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Madurai Bench of Madras High Court
T.S. SIVAGNANAM, J.
M. Marimuthu
Versus
The Regional Joint Registrar of Cooperative Societies & Others
W.P.(MD) Nos.2875, 2680 & 3523 of 2014 & M.P.(MD) Nos.1, 1 & 1 of 2014
Decided on: 14-07-2014
Supersession - Cooperative Society - Tamil Nadu Co-operative Societies Act, 1983, Section 33(14), Section 33(15), Section 88(1) - The impugned orders, dated 10.02.2014 and 24.02.2014, passed by the first respondent, are set aside and the meeting convened on 05.02.2014 by the Sub Registrar of Cooperative Societies, Pudukkottai, at the instance of the second respondent is declared as illegal and non-est in law. Further, the elected Board shall stand restored and the petitioner shall convene the first Board meeting within a period of seven days from the date of receipt of a copy of this order and thereafter they shall proceed in accordance with law. Consequently, connected miscellaneous petitions are closed. No costs.
Fact of the Case:
The petitioner, President of the Board of Directors of the Pudukkottai District Education Department Employees Cooperative Thrift and Credit Society, challenged the supersession of the Society and the procedure adopted in the decision-making process. The petitioner was elected as President along with ten Directors and assumed the management of the Society. The Regional Joint Registrar of Cooperative Societies issued a notice calling upon the petitioner and the other Board of Directors to show cause as to why the elected Board should not be superseded.
Finding of the Court:
The Court found that the notice convening the special meeting was illegal, the decision taken in the special meeting was illegal, and the impugned notice proposing supersession was unsustainable in law and vitiated. The Court also found that the impugned proceedings were in violation of the principles of natural justice, vitiated on account of non-application of mind, and suffered from a total lack of jurisdiction. The Court set aside the impugned orders and declared the meeting convened on 05.02.2014 as illegal and non-est in law. The elected Board was restored, and the petitioner was directed to convene the first Board meeting within seven days.
Issues: The issues included the legality of the notice convening the special meeting, the validity of the decision taken in the special meeting, the sustainability of the notice proposing supersession, compliance with the principles of natural justice, and the consultation with the financing bank before passing the order of supersession.
Ratio Decidendi: The Court held that the notice convening the special meeting was illegal, the decision taken in the special meeting was illegal, and the impugned notice proposing supersession was unsustainable in law and vitiated. The Court also found that the impugned proceedings were in violation of the principles of natural justice, vitiated on account of non-application of mind, and suffered from a total lack of jurisdiction.
Final Decision: The impugned orders, dated 10.02.2014 and 24.02.2014, passed by the first respondent, are set aside, and the elected Board shall stand restored. The petitioner shall convene the first Board meeting within a period of seven days from the date of receipt of a copy of this order and proceed in accordance with the law.
1. The petitioner in all these three writ petitions is one Mr. M. Marimuthu, President of the Board of Directors of the Pudukkottai District Education Department Employees Cooperative Thrift and Credit Society (since superseded), Santhanathapuram, Pudukkottai District.
2. In W.P.(MD) No.2680 of 2014, the petitioner seeks for issuance of a writ of certiorari to quash the notice, dated 10.02.2014, issued by the first respondent Regional Joint Registrar of Cooperative Societies, Santhanathapuram, Pudukkottai District, calling upon the petitioner and other Board of Directors to show cause, within a period of seven days, as to why the Pudukkottai District Education Department Employees Cooperative Thrift and Credit Society (herein after it may be referred to as 'the Society') should not be superseded.
3. In W.P.(MD) No.2875 of 2014, the petitioner seeks for issuance of a writ of declaration to declare that the meeting convened by the third respondent Sub Registrar of Cooperative Societies, on 05.02.2014, pursuant to the directions given by the second respondent Deputy Registrar of Cooperative Societies, as illegal and non-est in law.
4. In W.P.(MD) No.3523 of 2014, the petitioner seeks for issuance of a writ of certiorari to quash the order, dated 24.02.2014, passed by the respondent Regional Joint Registrar of Cooperative Societies, superseding the Society, by exercising the power conferred under Section 88(2) of the Tamil Nadu Co-operative Societies Act, 1983 (herein after it may be referred to as 'the Act') and appointing an Administrator to administer the affairs of the Society.
5. Though three writ petitions have been filed, the petitioner essentially challenges the supersession of the Society and the procedure adopted in the decision making process. The pleadings are identical in all the three writ petitions except for the grounds of challenge in each of the writ petitions. Therefore, this Court would proceed to refer the facts as averred in W.P. (MD) No.3523 of 2014.
6. The petitioner was elected as a President of the Society along with ten Directors and assumed the management of the Society on 09.05.2013. It is stated that till 03.01.2014, the Society has granted loans to it's members to the tune of Rs.219.00 Lakhs and recovered dues to the tune of Rs.234.00 Lakhs. Further, it is stated that there are 112 newly enrolled members and collected Rs.1.46 Lakhs as share capital and Rs.2.46 Lakhs as thrift deposits. During the six month period, 12 Board Meetings were convened and one General Body Meeting was held on 20.01.2013, in which the Society declared 14% dividend to the members and 14% interest to the thrift deposits of the members. Therefore, it is claimed that within a short span of time, the elected Board of Directors have discharged their duties efficiently for the well-being of the Society.
7. Whileso, a notice was issued, on 10.02.2014, by the Regional Joint Registrar of Cooperative Societies, under Section 88(1) of the Act, calling upon the petitioner and the other Board of Directors to show cause as to why the elected Board should not be superseded. This show cause notice is the subject matter of challenge in W.P.(MD) No.2680 of 2014. In the said show cause notice it is alleged that the petitioner, being the sole signatory of the Cheques, has drawn a sum of Rs.9,00,000/- from the Bank and remitted the money back into the Bank on 04.09.2013 and 05.09.2013 and in this regard an enquiry was ordered under Section 81 of the Act. A report has been submitted by the Deputy Registrar of Cooperative Societies, Pudukkottai, recommending action against the petitioner and the petitioner has also explained the transactions by stating that the amount was drawn to disburse the sanctioned loan amount to the members, as there was a delay in disbursement of funds by the Pudukkottai Central Cooperative Bank, the lone financing Bank of the Society, and after it was pointed out that the funds of the Society should not be utilized
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