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1994 DIGILAW 62 (BOM)

Shamburaj Shivajirao Desai & others v. Director of Sugar & others

1994-02-03

B.P.SARAF

body1994
JUDGMENT - Dr. Saraf B.P., J.:—The petitioners are the directors of Balasaheb Desai Sahakari Sakhar Karkhana Limited, a Co-operative Society registered under the Maharashtra Co-operative Societies Act, 1960 (“the Act”). By this writ petition they seek to challenge the legality of the order of the Additional Chief Secretary to the Government of Maharashtra, Co-operation and Textile Department dated 7 January, 1994 dismissing the appeal of the petitioners against the order of the Director of Sugar (Administration) and Additional Registrar of the Co-operative Societies, Maharashtra dated 20 November 1993 by which in exercise of the powers under section 77-A(b) and 77-A( c) of the Co-operative Societies Act, the Board of Directors of the society comprising of the petitioners was dismissed and on their place, the Joint Director (Sugar) (Administration) was appointed as the Administrator. 2. The material facts of the case relevant for the determination of the controversy raised in this writ petition are as follows: The Board of Directors of the Society consists of 15 directors of which 11 are elected from amongst the members, 2 are representatives of workers, one is co-opted as expert director and one is the representative of the District Central Co-operative Bank. The last election of the Board of Directors was held in 1984. The term of the said Board under section 73-G(2) of the Act was for five years. The term of the above Board expired in 1989. For one reason or the other election of the members of the Board could not be held before the expiry of the term in 1989 and till now. On 15 October 1993 the Director of Sugar, Maharashtra State, who is also the Additional Registrar of Co-operative Societies, issued a notice to the society, its managing director and workers to show cause against proposed removal of the existing Board of Directors and appointment of an administrator in their place. In the above notice it was stated inter alia — “Whereas, it has now become clear that the period of the Board of Directors of the Karkhana is ended in the month of June 1989 and newly elected Board of Directors could not take charge. In the above notice it was stated inter alia — “Whereas, it has now become clear that the period of the Board of Directors of the Karkhana is ended in the month of June 1989 and newly elected Board of Directors could not take charge. Therefore, I am satisfied that it has become necessary now to take legal action under the provisions of section 77-A of the Act, AND WHEREAS, before taking action under section 77-A of the Act, concerned persons should be heard and therefore they should be given such opportunity. THEREFORE, show cause as to why though the prescribed period of the Board of Directors of the Karkhana was expired the new Board of Directors could not take charge, therefore, show cause. Why the existing Board of Directors should not be removed and the administrator should not be appointed in its place, before 26th October, 1993 either in person or the representative duly authorised by you to the undersigned. If you fail to show cause as aforesaid within the prescribed time limit or the course shown is not satisfactory, further action as provided in section 77-A of the Maharashtra Co-operative Societies Act, 1960.” The members of the Board of Directors submitted written reply to the show cause on 16 November 1993. In the said reply, the circumstances due to which election could not be held so long were set out and the Director was requested to drop the proposed action under section 77-A. The Director did not find the cause shown by the petitioners satisfactory and by order dated 20 November, 1993 dismissed the Board of Directors of the Society and appointed Shri Y.B. Khavale, Joint Director (Sugar) (Administration) as the administrator to discharge the duties and responsibilities of the Board. The petitioners appealed against the above order to the Additional Chief Secretary of the State Government. The main grievance in the appeal was that the election could not be held due to reasons beyond their control and in such a situation section 77-A was not applicable. The petitioners appealed against the above order to the Additional Chief Secretary of the State Government. The main grievance in the appeal was that the election could not be held due to reasons beyond their control and in such a situation section 77-A was not applicable. The Additional Chief Secretary was not satisfied with the above contention and dismissed the appeal on the ground, inter alia, that under section 73-G(2-B) of the Act as substituted by the Maharashtra Act 20 of 1986, on expiry of an aggregate period of 6 years from the date on which the first meeting was held, the members cease to be members of the Committee and as such section 77-A was clearly attracted. Aggrieved by the above order, this writ petition has been filed. 3. The main submission of the learned Counsel for the petitioners Mr. K.K. Singhvi is that section 77-A has no application to the facts of the present case as under Clause (b) thereof power to appoint administrator can be exercised only in a case where there is a failure to elect the members or fill up the vacancies within the term of the Committee. In the instant case, according to the Counsel, “there is no failure on the part of the petitioners to hold the election” and hence section 77A has no application. Counsel further submits that the show cause notice was issued by the Director of Sugar under section 77-A of the Act. Order of dismissal of the Board of Directors and appointment of administrator has also been passed under the said section. In such a case, reliance cannot be placed on section 73-G(2) of the Act in support of the said order. Reliance is placed on a decision of this Court in (Ghatageepa Parreppa Mugeri v. M.R. Naik)1, 1983 Mh.L.J. 984 in support of the contention that the existing Committee is entitled to continue to function till a new Board is elected. 4. I have carefully considered the submissions of the learned Counsel. For a proper appreciation of the same, it is necessary to peruse the provisions of sections 77-A and 73-G of the Act. 4. I have carefully considered the submissions of the learned Counsel. For a proper appreciation of the same, it is necessary to peruse the provisions of sections 77-A and 73-G of the Act. Section 77-A, as stood at the material time, so far as it is relevant, reads: 77-A. Appointment of member of Committee, new Committee or administrator, where there is failure to elect member to constitute Committee or where Committee does not enter upon office -(1) Where the Registrar is satisfied that, — (a) at the first constitution of the Committee of any society there is a failure to elect all or any of the members of the Committee; (b) the term or extended term as the case may be, of the Committee of any society or of any of its members has expired or for any other reason election is held and there is a failure to elect all or any of the members required to fill the vacancies; (c) any Committee is prevented from entering upon office; (d) a new Committee has failed to enter upon office on the date on which the term of office of the existing Committee expired; or (e) a new Committee cannot for any reason be constituted before the expiry of the term of office of the existing Committee; (f) where more than one group of persons in a society is claiming to be elected as the Committee members and proceedings in respect thereof have been filed in the Co-operative Court; the Registrar may, either suo motu or on the application of any officer of the society, by order appoint — (i) any member or members of the society to be the member or members of the Committee to fill the vacancies; (ii) a Committee, consisting of not more than three members of the society, or one or more administrators, who need not be members of the society, to manage the affairs of the society till a new Committee enters upon office; From the reading of the above section, it is clear that the Registrar on being satisfied about the existence of any of the conditions mentioned in Clauses (a) to (f) of section 77-A may appoint one or more administrators to manage the affairs of the society till a new Committee enters upon office. Clause (b) applies if, (i) the term or extended term, as the case may be, of the Committee of any society or of any of its members has expired; or (ii) for any other reason election is held and there is a failure to elect all or any of the members required to fill the vacancies. The above two conditions are not cumulative but alternative. Existence of anyone of them will call for action under section 77-A. In the case of expiry of the term or extended term of the Committee, the power is to appoint a Committee of not more than three members of the society or one or more administrators who need not be members of the society to manage the affairs of the society till a new Committee enters upon office. It may be pertinent to mention that the words “or extended term as the case may be” in Clause (b) was inserted by Maharashtra Act 20 of 1986. This is relevant because by the very same amendment sub-section (2) of section 73-G was also substituted. Earlier the sub-section read as follows: “(2) When the election of all the members of the Committee of-any such society is held at the same time, the members elected on the Committee at such general election shall hold office for a period of five years from the date on which the first meeting is held and shall continue in office until immediately before the first meeting of the members of the new Committee.” (Emphasis supplied) By the Maharashtra Act 20 of 1986, the following was substituted in its place : “(2) When the election of all the members of the Committee of any such society is held at the same time, the members elected on the Committee at such general election shall hold office for a period of five years from the date on which the first meeting is held, unless the period is extended by the State Government, for reasons to be recorded in writing, for a period not exceeding one year so however that total period does not exceed six years in the aggregate.” The difference in the language of the two sub-sections is apparent. Under sub-section (2) of section 73-G as it stood prior to 1986, though the term of the office of a Committee or members was five years, they continued to be in office “until immediately before the first meeting of the members of the new Committee”. Under the substituted sub-section (2) the term of five years may be extended by the State Government to a period not exceeding one year. It is, however, clearly provided that the total period cannot exceed 6 years in the aggregate. Sub-section (2-B) of section 73-G which was also inserted by the very same 1986 Amendment Act further provides : “(2-B) Where, for any reason whatsoever, the election of the members of the Committee was not held or could not be held before the expiry of the term or the extended term, as the case may be, of the existing Committee, the members, including the officers of the Committee shall cease to hold office on the expiry of its term or extended term, as the case may be, and they shall be deemed to have vacated their offices: Provided......” This sub-section lays down what would happen if “for any reason whatsoever” the election of the members of the Committee “was not held” or “could not be held” before the expiry of “term” or “the extended term” as the case may be. It clearly says that in such cases (i) the existing Committee, its members shall cease to hold office on the expiry of its term or extended term and (ii) they shall be deemed to have vacated their offices. No provision similar to sub-section (2-B) was there in the Act prior to insertion of the above sub-section in 1986. On the other hand, under sub-section (2) of section 73G, as it stood prior to 1986, the position was just reverse. It provided that the Committee once elected shall continue in office until the first meeting of the members of the new Committee. 5. Clause (b) of section 77-A has to be read along with section 73-G(2) and (2-B) (as amended in 1986) because the “term” or “extended term” of the Committee is specified in that section. Section 77-A empowers the Registrar to appoint administrator in case of expiry of the term or extended term of the Committee. In the instant case, the election was held in the year 1984. The five year term expired in 1989. Section 77-A empowers the Registrar to appoint administrator in case of expiry of the term or extended term of the Committee. In the instant case, the election was held in the year 1984. The five year term expired in 1989. There is nothing to show that it was extended by the State Government at any time. Even if that be so, the aggregate period of six years also expired in the year 1990 and on the expiry of 6 years, in terms of section 73-G(2-B) the Committee and its members ceased to hold office and were deemed to have vacated their office. That being so, section 77-A is clearly attracted. In the eye of law, the Committee elected in the year 1984 is not deemed to be in office in any event after the expiry of six years and their continuation in office after that period is contrary to the express terms of section 73-G(2-B) of the Act. The Director of Sugar (Administration), who is also holding the office of Additional Registrar, Co-operative Societies also, was therefore fully justified in exercising powers under section 77-A of the Act and appointing administrator for the said society. Equally justified was the appellate authority, the Additional Chief Secretary to Government of Maharashtra, in confirming the said order and dismissing the appeal of the petitioners. 6. I have also perused the decision of this Court in Ghatageppa Parreppa Mugeri (supra) referred to by the learned Counsel. This judgment was rendered in the context of section 73-G(2) as it stood then which contained an express provision to the effect that the elected members of the Managing Committee who hold office for a period of five years shall continue in office until immediately before the first meeting of the members of the new Committee. It was observed by this Court that under the above provision the members of Committee were entitled to continue to function as such till the first meeting of the newly elected Managing Committee - who were the successors to the office. This is clear from the following observations in the above decision: “It is necessary to point that the mere fact that the period of office of an elected Managing Committee has expired does not mean that the members of the Managing Committee become functus officio immediately. This is clear from the following observations in the above decision: “It is necessary to point that the mere fact that the period of office of an elected Managing Committee has expired does not mean that the members of the Managing Committee become functus officio immediately. There is an express provision in section 73-G(2) of the Act which provides that the elected members of the Managing Committee who hold office for a period of five years “shall continue in office until immediately before the first meeting of the members of the new Committee”. Under this provision the members of the Managing Committee are entitled to continue to function as such till the first meeting of the newly elected managing Committee who are the successors-in-office.” That position no more exists after the amendment of section 73-G in the year 1986 and substitution of sub-section (2) by sub-sections (2), (2A) and (2-B) which provide to the contrary. It is now stated in express terms in sub-section (2) of section 73-G that the term of office of the elected members shall be for a period of five years from the date on which the first meeting is held, unless the period is extended by the State Government. The power of the State Government to extend the period is also restricted to one year that too can be exercised for reasons to be recorded in writing. The aggregate term, in any event, cannot exceed six years. In sub-section (2-B) of section 73-G, it has been made clear beyond all doubts that on the expiry of the term or the extended term, the Committee and the members shall cease to hold office and they shall be deemed to have vacated their office. On the face of this express provision, it is difficult to accept the contention of the petitioners that though they were elected in 1984, their term has not expired within the meaning of Clause (b) of section 77-A of the Act so as to empower the Registrar to dismiss them and to appoint an Administrator. Reliance on the decision of this Court in Ghatageppa Parreppa Mugeri (supra) is totally misplaced and unjustified. 7. In view of the foregoing discussion, I am of the clear opinion that there is no merit in this writ petition. Reliance on the decision of this Court in Ghatageppa Parreppa Mugeri (supra) is totally misplaced and unjustified. 7. In view of the foregoing discussion, I am of the clear opinion that there is no merit in this writ petition. The order of the Director of Sugar dated 20 November, 1993 under section 77-A of the Maharashtra Co-operative Societies Act, 1960 is strictly in accordance with the law and there is no infirmity in the same. The Appellate Authority was, therefore, justified in dismissing the appeal against the said order. 8. This writ petition is, therefore, dismissed at the admission stage itself. 9. Under the facts and circumstances of the case, there shall be no order as to costs. 10. Certified copy expedited. Writ petition dismissed. -----