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2021 Supreme(MP) 812

High Court of Madhya Pradesh
Mohammad Rafiq, C. J., Rajeev Kumar Dubey, Vijay Kumar Shukla, JJ.
BHOPAL CO-OPERATIVE CENTRAL BANK MARYADIT, BHOPAL & ORS. - APPELLANTS
Versus
STATE OF M. P. & ORS. - RESPONDENTS
W. P. Nos. 4021, 4057, 4339, 4915, 4919, 5124, 5535, 6038, 6607, 7065, and 7518 of 2019
Decided On : 22-04-2021

Advocates Appeared:
For Appellant : Smt. Shobha Menon, Rahul Choubey, Sanjay Ram Tamrakar, Rahul Deshmukh, Anil Lala, Naveen Dubey, Rajendra Kumar Shrivastava
For Respondent: R. K. Verma, Ankit Saxena

Headnote:(A) Madhya Pradesh Co-operative Societies Act, 1960 - Sections 48-AA, 50-A - Principle of natural justice - Directors of Co-operative Banks removed for exceeding twelve months in default - Court held that directors cannot be disqualified without being given an opportunity of hearing, reaffirming that mere statutory interpretation does not exclude natural justice provisions. (Paras 1, 10, 11)

(B) Judicial precedent - Need for consistent application of natural justice principles across different scenarios of disqualification and election to maintain equitable representation. (Paras 16, 32)

Facts of the case:
Petitioners, elected Directors of various Co-operative Banks, were removed due to default of parent societies beyond twelve months without notice. They contended the removal violated natural justice principles as outlined in Section 48-AA.

Findings of Court:
The court reiterated the requirement of providing an opportunity for hearing before such actions, emphasizing the applicability of natural justice even when not explicitly stated in statutory provisions.

Issues: Whether the removal/disqualification of Directors without a hearing violates principles of natural justice, and clarification on operational spheres of Sections 48-AA and 50-A regarding disqualification context.

Ratio Decidendi: The court clarified that the removal of Directors could not proceed without an opportunity for a hearing, rejecting arguments of futility without dispute of the parent society's financial default.

Result: The matters are placed before the regular Bench for final disposal.

Table of Content
1. reference to conflicting judgments. (Para 1 , 2)
2. arguments by petitioners about removal. (Para 3 , 4 , 5 , 6 , 7 , 8)
3. analysis of conflicting judgments. (Para 9 , 10 , 11 , 12)
4. no conflict between earlier judgments. (Para 13 , 14 , 15)
5. different application scenarios for statutes. (Para 16 , 17)
6. implication of natural justice principles. (Para 18 , 19 , 20 , 21 , 22 , 23)
7. natural justice in administrative decisions. (Para 24 , 25 , 26 , 27)
8. assessment of disqualification provisions. (Para 28 , 29 , 30 , 31 , 32)

JUDGMENT MOHAMMAD RAFIQ, C. J. : – All these matters have been laid before the Full Bench upon a reference from a learned Single Bench of this Court vide order dated 25-4-2019, assuming conflict between the ratio of two judgments rendered by Division Benches of this Court, one in Writ Petition No. 6913/2017- Brij Kumar Chanpuriya vs. State of M. P. and others decided on 15-5-2017 and another in Writ Appeal No. 551/2019, Anter Singh and others vs. State of M. P. and others decided on 17-5-2019, for answering the following three questions of law : –

    “1. Whether the order passed by the Division Bench of this Court in W. P. No. 6913/2017 on 15-5-2017 lays down the correct law in regard to section 48-AA and section 50-A of the Act of 1960 or the order passed in Writ Appeal No. 551/2019 affirming the order passed by the Single Bench of this Court in W. P. No. 5033/2019? 2. Whether the provisions of section 48-AA and section 50-A of the Act of 1960 operates in a different sphere i.e. pre and post election of the Director? 3. Whether section 50-A of the Act of 1960 is a deeming provision for holding a Director of a society as disqualified or an opportunity of hearing is still required to be given as held by this Court in W. P. No. 6913 of 2017?”

2. The petitioners in all these writ petitions were the Directors of the various Co-operative Central Banks, who assailed their removal as such Directors, on the ground of breach of principles of natural justice as well as non-service of notice prior to their removal in terms of section 48-AA of the Madhya Pradesh Co-operative Societies Act, 1960 (for short ‘the Act of 1960”). All the petitioners in their capacity as representatives of the parent Co-operative Societies were elected as Directors of the District Co-operative Central Banks and were removed/disqualified to continue as such Directors, because the Societies, of which they were representatives, were in default for exceeding 12 months.

3. We have heard learned counsel appearing for the petitioners and learned Additional Advocate General for the respondent/State. The arguments on behalf of the petitioners have been led by Smt. Shobha Menon, learned Senior Advocate and other advocates appearing for the petitioners in respective petitions have also made the submissions, who have substantially adopted her arguments.

4. Learned counsel appearing on behalf of the petitioners argued that the petitioners were elected representatives from different Co-operative Societies and in that capacity, they were further elected as Directors of the another Co-operative Society, which is in each case is a separate Central Co-operative Bank in terms of Rule 49-C of the MADHYA PRADESH CO-OPERATIVE SOCIETIES RULES , 1962 (for short “the Rules of 1962), as per the procedure contained in Rule 49-E of the Rules of 1962. The Registrar/Joint Registrar illegally removed them from the office of the Directors without following the provisions of section 48-AA of the Act of 1960 which mandates for providing an opportunity of hearing to any such Directors/representatives before their removal/disqualification. Section 50 -A of the Act of 1960, especially proviso to sub-section (2) thereof, would not be applicable to the case of removal of any Director/representative as it operates in entirely different sphere and applies to only pre-election stage of a candidate or voter, for election to Board of Directors, as representative or

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