2012 Supreme(Bom) 1550

In the High Court of Bombay at Nagpur
R.K. DESHPANDE
Sadashiv s/o Ganpatrao Mahajan
Versus
The Hon’ble Minister for Co-operation and Textile & Others
Writ Petition No.956 of 2011
Decided on : 16-08-2012
.

Headnote:MAHARASHTRA CO-OPERATIVE CREDIT SOCIETIES ACT, 1961 - Sections 2(7), 73(1-AB), 73-EA - Maharashtra Co- operative Societies Rules, 1961, Rule 58-A, Form M-20 - Term "office bearer". - Every member of Committee of Management or very Director of Primary Agricultural Co-op. Credit Society shall be "office bearer" within meaning of Section 73-EA(ii) of Act.

       MAHARASHTRA CO-OPERATIVE CREDIT SOCIETIES ACT, 1961 - Sections 2(13) and 78(1) - Removal of member of Committee - If a member of Committee is to be removed, requirement of prior consultation with Federal Society is mandatory.

       MAHARASHTRA CO-OPERATIVE CREDIT SOCIETIES ACT, 1961 - Section 73-EA - Applicability of. Section 73-EA of Act as introduced w.e.f. 29.10.2007, operates as and when situation or event covered by clause (11) of Section 73-EA of Act occurs.

       Section 73-EA was introduced on 29.10.2007. This case is concerned with a disqualification of an office hearer of a defaulting Primary Agricultural Co-operative Credit Society for being a Director of the District Central Co-operative Bank under clause (ii) of Section 73-EA. It does not admit to any distinction between the defaults committed prior or subsequent to the introduction of Section 73-EA.

       There is no question of prospectivity or retrospectivity in operation of the said provision. It operates as and when the situation or the event covered by clause (ii) occurs. If such situation or the event subsists on or before the date when a person is to be appointed or nominated or co-opted as a Director of the District Central Co-operative Bank or the State Co- operative Bank, then he will not be eligible for such appointment, nomination or co-option. If in spite of this fact he is appointed, nominated or co-opted, then he incurs a disqualification for being continued as a Director of the District Central Co-operative Bank or the State Co-operative Rank. The name of the respondent No. 4 was included in the list of validly nominated candidates for the election of the Director of the said Bank on 20.10.2007, i.e. before coming into force of Section 73-EA of the said Act and, therefore, the disqualification under clause (ii) therein was not attracted, is rejected. The default contemplated under clause (ii) of Section 73-EA, be construed as being in present, is rejected.

       MAHARASHTRA CO-OPERATIVE CREDIT SOCIETIES ACT, 1961 - Section 73-EA - Object of - Object of Section 73-EA of Act is to makeup losses, to get 100% financial assistance from Government of India for recouping losses and to appoint professional Directors on Board of Directors of District Central Coop. Banks and State Coop. Bank.

       MAHARASHTRA CO-OPERATIVE CREDIT SOCIETIES ACT, 1961 - Sections 73-EA and 78 - Removal of member of Committee - Where there was total failure in show cause notice to establish connection of member with disqualification alleged therefore it is a clear case of ’no notice’ and ’no hearing’.

       A due date for payment of loan by such Society can be determined only on the basis of the agreement or contract of the loan amount. Unless a reference is made in the show cause notice to any such agreement or contract giving the due date and the amount for repayment of loan, it was not possible for the respondent No. 4/objector, to find out as to whether there was a default in repayment of loan by such Society, to state whether the defaults alleged are non-existent or that they ever existed or that they do not justify the action proposed to be taken.

       There is a total failure in the show cause notice to establish connection of the respondent No. 4/objector with the disqualification alleged. These are all the factual aspects and an opportunity to raise a dispute in respect of it was required to be provided. In the absence of this, it is a clear case of ’no notice’ and ’no hearing’.

       MAHARASHTRA CO-OPERATIVE CREDIT SOCIETIES ACT, 1961 - Sections 73-EA and 78(1) - Show cause notice for incurring disqualification. Show cause notice, issued to a member of Committee sought to be removed on account of incurring disqualification, must state all material facts, particulars and provisions of law clearly constituting charge of disqualification.

       The intention to issue show cause notice is to furnish an effective opportunity to the person concerned to raise an objection or defence and to grant him a fair hearing in the matter.

       The person sought to be removed must know the case, which he has to meet, and he should be able to state that the grounds for proposed removal are non-existent or that they ever existed or that they do not justify the action proposed to be taken. The show cause notice, therefore, must state all the material facts, particulars and the provisions of law clearly constituting the charge of disqualification and establishing the connection of the pension sought to be removed with the ground of such removal on account of disqualification alleged.

       It cannot be the defence of the Authority acting under sub- section (1) of Section 78 of the said Act that the person removed on account of incurring of disqualification was aware of the material facts and particulars, as he himself is the Director/office bearer of the defaulting Primary Agricultural Co- operative Credit Society.

       MAHARASHTRA CO-OPERATIVE CREDIT SOCIETIES ACT, 1961 - Section 73-EA(ii) - Disqualification under clause (ii). - Where a member of Committee was disqualified under clause (ii) of Section 73-EA of Act therefore clearance of alleged outstanding dues by society have no effect of wiping out disqualification under Section 73-EA(ii) of Act.

       MAHARASHTRA CO-OPERATIVE CREDIT SOCIETIES ACT, 1961 - Section 73-EA(ii) - Expression "defaulting Primary Agricultural Cooperative Credit Society". Though expression "defaulting Primary Agricultural Cooperative Credit Society" is not defined any where either under Act or Rules, however it would mean a society which is committing defaults in making payment of loan on due dates.

       MAHARASHTRA CO-OPERATIVE CREDIT SOCIETIES ACT, 1961 - Sections 73-EA(ii) and 78(1) - Jurisdiction of Registrar - Registrar has jurisdiction under Section 78(1)of Act to remove a member of Committee of Management or Director of Society for incurring disqualification under Section 73-EA(ii) of Act.

       Once Section 73(1-AB) makes all the members of the Committee of the Primary Agricultural Co-operative Credit Society jointly and severally liable or responsible for all the acts and omissions, then there cannot be an intention of the Legislature to exclude some of those, who bear the conflicting interests and responsible for the acts of omission and commission detrimental to the interest of one of the two Banks specified therein, of which they are the members of the Managing Committee. Hence, the term ’office bearer’ in clause (ii) of section 73-EA will have to be read as a member of the Committee of the Primary Agricultural Co- operative Credit Society in tune with sub-section (1) of Section 78 of the said Act.

       It cannot be construed narrowly to exclude the members of the Committee, who are not the President, Vice-President, Chairman, Vice-Chairman, Secretary, Treasurer, etc. The argument that the Registrar has no jurisdiction under sub-section (1) of Section 78 of the said Act to remove a member of Committee or the Director of the Primary Agricultural Co-operative Credit Society for incurring disqualification under clause (ii) of Section 73-EA of the said Act, is, therefore, rejected and it is held that there is power to remove a member of the Committee of Management of the said Society for incurring such disqualification.

       MAHARASHTRA CO-OPERATIVE CREDIT SOCIETIES ACT, 1961 - Sections 73-EA(ii) and 78(1) - Term "office bearer". Term "office bearer" used in clause (ii) of Section 73-EA of Act to be construed as a member of Committee of Primary Agricultural Cooperative Credit Society in tune with Section 78(1) of Act.

       MAHARASHTRA CO-OPERATIVE CREDIT SOCIETIES ACT, 1961 - Section 78(1)(b) Second Proviso - Removal of member of Committee. If a member of Committee is to be removed, requirement of prior consultation under Second Proviso of Section 78(1)(b) of Act with Reserve Bank of India is not at all attracted.

       It is the ’Committee’ of the Federal Society, which is required to be consulted under sub-section (4) of Section 78 The requirement is not the meeting of minds of the members of the ’Committee of Management of Federal Society’ amongst themselves and with the consulting authority, culminating into the passing of resolution either one way or the other. The consulting body must keep in mind the object of consultation, its statutory duty and obligation as a body of expert and it cannot sit tight over the issue or leave it to be tackled by any individual ’officer’ of the Federal Society. Record must disclose such a resolution and in the absence of it, there cannot be the compliance of effective consultation. The simple communication from the Managing Director, a paid- employee, without disclosing any authority from the Committee of a Federal Society is not the compliance of the requirement of consultation. In the present case, all the material including the show cause notice and the reply along with the documents was forwarded to the Federal Society for consultation. It is not clear as to whether this entire material was placed before the ’Committee’ of the Federal Society and it has taken any decision one way or the other. It also does not disclose whether the matter was at all placed before the Committee or any resolution by the Federal Society taken in the matter of consultation. It is not clear as to whether the Managing Director was authorized by the Federal Society by its resolution to communicate such decision. Unless the record discloses the resolution by the members of the Managing Committee of the Federal Society with the Authority seeking consultation, it cannot be said that there was any effective consultation. The order of removal of the respondent No. 4 from the Director of the said Bank cannot, therefore, be sustained and it needs to be set aside for non-compliance of mandatory requirement of effective consultation with the Federal Society under sub-section (1) of Section 78 of the said Act.