2007 Supreme(Bom) 1346

IN THE HIGH COURT OF BOMBAY
S. B. MHASE & D.G.KARNIK,JJ.
Mr. S. M. Kamble -Petitioners.
versus
Jt. Registrar, Co-operative - Respondents.
WRIT PETITION NO. 2801 OF 2007.
Decided on: SEPTEMBER 19, 2007.

Headnote:Maharashtra Co-operative Societies Act, 1960 - Section 35-Co-operative society- Membership of-Expelling of member from society-No opportunity of hearing afforded to expelled member-Not given an opportunity to represent his case in meeting-No show cause notice issued to member-Meeting convened in violation of bye-laws of society-All resolutions including resolution of expulsion of members illegal.-In the present case aforesaid conditions were not satisfied. Our attention was invited to the minutes on the general body meeting held on 17th March, 2007. From the said minutes it appears that 14 members who were present at the place of the meeting were prevented from entering the meeting shall on the ground that they had already ceased to be the members. Out of 34 other members who were present 19 insisted that those 14 members should be allowed to participate in the meeting but it was not agreed by the Administrator. Therefore 19 members staged a walk out, as holding the meeting would be illegal. 12 members who were to be expelled in the meeting do not appear to have been given an opportunity of hearing and representing their case in the meeting. In fact there is no material on record to show that even a simple notice to show-cause against their expulsion was given to them. The meeting was convened on 10th March, 2007. It was not in accordance with the bye-laws of the society and notice of the meting required to be given as per Rule No. 60(11) was of a period shorter than the period prescribed under the bye-laws of the society. The meeting of the general body was thus not convened by a valid notice and all the resolutions including the resolution of the expulsion of 12 members are therefore illegal.

       Maharashtra Co-operative Societies Act, 1960 - Section 25 - Co-operative society - Membership of - Ineligibility for - Members cannot automatically ceased to be members - Merely in ipse dixit of Administrator that they not residing in State of Maharashtra - Administrator had no power to unilaterally declare that members being disqualified ipso facto ceased to be a member. - Section 25 provides that a person ceases to be a member of the society on his resignation being accepted or on his transfer of the whole share or interest in the society to another member or on his death or on his removal or expulsion from the society. Admittedly none of the aforesaid things had happened. Therefore, 27 members could not have automatically ceased to be the members, merely on the ipse dixit of the Administrator that they were not residing in the State of Maharashtra for the required period of 15 years or more and therefore they were not eligible to be the members. No enquiry was held, no notice was issued and no opportunity of hearing was given to the 27 members before the Administrator declared that they had ceased to be the members. The CIDCO also while withdrawing the "No Objection Certificate" did not hold any enquiry but had merely replied upon the assertion of the Administrator that 27 members were not eligible to be the members. In fact the CIDCO has made its position safe by saying that it will not be responsible for any dispute that may arise between the society and its members regarding cessation of their membership. When the matter was heard for two sittings yesterday and in the morning sitting today, AGP, Mr. Sonawane could not point out any provision either in the Act or the Rules or Bye-laws of the society about the automatic cessation of membership other than Section 25 of the Act. In Court’s view therefore by mere ipse dixit of the Administrator that 27 members were ineligible and ceased to be the members of the society cannot be accepted. It is one thing to say that a person is not eligible and therefore not admit him as a member and quite another to say that having been admitted he ceases to be member being ineligible. In the latter case only course to terminate his membership against his wish is to expel him in accordance with the procedure prescribed by the Act. Rules and the Bye-laws. The Administrator had no power to unilaterally declare that 27 members, or for that matter any member, being disqualified has ipso facto ceased to be a member.

       Maharashtra Co-operative Societies Act, 1960 - Section 35 - Co-operative society - Member of - Expulsion of from society - A member cannot be expelled merely on fanciful grounds - Can be expelled for his acts detrimental to interest or proper working of society. - Regarding expulsion of 12 members :

       12 members were purportedly removed for the alleged breaches committed by them. Section 35 of the Act which provides for the expulsion of members, reads thus :

       "Expulsion of members. - A society may, by resolution passed by a majority of not less than three-fourth of the members entitled to vote who are present at a general meeting held for the purpose expel a member for acts which are detrimental to the interest or proper working of the society;

       Provided that, no resolution shall be valid, unless the member concerned is given opportunity of representing his case to the general body and no resolution shall be effective unless it is approved by the Registrar.

       No member of a society who has been expelled under the foregoing sub-section shall be eligible for re-admission as 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 such expulsion;

       Provided that, the Registrar may, on an application by the society and in special circumstances, sanction the re-admission or admission, within the said period, of any such member as a member of the said society or of any other society, as the case may be.’’

       In Court’s opinion, therefore, for expelling a member, the following conditions must be fulfilled.

       (i) The society is required to issue notice of the proposed expulsion of the member to enable him to show cause why he should not be expelled.

       (ii) The member concerned would be entitled to be heard and must be given an opportunity of representing his case to the general body meeting in which the resolution proposing the expulsion is proposed.

       (iii) The resolution of expulsion must be passed by a majority of not less than three-fourths of the members entitled to vote who are present at a general body meeting.

       (iv) A member cannot be expelled merely on fanciful grounds, and can be expelled for acts which are detrimental to the interest or proper working of the society.

       (v) A resolution of expulsion passed in the general body meeting shall not be effective unless it is approved by the Registrar.

       [Mr. S.M. Kamble and others v. The Joint Registrar, Co-operative, Soci

       eties, CIDCO, Navi Mumbai and others, 2008 (1) All MR 692 at pp. 695, 696 (Bom) : 2008 (1) Bom CR 695 : 2008 (1) AIR Bom R 274].

       Maharashtra Co-operative Societies Act, 1960 - Section 78 - Co-operative society - Administrator of - Powers of - Administrator appointed for holding elections and to constitute a proper managing committee - Administrator has no power to take policy decision in respect of disposal of property of society - Also not empowered to enroll new members and take policy decision regarding alteration of composition and capital of society. - Admission of new members by the Administrator.

       In K. Shantaraj v. M.L. Nagaraja, AIR 1995 SC 2925, the Supreme Court, while interpreting the provisions of Karnataka Co-operative Societies Act, 1959 has held that the Administrator has no power to enroll the new members; he has only power to organise the election in accordance with the law, and the bye-laws, of the society. This decision was followed and the ratio thereof was re-affirmed by the Supreme Court in Joint Registrar of Co-operative Societies, Kerala v. T.A. Kuttappan and others, reported in (2000) 6 SCC 127. Therein after considering the provisions of the Karnataka Co-operative Societies Act, 1959 as well as the Kerala Co-operative Societies Act, 1969 the Supreme Court re-iterated the position that the Administrator or the Committee of Management appointed (by the Registrar) to administer the society while the regular managing committee is under suspension does not have the power to enroll new members. Enrollment of new members would involve the alteration or the composition of the society itself and such a power should be exercised by an elected committee rather than by an Administrator or a committee appointed by the Registrar while the regular management committee is under suspension.

       Section 32(4) of the Kerala Co-operative Societies Act, 1969 is pari materia with Section 78(2) of the Maharashtra Co-operative Societies Act, 1960. In Court’s view even in respect of the co-operative societies governed by the Maharashtra Act of 1960 the Administrator appointed by the Registrar under Section 78 should not ordinarily enroll new members and he is not expected to take any policy decision which would involve the alternation of composition and capital of the society. In the circumstances, the admission of the new members by the Administrator was beyond his powers and illegal.

       Maharashtra Co-operative Societies Act, 1960 - Section 78 - Co-operative society - Powers of Administrator - Administrator appointed to constitute a proper Managing Committee and to conduct elections of committee - Policy decision regarding disposal of property of society cannot be taken by Administrator - Administrator has no power to enroll new members - Cannot change composition and capital of society. - In respect of the co-operative societies governed by the Maharashtra Act of 1960 the administrator appointed by the Registrar under Section 78 should not ordinarily enroll new members and he is not expected to take any policy decision which would involve the alteration of composition and capital of the society. In the circumstances, the admission of the new members by the Administrator was beyond his powers and illegal.