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MADHYA PRADESH HIGH COURT AT GWALIOR BENCH
Sujoy Paul, J.
Registered District Co-operative Agricultural and Rural Development Bank Maryadit - Appellant
Versus
State of M.P. - Respondent
Writ Petition No. 5273-2014
Decided On : 19-12-2014
Natural Justice - Cooperative Society Disqualification - M.P. Co-operative Societies Act, 1960 - Section 48-AA, Section 50-A - Summary of Acts and Sections: The court discussed the application of Section 48-AA and Section 50-A of the M.P. Co-operative Societies Act, 1960, focusing on the principles of natural justice and the competence/jurisdiction of the authority. The court held that the action of the Registrar in issuing notices and passing orders was impermissible as the society had already initiated action under Section 48-AA, and therefore set aside the impugned orders.
Fact of the Case:
The petitioners challenged the disqualification of the petitioner-Board and the appointment of an Administrator by the society. The petitioners argued that the action under Section 48-AA of the M.P.Co-operative Societies Act, 1960 was already initiated by the society before the notices were issued by the respondents. They contended that the action of the respondents was arbitrary and violated principles of natural justice.
Finding of the Court:
The court found that the action of the Registrar in issuing notices and passing orders was impermissible as the society had already initiated action under Section 48-AA. The court held that the impugned orders were set aside due to the lack of competence/jurisdiction of the authority.
Issues: The issues revolved around the disqualification of the petitioner-Board, the appointment of an Administrator, and the validity of the notices issued by the respondents under Section 48-AA of the M.P.Co-operative Societies Act, 1960.
Ratio Decidendi: The court's decision was based on the finding that the action of the Registrar in initiating parallel action was impermissible as the society had already taken action under Section 48-AA. The court also emphasized the need to read the principles of natural justice into Section 50-A of the Act.
Final Decision: The impugned orders were set aside, and the petition was allowed.
Sujoy Paul, J.
1. This petition filed under Article 226 of the Constitution is directed against the order dated 19.8.2014, whereby the petitioners were held to be disqualified for membership of the committee. The consequential order of the same date, Annexure P-1, is also called in question, whereby it was held that the elected Board of Directors has ceased to function for want of quorum. Accordingly, in place of Board of Directors, an Administrator is appointed.
2. The case of the petitioners is that the petitioner-Board was constituted for five years pursuant to an election held on 4.4.2008. The term of the Board was five years, i.e., up to 3.4.2013. Before the Board could complete its tenure, it was suspended on 9.12.2009. This suspension order was challenged before this Court in WP No. 4536/2011. The Division Bench by order dated 30.1.2014 (Annexure P/4) set aside the said suspension order. The said order of this Court was unsuccessfully put to test before the Apex Court in SLP No. 10826/2014. The Apex Court dismissed the appeal on 30.6.2014 by observing that it would be open to the petitioners to take appropriate action in accordance with law.
3. The respondents issued notices to petitioners No. 4,5,8,9 and 11 on 6.8.2014. These notices were issued under rule 44 (1) (h) of M.P. Co-operative Societies Rules, 1962 (for brevity, the “1962 Rules”). The case of the petitioners is that before issuance of said notices dated 6.8.2014, the action under Section 48-AA of the M.P.Co-operative Societies Act, 1960 (for brevity, the “Act”) was already initiated by the society under section 48-AA of the Act. In addition, it is contended by Shri H.D.Gupta, learned senior counsel that the aforesaid notices (Annexure P/6) were not served on the petitioners No. 4,5 and 8. The attention is drawn on Annexure P-7 to submit that notices were returned and were not actually served on the said petitioners. It is further contended that President of the Board appeared and submitted objection in respect to the action taken by the Joint Registrar. The specific objection was that once an action has already been initiated by the Board/Society, it is not open to the respondents to issue notices (Annexure P/6). Registrar could have taken action only after completion of two months period as per Section 48-AA.
4. The petitioners argued that the total number of Directors of Board is 23, out of which 15 are elected members, 5 are official members and 3 are nominated members. As per Rule 44 (1) (h) of 1962 Rules, the action can be taken only when there is a deficiency of repayment of loan. Rule 44 (1)(h) does not include non payment of “advance”. It is, therefore, urged that the action for non-payment of advance is beyond the ambit of said rules and, therefore, action is without authority of law. Shri Gupta relied on Section 86 of the Act and Rules 75 (3)(c) of 1962 Rules to submit that notices are required to be issued and served in consonance with the said provisions. The notices were not served as per the said statutory procedure and, therefore, the entire action based on such notices is vitiated. It is also submitted that the registered notices were not issued with acknowledgment due. Reliance is also placed on Order 5 Rule 9 CPC to bolster the submission regarding mode of service of notice.
5. It is also urged that Annexure P/9 is the no-dues certificate issued by the concerned society manager in favour of petitioners No. 4, 5 and 8. This certificate makes it clear that there were no dues against these petitioners. If notices would have been received, the petitioners could have put forth their defence before the respondents.
6. It is further urged by Shri H.D.Gupta that on the date fixed for appearance, i.e., 19.8.2014, the order Annexure P/2 has been passed. The order is passed by invoking Section 50-A(1) and (2) of the Act and Rule 44(1) of 1962 Rules. The authority has not taken pains to verify whether notices were served. This action runs contrary
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