1998 Supreme(Bom) 319

IN THE HIGH COURT OF BOMBAY
A.V. Savant S. Radhakrishnan, JJ.
Bhaskar Laxman Rane ..... Petitioner.
Versus
Shri Gurudev Nityanand Co-operative
Housing Society Ltd. others ..... Respondents.
Writ Petition No. 3128 of 1990, decided on 18/19-6-1998.
Advocates appeared:
P.M. Karlekar, for petitioner.
G.S. Godbole i/b M/s Chitnis, Vaity and Co., for the respondent No. 1.
V.V. D’gama, A.G.P., for respondent Nos. 2 and 3.

Headnote:Section 35-Maharashtra Cooperative Societies Rules, 1961, Rule 29-Issuance of notice of meeting under Rule 29-Expulsion of member under Section 35-Service of notice at least one month prior to the date of meeting-Meeting held prior to the date of notice-Illegal-Transaction of business in the meeting not proper and not accordance to law.- The words "General meeting" to be held not earlier than a period of one month from the date of such notice" ought to be construed to mean "not earlier than a period of one month from the date of service of such notice". We are only confining this interpretation to the question of notice to the member against whom the resolution is proposed to be brought. That is the emphasis on subrule (1) of Rule 29, reproduced above. The whole purpose of the notice contemplated in Rule 29 is to give adequate opportunity to the member who is sought to be expelled on serious grounds such as persistent default. Failure to comply with the provisions of the byelaws, bringing disrepute to the Society or acting in manner detrimental to the interests of the Society. The resolution based on any of these grounds casts a stigma on the member concerned. He is also disqualified from becoming a member of that Society or for admission as a member of any other Society for a period of one year from the date of expulsion. This results in consequences on the member concerned. The notice contemplated by Rule 29 is only to that member who is sought to be expelled. He has to show cause. We are, therefore, inclined to take the view that if the petitioner was served with the notice dated 18th September, 1986 on 23rd September, 1986, the meeting held on 19.10.1986 was held earlier than a period of one month from the date of service of the notice on the petitioner. Such a meeting held on 19.10.1986 was, therefore, held in violation of the mandatory provisions of sub-rule (1) of Rule 29 of the Co-operative Societies Rules, 1961 and would, in our opinion, be bad in law. It would, therefore, follow that any business transacted at such a meeting would be bad in law. That as far as notice to the member who is to be expelled, casting a stigma on him, the meeting cannot be held earlier than one month from the date of service of such notice on him since he is called upon to show cause against his expulsion. The notice contemplated by Rule 29(1) is only to the member to be expelled. It mayor may not be necessary for the other members to get one months notice and they may be prepared to attend the meeting and express their views at a shorter notice.

       Section 35-Maharashtra Co-operative Societies Rules, 1961, Rule 29-Validity of expulsion of member -Expulsion being a very serious matter requires strict following of rules, otherwise the resolution would be termed as being passed without application of mind and without properly following rules as per requirement.-If, the General Body in its meeting, dated 6th July, 1986 were to apply its mind to the petitioners reply, dated 16/17th April, 1985 or to the three resolutions mentioned above, it is doubtful whether it could have proceeded to condemn the petitioner on the two grounds stated in the resolution. The two grounds are:-(i) the petitioners resignation from the Managing Committee on 8.11.1981 and (ii) failure to pay his contribution despite time concession granted to him to pay. The Court finds that the first ground is wholly irrelevant and extraneous. The reading of the resolutions dated 29.10.1978, 14.1.1979 and 28.1.1979 leaves no manner of doubt that the ex-gratia payment to him was in token of appreciation of the services rendered by him at the initial stages of the project and in particular, for getting the occupants evicted from the old tenements and accommodating them in the new building which the petitioner had got constructed. The petitioner had only ceased to be a member of the Managing Committee pursuant to his resignation on 8th November, 1981. There was no condition in any of the resolutions of 29.10.1978, 14.1.1979 and 28.1.1979 that he should continue to be a member of the Managing Committee to be eligible to enjoy the concession of exemption from initial contribution of 40% plus Rs. 49,140/-

       Thus, the first ground for revocation of the concession is wholly irrelevant and extraneous.

       Admittedly, expulsion of a member has serious consequences and it casts a stigma on a persons image in the society. Section 35 of the Act requires a resolution to be passed by a majority of not less than three-fourths of the members entitled to vote who are present at a General meeting held for the purpose of expelling a member for acts which are detrimental to the interest or proper working of the Society.

       The order, dated 11th April, 1986 passed by the Deputy Registrar has been confirmed in appeal by the Divisional Joint Registrar on 9th March, 1990. After setting out the facts in the first four paragraphs, in the fifth para, the Divisional Joint Registrar has proceeded on the erroneous footing that the concessions granted to the petitioner in the meeting held on 28.1.1979 was conditional and whatever concession was granted to him was subsequently cancelled in the meeting held on 6th July, 1986. On both the premises, the order of the Divisional Joint Registrar proceeds on erroneous assumption and shows clear non-application of mind. The exemption from payment of 40% as the initial contribution towards the cost of the flat is not at all conditional. A bare reading of Resolution No.2 in the meeting held on 28.1.1979 will conclusively establish this fact. The question as to what was the necessity of demanding the payments and as to whether the payments had fallen due, in the sense that monies were to be paid to the Contractor in June 1984, has not been considered either by the Deputy Registrar or by the Divisional Joint Registrar.

       Thus, proceeding on the erroneous assumptions and without bearing in mind the gravity of the con- sequences of the resolution of expulsion and the caution sounded by this Court in considering the question of grant of approval to the resolution of expulsion, the Divisional Joint Registrar dismissed the petitioners appeal by his Order, dated 9th March, 1990.

       Section 35-Maharashtra Cooperative Societies Rules, 1961, Rule 29(1)-Purpose of notice under Rule 29 for adequate opportunity to be given to expelled member-Period of one month notice not binding-Allowed to express their views at a shorter notice -Counting of period from date of service of notice to member expelled. The whole purpose of the notice contemplated in Rule 29 is to give adequate opportunity to the member who is sought to be expelled on serious grounds such as persistent default, failure to comply with the provisions of the byelaws, bringing disrepute to the society or acting in manner detrimental to the interests of the society. The resolution based on any of these grounds casts a stigma on the member concerned. He is also disqualified from becoming a member of that society or for admission as a member of any other society for a period of one year from the date of expulsion. This results in serious consequences on the member concerned. The notice contemplated by Rule 29 is only to that member who is sought to be expelled. He had to show cause. In the instant case if, the petitioner was served with the notice, dated 18th September, 1986 on 23rd September, 1986, the meeting held on 19.10.1986 was held earlier than a period of one month from the date of service of the notice on the petitioner. Such a meeting held on 19.10.1986 was, therefore, held in violation of the mandatory provisions of sub-rule (1) of Rule 29 of the Co-operative Societies Rules, 1961 and would, be bad in law. It would, therefore, follow that any business transacted at such a meeting would be bad in law.

       Section 35-See Maharashtra Co-operative Society Rules, 1961, Rule 69.

       Sections 35, 64, 65 and 72-Validity of expulsion of member-When the grant of concessions to petitioner were not in any way related to his continuation as Secretary, expulsion on such ground is extraneous and irrelevant.

       Section 78-Maharashtra Cooperative Societies Rules, 1961, Rule 29-Validity of approval of resolution-Resolution of society expelling promoters and without appreciating earlier service and without responding his reply is based on erroneous assumptions of default and is liable to be dismissed.

       Rule 69-Maharashtra Cooperative Society Act, Section 35-Service of notice under Section 29 to member against whom resolution was passed-Notice prior to date of one month of meeting-Prior to one month holding of meeting illegal and transaction in meeting are not valid.- The whole purpose of the notice contemplated in Rule 29 is to give adequate opportunity to the member who is sought to be expelled on serious grounds such as persistent default, failure to comply with the provisions of the byelaws, bringing disrepute to the society or acting in manner detrimental to the interests of the society. The resolution based on any of these grounds castes a stigma on the member concerned. He is also disqualified from becoming a member of that society or for admission as a member of any other society for a period of one year from the date of expulsion. This results in serious consequences on the member concerned. The notice contemplated by Rule 29 is only to that member who is sought to be expelled. He has to show cause, the Court is, therefore, inclined to take the view that if, the petitioner was served with the notice dated 18th September, 1986 on 23rd September, 1986 the meeting held on 19.10.1986 was held earlier than a period of one month from the date of service of the notice on the petitioner. Such a meeting held on 19.10.1986 was, therefore, held in violation of the mandatory provisions of sub-rule (1) of Rule 29 of the Co-operative Societies Rules, 1961 and would, be bad in law, it would, therefore, follow that any business transacted at such a meeting would be bad in law.