Disputes related to the election of officers in a multi-State co-operative society should be referred to arbitration under section 84 of the Multi State Co-operative Societies Act, 2002.

JUDGMENT :

R.D. Dhanuka, J.

1. By this petition filed under Article 226 of the Constitution of India, the petitioner has impugned the orders dated 19th December, 2019 and 23rd September, 2020 passed by the Central Registrar of Cooperative Societies, Government of India. All the respondents are served. None appeared for the respondent nos. 4 and 5 though served when the matter was called out.

2. Sometime in the year 2012, the petitioner was elected as a director of the respondent no.3 bank. The chairman of the respondent no.3 had issued a show cause notice on 12th January, 2013 alleging that the petitioner was a defaulter and accordingly he would be dismissed under bye-law 51 from the respondent no.3 bank. The petitioner was thereafter removed as a director on the ground that as per the RBIs inspection report dated 24th December, 2012, he was a defaulter. Such action on the part of the chairman of the respondent no.3 was challenged by filing arbitration proceedings by the petitioner on 4th August, 2013 under section 84 of the Multi State Co-operative Societies Act, 2002 (for short the said MSCS Act).

3. The learned arbitrator made an award on 4th August, 2013 declaring that the petitioner was not a defaulter and was pleased to set aside the order of dismissal of the petitioner. The said award made by the learned arbitrator was not challenged by the bank and attained finality. The petitioner was thereafter elected as a chairman on 16th May, 2016. It appears that on 5th June, 2017, the Reserve Bank of India addressed a letter to the respondent no.2 stating that the complaint had been received against the petitioner pursuant to which the Reserve Bank of India had carried out an enquiry which allegedly indicates that the accounts of the petitioner had been repaid out of fresh sanctions to two other accounts/parties. The Reserve Bank of India accordingly requested the Central Registrar to review the election of the petitioner as a director and chairman of the respondent no.3 bank.

4. Pursuant to the said request made by the Reserve Bank of India on 5th June, 2017, the respondent no.2 issued a show cause notice on 1st August, 2017 to the petitioner to show cause as to why the petitioner should not be considered to be in violation of section 29(d) of the Act and why the bank should not be directed to invoke the provision of bye-law 51(5) of the respondent no.3 bank. The said show cause notice was replied by the petitioner on 10th August, 2017. The petitioner pointed out that vide arbitration award dated 4th August, 2013, the arbitrator had declared that these accounts were not NPA and that the allegations of RBI were factually incorrect.

5. On 16th May, 2018, the respondent no.2 observed that the issues involved a lot of complexities which required technical examination including expert opinion and that as such further examination thereof would take time. The respondent no.3 accordingly passed an ex-parte order restraining the petitioner from exercising the powers of chairman/ director including attending any board meetings in the capacity of chairman/director of the bank till further orders.

6. This Court passed an order on 16th May, 2018 in the writ petition bearing no.2367 of 2018 filed by the petitioner impugning the said order dated 16th May, 2018 and was pleased to set aside the order dated 16th May, 2018. By an order dated 5th February, 2019, this Court was pleased to set aside the order dated 16th May, 2018 by holding that any such order had to be supported by statutory provisions. This court observed that there was no statutory provision to pass such order dated 16th May, 2018 by the respondent no.2. The said order dated 16th May, 2018 as well as order dated 5th February, 2019 were not impugned by the respondent no.3 bank or by the respondent no.2 through the State Government.

7. A perusal of the record indicates that on 30th September, 2019, the petitioner has been elected to the board of directors and thereafter as a chairman by t