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IN THE HIGH COURT OF BOMBAY
Lodha R.M. Bhosale D.B., JJ.
Salim Akbarali Nanji .... Petitioner.
Versus
Union of India others.... Respondents.
Writ Petition Nos. 1443 of 1995, 2229 786 of 1996 with 2492 of 2000, decided on 1-11-2002.
Advocates appeared :
Salim Nanji, in Writ Petition Nos. 1443/1995, 2229/96, 2492/2000 786/96, in person, for petitioner.
C.U. Singh with H.R. Gandhi, in W.P. No. 1443/1995, for respondent No. 12.
Virag Tulzapurkar with Jamshed Mistry, K.G. Munshi P.J. Ranga i/b. Cr. Bayley Co., in Writ Petition Nos. 1443/1995 2229/96, for respondent No. 3.
Suraj M. Shah with D.A. Dube, in W.P. 1443/1995, for respondent Nos. 1, 4 7, in W.P. No. 2229/96, for respondent Nos. 1, 4, 5, in W.P.2492/2000, for respondent Nos. 1, 5 to 7 in W. P. No. 786/96, for respondent Nos. 5 6.
R.S. Desai, A.G.P., in Writ Petition No. 1443/1995, for respondent Nos. 2, 6 9, in W.P. No. 2229/96, for respondent Nos. 2, 6, 7 10, in W.P. No. 2492/2000, for respondent Nos. 2, 8 9 in W. P. No. 786/96, for respondent No. 4.
I.M. Chagla, Sr.C. with Shyam Diwan Yash Kapadia, i/b. Mahimutra Co., in Writ Petition Nos. 1443/1995, 2492/2000, for respondent No. 11, in W.P. No. 2229/96, for respondent No. 9 in W. P. No. 786/96, for respondent No. 2.
Varghese Joseph, in Writ Petition No. 1443/1995, for respondent No. 13.
Virag Tulzapurkar with Jamshed Mistry, K.G. Munshi J.P. Ranga, in Writ Petition No. 2492/2000 in Writ Petition No. 786/96, for respondent No. 3.
Companies Act, 1956 - Sections 3, 565 and 566 - Word "company" - A group, assembly or association of persons - Consisting of 7 or more members - Capable of being registered - It includes a Cooperative Society registered under Societies Act or Multistate Act. - The definition of company under Section 3 of the Companies Act expressly provides that the definition will apply, where the context so requires, to a Company formed or registered under the Companies Act or existing company meaning thereby a company formed or registered under the previous Companies Acts. Respondent No. 11 is a Joint Stock Company within the meaning of Section 566 which on plain reading of section requires that it has a permanent paid-up or nominal share capital of fixed amount; that capital is divided into shares of fixed amount; and it is formed on the principle of having formed for its members and holders of those shares and no other persons. Respondent No. 10 satisfied all the above conditions and accordingly is a Joint Stock Company within the meaning of Section 566, on the date of application to the Registrar of Companies for the purpose of incorporation under Part IX. From the plain reading of Sections 565 and 566 it is clear that the expression "company" in Part IX is used in the sense of a group, assembly or association of persons which has been incorporated under the Act of Parliament or otherwise duly constituted according to law and consisting or seven or more members. The word "company occurring in Section 566 is not a company registered under the Companies Act. In Court s view it may include within its purview a Co-operative Society registered under the Societies Act or Multi-State Act.
Words and Phrases - Company - See Companies Act, 1956, Sections 3, 565 and 566.
Evidence Act, 1872 - Section 27 - Conscious possession. - Conscious possession cannot be made out from recovery of open space.
Multi-State Cooperative Societies Act, 1984 - Sections 14 and 17 (1) - Multi-State Cooperative Society - A corporate body - Cancellation of registration - Whole assets and liabilities of a Multi-State Cooperative Society transferred to another entity under Section 14 of Act - Registration of that Multi-State Cooperative Society stands cancelled - Deemed to have been ipso facto dissolved - Ceased to exist as a corporate body. - Where the whole of the assets and liabilities of a Multi-State Co-operative Society are transferred to another Multi-State Co-operative Society or to a Co-operative Society in accordance with the provisions of Section 14, the registration of the first mentioned Multi-State Co-operative Society stands cancelled and the society shall be deemed to have been dissolved and ceased to exist as a corporate body. The plain intendment of the Multi-State Act is that when the whole of the assets or liabilities of a Multi-State Co-operative Society are transferred to another entity, the registration of that Multi-State Society stands cancelled and the society shall be deemed to have been ipso facto dissolved and shall cease to exist as corporate body. This principle can be taken recourse to, to hold that the existence of respondent No. 10 society stood dissolved on its conversion under Part IX of the Companies Act as Joint Stock Banking Company
Multi-State Cooperative Societies Act, 1984 - Sections 99 and 102 - Companies Act, 1956, Part IX - Multi-State Cooperative Society - Conversion of into a banking company - Permissibility of - Notification under Section 99 issued by Central Government - Exempting a Multi- State Cooperative Society from rigour of Section 102 (2) of Societies Act - Multi-State Society can be registered under Part IX of Companies Act - No bar in applying provisions of Companies Act for registering Multi-State Cooperative Society as a banking company - However, Central Government expected to record reasons for giving exemption. - Careful reading of Sections 99 and 102 of the Multi-State Co-operative Societies Act shows that as long as the Society is operating under the Multi- State Co-operative Societies Act, the provisions of the Companies Act would not apply to the Multi-State Society. However, Section 102 appears to have been enacted only as a clarification or by way of abundant caution, since certain features of a co-operative society resemble a Company and, therefore, the Legislature in order to clarify, or by way of abundant caution, enacted Section 102. It is clear that bar imposed under sub-section (2) of Section 102 in application of the provisions of the Companies Act stands lifted on issuance of notification under Section 99, by the Central Government, exempting any Multi-State Co-operative Society from any of the requirements of the Multi-State Co- operative Societies Act relating to registration and resultantly multi-state society could be registered under Part IX of the Companies Act. There is no legal impediment on the Central Government from exempting a co-operative society from the rigour of Section 102 by issuing exemption under Section 99 of the Multi-State Co-operative Societies Act. The Central Government. however, is expected to record, its reasons for giving exemption by general or special order to that effect. The notification dated 30th August, 1995 in the present case does record such reasons. In view thereof, there was no bar in applying the provisions of the Companies Act and Part IX in particular for registering respondent No. 10 as banking company.
BHOSALE D.B., J.:---In this group of writ petitions, the principal question that arises for our consideration is as to whether Development Co-operative Bank Ltd. (respondent No. 10) initially registered under the Maharashtra Co-operative Societies Act, 1960 (for short, Societies Act) and which is deemed to be registered under the Multi-State Co-operative Societies Act, 1984 (for short, Multi-State Act) could be converted into a joint stock (banking) company under the provisions of Part IX of the Companies Act, 1956 (for short, Companies Act).
2. The petitioner, in all the four writ petitions, is common. The facts giving rise to these writ petitions are similar and the issues involved are also common, hence all the writ petitions are being disposed of by this common judgment.
3. The principal question that we require to decide in these writ petitions is mainly raised in Writ Petition No. 1443 of 1995 and our decision in this writ petition will decide the fate of other writ petitions also, hence we propose to deal with the said writ petition in detail.
4. Petitioner-Salim Akbarali Nanji appeared in person and efficiently argued all writ petitions at length.
5. The factual matrix giving rise to the first writ petition (Writ Petition No. 1443 of 1995) reveals as follows:
(a) Initially this writ petition was filed by three petitioners, viz. Development Co-operative Bank Employees Union through its General Secretary, Shri Azim Akbarali Charania and Shri Salim Akbarali Nanji as petitioner Nos. 1, 2 and 3. Petitioner Nos. 1 and 2, however, were transposed as respondent Nos. 12 and 13 respectively by order of this Court. Original petitioner No. 3 who will be hereinafter referred to as petitioner, alone contested present writ petition.
(b) Respondent Nos. 1 and 2 are the Union of India and State of Maharashtra respectively. Respondent No. 3 is a statutory body registered under the Reserve Bank of India Act, 1934 (for short, "R.B.I. Act") which is having powers, inter alia, of issuing licences to banks and have over all supervision over the said banks. Respondent No. 4 is the Registrar functioning under the Multi-State Act who is empowered under section 8 to issue certificate of registration under the said Act. Respondent No. 5 is the Registrar of Companies appointed under the Companies Act and who is empowered to issue certificate of incorporation to a company. Respondent Nos. 6 and 7 are authorities functioning under the provisions of the Societies Act.
(c) The Ismailia Primary Credit Society and Masalawala Primary Credit Society were two independent Primary Co-operative Credit Societies which were managed by Ismailia community. They were registered under the Bombay Co-operative Societies Act, 1925 which was subsequently replaced by the Societies Act, 1960. These two credit societies attained the status of Co-operative Banks, viz. Ismail Co-operative Bank Ltd. and The Masalawala Co-operative Bank Ltd. in 1951 and 1934-35 respectively. On 30th June, 1981 both these Co-operative Banks were amalgamated under section 17 of the Societies Act on a scheme of amalgamation. The amalgamated bank was known as Development Co-operative Bank Ltd. (respondent No. 10).
(d) The Multi-State Act, came into force on 16th September, 1985 and as a result of which respondent No. 10 was deemed to be registered under the provisions of the said Act as the area of its operation was extended to Maharashtra and Andhra Pradesh. Respondent No. 11 bank is the Development Credit Bank Ltd. a Joint Stock (Banking) Company registered under the Companies Act and has been converted from respondent No. 10 Co-operative Bank.
(e) The petitioner was a member/shareholder of respondent No. 10 bank and is now a share holder of respondent No. 11 banking company.
(f) It is the case of the petitioner that when he came to know that respondent No. 10 had an intention of converting itself into a Joint Stock Banking Company, he addressed a letter to respondent No. 3 expressing t
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