Gokral as the Administrator to manage the affairs of the said Society. The Society thereupon preferred an appeal to the Divisional Joint Registrar and on 17-1-1970 the said appeal was allowed and the supersession order of the District Deputy Registrar dated 18-10-1969 was set aside. It appears that seven other members of this Society out of the total strength of 13 had also appeared before the Divisional Joint Registrar seeking his permission to intervene and support
