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In the High Court of Bombay at Nagpur
B.R. GAVAI & A.P. BHANGALE, JJ.
Sadashiv s/o. Ganpatrao Mahajan & Others
Versus
Hon'ble Minister for Co-operation and Textile & Others
LETTERS PATENT APPEAL NO.389 OF 2012 IN WRIT PETITION NO.956 OF 2011 & COUNTER APPEAL ST.NO.10752 WITH LETTERS PATENT APPEAL NO.390 OF 2012 IN WRIT PETITION NO.1743 OF 2011 & COUNTER APPEAL NO.10753 WITH LETTERS PATENT APPEAL NO.391 OF 2012 IN WRIT PETITION NO.2149 OF 2011 WITH LETTERS PATENT APPEAL NO.392 OF 2012 IN WRIT PETITION NO.1742 OF 2011 WITH LETTERS PATENT APPEAL NO.393 OF 2012 IN WRIT PETITION NO.2150 OF 2011 WITH LETTERS PATENT APPEAL NO.394 OF 2012 IN WRIT PETITION NO.957 OF 2011
Decided on : 19-11-2012
Disqualification of Directors of Co-operative Society without prior consultation with Federal Society improper and not sustainable. - Insofar as effective consultation is concerned, the single Judge has basically gone on the premise that consultation with the Federal Society would mean consultation with the Board of Directors of the Federal Society. The single Judge has held that consultation would not mean consultation with the Managing Director, who is not elected Director of the Federal Society. The single Judge has held that, for an effective consultation, it should be shown that entire material was placed before the Board of Directors of the Federal Society. It has been further held that it must be shown that the Board of Directors have applied their mind and thereafter, have come to some conclusion either way, before giving their opinion to the competent Authority. The document which is sought to be relied on behalf of the appellants in support of the contention that there was effective consultation. The said document, which is a communication date 7.5.2010 addressed by the Managing Director of the Federal Society, states that the Authority concerned, after considering the replies of the concerned Directors, should take action in accordance with the provisions of the Maharashtra Co-operative Societies Act. On perusal of the said communication itself, it would appear that there is even not a whisper as to whether the said material was placed before the Managing Committee of the Federal Society and as to whether the Managing Committee of the Federal Society had applied its mind and arrived at any decision. In that view of the matter, single Judge has erred in coming to a finding that there was no effective consultation.
Maharashtra Co-operative Societies Act, 1960 - Sections 73 and 78 - Disqualification of directors.
Non-compliance of principles of natural justice, renders disqualification of Directors of Society unsustainable. - It is a settled principle of law that the principles of natural justice cannot be put in any straitjacket formula. What should be the principles of natural justice in the particular factual situation would depend upon the facts of each case. The single Judge analysing the scope of Section 73-EA of the Act found that the show-cause notices which were given to the respondents/Directors were not sufficient so as to enable them to meet the allegations made against them. The single Judge, while arriving at a finding, has also taken into consideration the gravity of the resultant consequences which would follow upon the action being taken against the Directors under the provisions of Section 78 read with Section 73(1)-AE of the said Act. The single Judge has erred in holding that the show-cause notices which were issued to the respondents/Directors herein were not such which would enable them to effectively answer the allegations made against them. Insofar as the contention of the appellants regarding prejudice being caused to them is concerned, the reasoning given by the single Judge that, in view of gravity of the resultant consequences, a stricter adherence to the principles of natural justice was required, can be in no way faulted with.
(B.R. Gavai, J.)
1. Admit. By consent, taken up for final hearing.
2. The appellants/Original Writ Petitioners have approached this Court by way of present intra Court appeals being aggrieved by the part of the findings, as recorded by the learned Single Judge of this Court in Judgment and Order, dated 16.8.2012 passed in Writ Petition No.956 of 2011 along with companion petitions.
2. The facts, in brief, giving rise to the present appeals, are as under:
Respondent no.2/Divisional Joint Registrar, Co-operative Societies, Amravati, on the basis of the report of NABARD and the subsequent report by the District Deputy Registrar, Co-operative Societies, Yavatmal, had issued show cause notices on 26.2.2012 to fourteen Directors of respondent no.3/Yavatmal District Central Cooperative Bank, who are respondent no.4 respectively in each of these appeals, calling upon then to show cause as to why they should not be held to be 'disqualified' under the provisions of Section 73-EA of the Maharashtra Co-operative Societies Act, 1960 (hereinafter referred to as “the Act“ for the sake of brevity). The basic ground raised in the said show cause notices was that the said Directors of respondent no.3 were the members of Primary Agricultural Co-operative Credit Societies, which Societies were defaulters and as such, they had incurred disqualification under the provisions of Section 73A (ii) of the said Act. All of the said Directors submitted their replies to the said show cause notices. The main defence raised in the reply to the show cause notices was that the show cause notices were vague. It was also contended that the member of the Managing Committee of the Primary Agricultural Co-operative Credit Society cannot be termed to be 'Office bearers of the said Society'. It was further submitted that the said Primary Societies have already paid the outstanding amounts. The Divisional Joint Registrar/respondent no.2, after considering the submissions made on behalf of the said Directors, held that the said Directors had incurred disqualification as provided under Section 73-EA of the said Act. Being aggrieved thereby, the said Directors filed statutory appeals before the State Government. The Hon'ble Minister for Co-operation, Maharashtra State, Mantralaya, Mumbai, by Judgment and Order dated 29th September, 2010 allowed the appeals. The appeals were, inter alia, allowed on the following grounds:
a) That the Directors were elected prior to the date on which Section 73-EA of the Act came into operation and as such, disqualification would not incur retrospectively.
b) The replies filed by the petitioners were not sent by the Divisional Joint Registrar to the Federal Society and as such, there was no effective consultation.
c) The Primary Societies had already repaid the outstanding amounts and as such, disqualification was on a non-existent ground.
d) The Divisional Joint Registrar had not consulted the Reserve Bank of India and as such, the order passed by the Divisional Joint Registrar was not in consonance with the provisions of Section 78 of the said Act.
e) That the members of the Primary Agricultural Co-operative Credit Society could not be termed as 'Office bearers'.
3. Being aggrieved thereby, the present appellants filed Writ Petitions before this Court. The learned Single Judge, while dismissing the petitions, upheld the findings of the Hon'ble Minister to the effect that there was no effective consultation with the Federal Society and therefore, the order passed by the Divisional Joint Registrar on this count was not sustainable. However, the learned Single Judge reversed the findings of the Hon'ble Minister to the effect that the said Directors were not the Office bearers of the Society and that the provisions of Section 73-EA could not be made retrospectively applicable to the Directors and that, since the outstanding amount was already repaid, the disqualification does not stand. The learned Single Judge, however, found that
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