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IN THE HIGH COURT OF BOMBAY
C.S. Dharmadhikari, Ag.C.J. T.D. Sugla, J.
Murlidar Bhaulal Malu .... Petitioner.
Versus
Sudhakar Honaji Patil another.... Respondents.
Writ Petition No. 4470 of 1986 with W.P. Nos. 459 of 1987, 3430 of 1986, 2731 of 1987, 2686 of 1987, 2649 of 1987, 2583 of 1987, 2582 of 1987, 2581 of 1987, 3785 of 1986, 3148 of 1987, 3151 of 1987, 3150 of 1987, 3149 of 1987, 2646 of 1987, 3485 of 1987, 3216 of 1987, 2683 of 1987, 2966 of 1987 and 3275 of 1987, decided on 18-9-1987.
Advocates appeared :
Dr. B.R. Naik with Y.R. Naik, for petitioners in W.P. 4470/86, 459/87 3430/86.
A.S. Bobade, Adv. General with H.L. Gokhale, A.G.P, for respondent-State in W.P. 4470/86, 459/ 87, 3275/87, 3430/86, 2731/87, 2686/86, 3148, 3149, 3150, 3151/ 87, 2645/87, 2683/87, 3455/ 87, 3216/87, 2986/87.
R.N. Dhorde, for R.N. 2 in W.P. 3430 of 1986, for petitioner in W.P. 2986/87.
Dr. B.R. Naik with Prashant Naik, for petitioner in W.P. 2731 2686/86.
Ajit P. Shah, for petitioners in W.P. 2649/87, 2583/87, 2582/87, 2581/87, 3785/86.
Bhimrao N. Naik, for respondent No. 1 in 3 matters, for petitioner in W.P. 2963/87.
S.G. Page, for respondent No. 6 in 3 matters.
M.D. Lonkar, for petitioners in W.P. 3148, 3149, 3150 3151/87.
T.K. Patil, for respondent 4 in 3148 to 3151/87.
P.M. Pradhan, for petitioner, in W.P. 2646/87.
Y.R. Naik, for respondent No. 5 in W.P. 2683/87.
C.J. Sawant with A.Y. Sakhare, for petitioners, in W.P. 3485/87.
A.V. Sawant with V.D. Hon., for petitioner in W.P. 3216/87.
R.B. Raghuwanshi, for petitioner in W.P. 3275/87.
On proper reading of Section 73 FF (1) (c), it is clear that a member who avails himself of any services from the society for which charges any payable in cash and fails to pay the charges for services within the period specified in that behalf, under the bye-laws of the concerned society or the contract or within a period of 30 days from the receipt of the notice of demand by him from the concerned society whichever is earlier, will be a defaulter. Similarly, a member who has taken anamat or advance and fails to repay the full amount of such anamat or advance, within such and as specified in that behalf, under the bye-laws, of the society or the contract or within 30 days from the receipt of notice of demand by him from the concerned society, whichever is earlier, will become a defaulter. Further a member who has purchased any goods or commodity on credit and fails to pay the price of such goods or commodity within the period specified in that behalf in the bye-laws of the society or the contract of within 30 days from the receipt of the notice of demand by him from the concerned society, whichever is earlier, then he will also be treated as a defaulter. If any other construction is given the purpose of the statute will be frustrated. If the section is so read then it is neither absurd nor unworkable. This position is further clear from other clauses of sub-section (i) of Section 73 FF (1) of the said Act. However, the question is to whether a person is a defaulter or not must depend on the facts and circumstances of each case and no general rule can be laid down.
Sub-section (v) and (vi) of Section 73 FF (1) deal with different type of disqualifications. The activities referred to therein involve conflict between interest and duty. Even the likelihood of conflict is taken in its import. If a person carries on business of the kind carried on by the society either in his name or in the name of any member of his family or he or any member of his family is a partner in a film or director in a company which .carries on business of the kind carried on by the society, he is declared as ineligibe for being appointed, nominated, elected, co-opted or for being a member of a Committee. Sub-section (vi) of Section 73 FF (1) (i) deals with a salaried employee of any society. Sub-section (vi) of Section 73 FF (1) (i) also cannot be read torn from its context. The disqualification contemplated by the said provision applies to salaried employee of any society other than a society of employees themselves or to a person who holds office of profit under any society except when he holds or is appointed to the office of a Managing Director or any other office declared by the State Government by general or special Order not to disqualify its holder or is entitled to be appointed or selected or elected to any reserved seat of the Committee of the society under Section 73 FF, of the said Act. The word any cannot also be read tom from its context. It is by now well settled that the word any could be used as meaning one as contrasted with more than one. It is also used as covering several i.e. meaning all.
The provisions under clause (vi) of Section 73 FF (1) of the said Act are founded on the imperative need for neutrality and impartially. It is alienated for avoiding the likelihood of conflict between interest and duty. The object of the provision is to secure independence of the members of the Committee and to ensure that the Committee does not include persons who are salaried employees of the society concerned, and in that position have received or can receive favours or benefits from the executive and therefore being under its obligation or being subordinate to it might be amenable to executive influence. Such a conflict between interest and duty can arise only qua the same society, or qua a federal society if the said society itself is a member of the concerned federal society. If the said provision is so constructed, in our view it does not run counter to the objects as enshrined in Article 43 A of the Constitution of India or Section 73 BB of the said Act.
The qualifications and disqualifications, for becoming a member of society are laid down, obviously in the interest of co-operative movement. If this is so then laying down further disqualifications for membership of the committee are obviously in the interest of co-operative movement as well as general public. The purpose behind its to maintain purity of cooperative movement, and to avoid conflict between duty and interest. It is intended to ensure that there is no occasion for conflict between public duty and private interest. Therefore, it cannot be termed as arbitrary or violative of petitioners fundamental rights guaranteed under Articles 14, 19 (1) (c) and 19 (1) (g) of the Constitution of India.
Section 73-FF (1) (i) (c)-Provides for disqualification for being a member of a Committee-Two types of disqualifications prescribed, one Involving stigma and another conflict between interest anti duty.
Section 73-FF provides for disqualification for being a member of a Committee. According to the said sub-section (i) to the said section, no person shall be eligible for being appointed, nominated, elected, co-opted or for being a member of a Committee if he is a defaulter of any society. Then comes explanation which explains the meaning of term defaulter. Definition in that behalf is inclusive. Sub-section (1) (i) (c) of Section 73-FF explains as to who could be termed as a defaulter in the case of any society. Obviously a society other than the one covered by sub-clauses (a), (b), (d), and (e) of the said section are covered by clause (c). It is no doubt true that the sub-section (c) (ii) is not happily drafted. It appears that in the initial Bill the structure of section was different.
As a result of this recommendation of the Joint Committee present provision came to be redrafted. If the said provision is read literally turn from its content and without ascertaining the intention behind it, it does create certain difficulties in its implementation. However, the scope of this clause is clear. If it is read harmoniously and together with other sub-clauses, it is neither ambiguos nor unreasonable or unworkable as contended by the C0unselfor the petitioners. This clause is applicable to all the cooperative societies registered in the State of Maharashtra other than those referred to in clause (a) (b) (d) and (e) of the explanation. The use of the words and expressions such as on credit, charges are payable, fails to repay the full amount or pay the price of goods etc., clearly indicate that the clause applies only to such cases where the price of goods or charges for services or the amount of anamat or advance are payable or refundable in cash. In other words if the payment of charges are to be adjusted in a manner other than payment in cash this clause will have no appreciation. This position has been fairly conceded by the learned Advocate General.
It is well settled rule that in interpreting the provision of a statute the Court will presume that legislation was intended to be intra vires and also reasonable. The rule followed is that the section ought to be interpreted consistent with the presumption which imputes to the legislature an intention of limiting the direct operation of its enactment to the extent permissible. The reading down of a provision of a statute puts into operation the principle that so far as it is reasonably possible to do so, the legislation should be construed as being within its power. It should be read as a whole and a provision of the Act, should be construed with reference to other provisions the same Act, so as to make a consistent enactment of the whole statute. Further sub-section must be read as parts of an integral whole, as being interdependent. Many times one sub-section throws light on another. It should on read harmoniously, together with other provisions of the Act, to make it consistent and reasonable. The purpose and object of prescribing the Several disqualifications is to insure purity of administration of the co-operative Societies. From the scheme of the Act it appears that two types of disqualifications are prescribed, one involving stigma and another conflict between interest and duty. Where stigma is involved disqualification appears to be absolute. As rightly contended by the learned Advocate General the provisions relating to the disqualifications should be specific as its consequences are penal in nature. It is a recognised principles of construction of penal statutes that its language should be construed that no case shall be allowed to fall within its import, which does not fall within it, on reasonable construction of the enactment. Therefore, the section calls for a reasonable construction to avoid absurd results, or undue and unforseen hardship. The provisions of sub-sections 73-FF (1) (c) and (vi) will have to be read in the light of these well settled principles.
Penal statutes - Principle of construction.
It is a recognised principle of construction of penal statutes that its language should be so construed that no case shall be allowed to fall within its import, which does not fall within it, on reasonable construction of the enactment. Therefore, the section calls for a reasonable construction to avoid absurd results, or undue and unforseen hardship. Sections 73 - FF (1) (i) (c), 73 - FF (1) (vi).
See Maharashtra State Co - operative Appellate Court, Bombay.
Sections 73 - FF (1) (i) (c), 73 - W (1) (vi) (as amendment by Act XX of 1986, w. e. f. 12 - 5 - 1986) and Sections 73 - BB and 73FEF – (3) – Constitution of India - Articles 14, 19 (1) (c) and 19(1) (g) and 43-A –Scope Applicability Interpretation and constitutionality of Sections 73 - FF (1) (i) (c) and 73 - FF (1) (vi) - Disqualification of membership of tile Committee powers of the removal of the Committee its members thereof - The words "on credit", "charges and payable", "fails to repay the full amounts" or "pay the price of goods" etc. Meaning and Interpretation of - Held, those provision were violative of Articles 14, 19 (1) (c) and 19 (1) (g) of the Constitution - Further, whether a person was disqualified or not, must depend upon the facts and circumstances of each ease (1987 Mah LJ 709 referred).
If a conflict of interest is not involved, the question of a person being disqualified does not arise. Within the same class of salaried employees, Some are permitted to participate in the managins Committee, viz. a Managing Director or other officer declared by the Slate Government or any person selected, or nominated under Section 73 - BB of the said Act. There is absolutely no justification as to why some are brought within the mischief of the said provisions and the others are excluded. Further the said clause tries to reach every type of employee in every Co - operative Society. This is wholly arbitrary. There is no classification at all. Assuming that any Classification exists, the same is not based upon any intelligible differentia distinguishing those that are grouped together from the others left out of the group. Further - more, such differentia does not have any rational relation or nexus with the objects sought to be achieved by the said Act. thus these provision are violative of Articles 14, 19 (1) (c) and 19 (1) (g) of the Constitution.
The use of the words and expressions such as "on credit, charges are payable, fails to repay the run amount, or pay the price of good, etc., clearly indicate that the clause applies only to such cases where the price of goods or charge for services or the amount of anamat or advance are payable or refundable in cash. In other words if the payment of charges are to be adjusted in the manner other than payment in cash, this clause, will have no application.
On proper reading of Section 73 - FF (1) (c), it is, clear that a member who avails himself of any services from the Society for which changes are payable in cash and fails to pay the charges for services within the period specified in that behalf, under the bye - laws of the concerned Society or the contract or within a period of 30 days from the receipt of the notice of demand by him from the concerned Society whichever is earlier, will become a defaulter. Similarly, a member who has taken anamat or advance and fails to repay the full amount of such anamat or advance, within such period as specified in that behalf, under the bye-laws - of the Society or the contract or whiten 30 days from the receipt of notice of demand by him from the concerned Society, whichever is earlier, will become a defaulter. Further a member who has purchased any goods or commodity on credit and fails to pay the price of such goods or commodity within the period specified in that behalf in the bye - laws of the Society or the contract or within 30 days from the receipt of the notice of demand by him from the concerned Society, whichever is earlier, than he will also be treated as a defaulter.
Sub section (vi) of Section 73.FF (1) (i) deals with the salaried employee of any Society. Sub - section (vi) of Section 73 - FF (1) (i) also cannot be read torn from its context. The disqualification contemplated by the said provision applies to salaried employee of any, Society other than a Society of employees themselves or to a person who" holds office of, profit under any Society except when he holds or is appointed to the office of a Managing Director or any other office declared by the State Government by general or special order not to disqualify its holder or is entitled tope appointed or selected or elected to any reserved seat of the Committee of the Society under Section 73 - BB of the said Act. The word any cannot also be read torn from its context. It is by now well settled that the word any could be used as meaning one as contrasted with more than one. It is also used as covering several i. e. meaning all. A reference to Strouds Judicial Dictionary shows that the word any according to the context can bear either meaning. [See also Narayan Tambaji and another v. Rameshwar Guru Mahesh Puri and another, 1957 MLJ 274 and Pfizer Employees Union, Bombay v. Mazdoor Congress, Bombay and others, 1979 Mah LJ 571]. In sub - section (vi) of Section 73 - FF (1) of the said Act, there is inherent evidence to indicate that the word ally has been used in the said sub - section in a restrictive sense. The bracketed portion in the section i. e. (other than a Society of employees themselves) is clear indicative of Legislative intent. This portion is, further clear from the later part of the section when it excepts a salaried employee who is entitled to be selected or elected to any reserved seat on the Committee of the Society under Section 73 - BB of the said Act.
It is also enacted for avoiding the likelihood of conflict between interest and duty. The object of the provision is to secure independence of the member of the Committee and ensure that Committee does not include persons who are salaried employees of the Society concerned, and in that position have received or can receive favours or benefits from the executive and therefore being under its obligation or being subordinate to it might be amenably to executive influence. Such a conflict between interest and duty can arise only" qua the same Society, or qua a Federal Society if the said Society itself is a member of the concerned Federal Society If the said provision is so construed, in our view it does not run counter to the objects as enshrined in Article 43 - A of the Constitution of India or Section 73 - BB of the said Act.
From Section 73 - FFF (3) it is clear that a person is eligible to be renominated, re - co - opted, re - appointed or re - elected as a member on the Committee as soon as his disqualification ceases to exist. The disqualification in that behalf will cease to exist if the person ceases to be II, salaried employee of the concerned Society, or ceases to be a defaulter on, payment of the amount due. Therefore, the said provisions cannot be termed as unreasonable, or arbitrary. As already observed ultimately as to whether a person is disqualified or not, must depend upon the facts and circumstances of each case.
2. In this writ petitions the provisions of section 73-FF of the Maharashtra Co-operative Societies Act, 1960 as a whole are challenged on various grounds. However, we are mainly concerned with the provisions of sections 73(i)(c) and 73-FF(1)(vi) of the Maharashtra Co-operative Societies Act, 1960 (hereinafter referred to as the said Act). Section 73-FF came to be inserted in the said Act by Maharashtra Act XX of 1986, which came into force with effect from 12th of May, 1986. By the said Act section 78 also came to be amended. Section 73-FF deals with the disqualification of membership of the Committee. Since section as a whole is challenged before us it will be worthwhile to reproduce the said section verbatum :
"73-FF(1) Without prejudice to the other provisions of this Act or the rules made thereunder in relation to the disqualification of being a member of a committee, no person shall be eligible for being appointed. Nominated, elected, co-opted or, for being a member of a committee, if he---
(i) is a defaulter of any society ;
Explanation.---For the purpose of this clause, the term "defaulter" includes---
(a) in the case of a primary agricultural credit society, a member who defaults the repayment of the crop loan on the due date;
(b) in the case of term lending society a member who default the payment of any instalment of the loan granted to him;
(c) in the case of any society,---
(i) a member who has taken anamat or advance;
(ii) a member who has purchased any goods or commodities on credit or availed himself of any services from the society for which charges are payable; and fails to repay the full amount of such anamat or advance or pay the price of such goods or commodities or charges for such service, after receipt of notice of demand by him from the concerned society or within thirty days from the date withdrawal of anamat or advance by him or from the date of delivery of goods to him or availing of services by him, whichever is earlier;
(d) in the case of non-agricultural credit societies, a member who defaults the payment of any instalment of the loan granted;
(e) in the case of housing societies, a member who defaults the payment of dues to the society within three months from the date of service of notice in writing served by post under certificate of posting demanding the payment of dues;
(ii) has, in the opinion of the Registrar, deliberately committed breach of co-operative discipline with reference to linking up of credit with co-operative marketing or co-operative processing; or
(iii) has been held responsible under section 79 or 88 or has been held responsible for payment of costs of inquiry under section 85;
(iv) has incurred any disqualification under this Act or the rules made thereunder; or
(v) carries on business of the kind carried on by the society either in his name or in the name of any member of his family or her or any members of his family is a partner in a firm or a director in company which carries on business of the kind carried on by the society;
Explanation.---For the purpose of this clause, the expression "family" means a wife, husband, father, mother, brother, sister, son, daughter, son-in-law, or daughter-in-law; or
(vi) is a salaried employee of any society (other than a society of employees themselves) or holds any office of profit under any society, except when he holds or is appointed to the office of a Managing Director or any other office declared by the State Government by general or special order not to disqualify its holder or is entitled to be or is selected or elected to any reserved seat on the committee of a society under section 73-BB.
(2) A member who has incurred any disqualification under sub-section (1), shall cease to be a member of the committee, and his seat shall thereupon be deemed to
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