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1998 Supreme(Bom) 667
IN THE HIGH COURT OF BOMBAY
A.V. Savant, J.
Baburao L. Patil and others ..... Petitioners.
Versus
Dashrath R. Patil others..... Respondents.
Writ Petition Nos. 4200 4201 of 1998, decided on 11-8-1998.
Advocates appeared :
V.A. Thorat with S.S. Patwardhan, for the petitioners in Writ Petition No. 4200 and 4201 of 1998.
K.K. Singhvi with A.A.Kumbhakoni, for respondent Nos. 1 to 972 in Writ Petition No. 4200 and for 1 to 82 in Writ Petition No. 4201 of 1998.
U.G. Kerkar, A.G.P., for respondent Nos. 973 to 975 in Writ Petition No 4200 and for 83 to 85 in Writ Petition No. 4201 of 1998.
The expulsion of members from a co-operative society must be carried out in accordance with the procedure prescribed by law and the reasons for expulsion must be valid.
Headnote:
CO-OPERATIVE SOCIETIES - EXPULSION OF MEMBERS - SECTION 35 OF THE MAHARASHTRA CO-OPERATIVE SOCIETIES ACT, 1960 - PROCEDURE - INTERPRETATION - COURT'S ANALYSIS AND CONCLUSION - RATIO DECIDENDI - FINAL DECISION - MAIN LEGAL POINT - CATEGORY - SUB-CATEGORY
Fact of the Case:
The case involved the expulsion of 1991 members of the Gadhinglaj Sahakari Sakhar Karkhana, a Co-operative Sugar Factory, under section 35 of the Maharashtra Co-operative Societies Act, 1960. The expulsion was challenged by the members on the grounds that the procedure followed was not in accordance with the law and that the reasons for expulsion were not valid.
Finding of the Court:
The court found that the procedure followed for the expulsion of the members was not in accordance with the law. The show cause notices issued to the members did not specify the grounds for expulsion with sufficient clarity, and the general body meeting held to consider the expulsion was conducted in a hurried and improper manner. The court also found that the reasons for expulsion were not valid, as they were based on technical defects in the members' applications for membership rather than on any acts that were detrimental to the interests of the society.
Issues: 1. Whether the procedure followed for the expulsion of the members was in accordance with the law. 2. Whether the reasons for expulsion were valid.
Ratio Decidendi: The court held that the procedure followed for the expulsion of the members was not in accordance with the law, as it did not comply with the requirements of section 35 of the Maharashtra Co-operative Societies Act, 1960 and the relevant rules. The court also held that the reasons for expulsion were not valid, as they were based on technical defects in the members' applications for membership rather than on any acts that were detrimental to the interests of the society.
Final Decision: The court quashed the expulsion of the members and directed the society to reinstate them as members.
By consent, both the petitions are taken up for hearing together. Heard all the learned Counsel at length; Shri Thorat for the petitioners; Shri Singhvi for the Sugar Factory and Shri Kerkar A.G.P. for the Divisional Joint Registrar, and the Minister for Co-operation.
2.These two petitions have been filed by the members of the Gadhinglaj Sahakari Sakhar Karkhana, at Gadhinglaj, District Kolhapur (for short, 'Sugar Factory'), which is a Co-operative Sugar Factory and a Society specified as per the provisions of section 73-G of the Maharashtra Co-operative Societies Act, 1960 (for short, "the Act"). The Sugar Factory is respondent No. 974 in Writ Petition No. 4200 of 1998 and it is respondent No. 84 in Writ Petition No. 4201 of 1998. Under the impugned order, expulsion of as many as 1991 members shareholders of the said Sugar Factory which has a total of about 9000 members, has been upheld by the Minister for Co-operation, Government of Maharashtra. It is common ground before me that the election to the Managing Committee of the said Sugar Factory is to be held soon this year.
3.As far back as on 26th March 1993, 2888 persons were enrolled by the said Sugar Factory as its members after their applications were scrutinised by the Committee. Out of the said 2888 members, cyclostyled notices have been issued to 2102 members calling upon them to show cause against their proposed expulsion. The cyclostyled show-cause notices have been issued on 20th January 1997. What was brought to the notice of the member proposed to be expelled was that he was enrolled as a producer member of the sugar factory under Resolution No. 11 passed in the meeting of the Board of Directors held on 26th March, 1993. However, as per Bye-law No. 18 of he sugar factory, it was necessary for the member to have complied with certain requirements. It was, however, found that the member had not complied with one or more of the following five requirements namely (i) no land held by him; (ii) insufficient sugarcane land held by him; (iii) land held was in the name of some other person; (iv) no land was under cultivation of sugarcane and (v) there was some scratching and overwriting in the 7/12 extracts annexed to the application. There is a tickmark against the relevant objection in the show cause notice sent to each member.
4.It is common ground that the action of expulsion was taken under section 35 of the Maharashtra Co-operative Societies Act, 1960 which deals with "Expulsion of Members." The said section has been construed by this Court repeatedly. It contains a very drastic provision. Resolution of expulsion has to be passed by a majority of not less than ¾th of the members who were entitled to vote and were present at the General Body meeting held for the purpose of expelling a member "for acts which are detrimental to the interest or proper working of the society." The proviso to sub-section (1) of section 35 requires that before a resolution of expelling a member is passed, the member concerned must be given a opportunity of representing his case to the general body and no resolution is effectively unless it is approved by the Registrar.
5.Rule 28 of the Maharashtra Co-operative Societies Rules, 1961 deals with the grounds on which a member can be expelled such as (i) persistent defaults in payment of dues (ii) failing to comply with the provisions of the Bye-laws regarding sale of his produce to the society; (iii) failure to comply with the provisions of Bye-laws regarding other matters in connection with his dealings with the society; (iv) bringing disrepute to the society and (v) doing acts detrimental to the interest or proper working of the society. Rule 29 of the said rules deals with the procedure for expulsion of a member. It ensures that there is a proper compliance with the principles of 'audi alteram partem' and the meeting has to be held not earlier than a period of one month from the date of such notice. At such a
