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Madhya Pradesh High Court · body

1999 DIGILAW 160 (MP)

ZILA SAHAKARI KENDRIYA BANK MARIYADIT v. JAGDISH SARAF

1999-02-17

R.S.GARG

body1999
R. S. GARG, J. ( 1 ) BY this petition under Article 227 of the Constitution of india, the petitioner-Zila Sahakari Kendriya Bank Maryadit Shahdol seeks to challenge the correctness, validity and propriety of the order dated 14. 8. 1997 passed in Revision Case No. 125-Toan/97 which arose from the order dated 22. 4. 1997 passed in Case No. Credit/97/770 by the Joint Registrar, Co-operative societies, Rewa. ( 2 ) BRIEF facts for disposal of the petition are that on 22. 4. 1997, the Joint registrar Co-operative Societies sent a letter to the petitioners craving indulgence to the fact that Vipnan Sahkari Sanstha Maryadit Shahdol was defaulter to the medium term godown loan principal amount being Rs. 82,673. 45p. and interest thereon as on 1. 1. 1997 being Rs. 92,510. 15p. and as the amount was over due for more than 12 months, the representative of the said Vipnan sahkari Sanstha could not hold the office of a Director for the petitioner, therefore, action under Section 19-AA of the Madhya Pradesh Co-operative societies Act, 1960 (hereinafter referred to as the Act) be taken against them. On 26. 4. 1997 vide letter No. Adhyaksh/97-98/399, the President of the petitioner-Society asked the respondent No. 1 that as his parent society (i. e. Vipnan Sahkari Sanstha Maryadit Shahdol) was a defaulter member, why the respondent No. 1 be not removed under the provisions of Rule 43 (3) of the co-operative Societies Rules, 1962. ( 3 ) THE respondent No. 1 in response to the notice, submitted that the notice (Annexure P-2) was without authority of law and contrary to the provisions of law and as the petitioner-Bank had already filed a dispute under section 64 of the Act, no disqualification could be attached to the respondent no. 1. He also submitted that the respondent No. 1 was not a defaulter member but in fact the Vipnan Sahkari Samiti was a defaulter; and as such, a show cause notice ought to have been issued to the gross root society. ( 4 ) IT appears that without making an enquiry into the allegations or counter allegations or without service) a notice upon the Vipnan Sahkari samiti, or without giving an opportunity of hearing to the said Samiti, the petitioner-Bank in its meeting dated 6. 5. 1997 took up the present matter as item No. 9 (5) with the permission of the chair. 5. 1997 took up the present matter as item No. 9 (5) with the permission of the chair. The record shows that the matter was considered by the Directors and the present respondent No. 1 was also heard. After hearing the respondent No. 1, the petitioner-Society held that the respondent No. 1 is disqualified for holding the office of the Director. The respondent No. 1 was accordingly removed. ( 5 ) THE respondent No. 1 being aggrieved by the said order, filed a revision-petition before the Board of Revenue. The Board of Revenue by its order dated 14th August, 1997, held that as the principles of natural justice were not observed and as proper opportunity to defend was not given to the respondent no. 1 and as the matter was considered very casually, not in a meeting specially convened for the purpose, the resolution passed by the petitioner-Society was illegal. Being aggrieved by the said order, the petitioner- central society has filed this petition. ( 6 ) I have heard the parties at length. ( 7 ) A perusal of Section 19-AA would show that no person shall be eligible for election as a member of the committee of a society and shall cease to hold the office as such, if he suffers from such disqualification as may be prescribed. A perusal of this provision, would clearly show that it does not apply to a member society but it confines to a person in person. If a member of the society suffers with any disqualification, then, he shall not be eligible for his election and he shall cease to hold the office as such. The later part of Section 19-AA provides that no society shall elect any member as its representative to the committee of any other society or to represent the society in other society, if he suffers from such disqualification as may be prescribed. The language of this part of Section 19-AA would again show that the society is forbidden from electing its representative if such person is under disqualification. ( 8 ) IN the present case, undisputedly, the respondent No. 1 was not suffering with any disqualification. The disqualification was suffered by vipnan Sahkari Samiti, as, according to the Joint Registrar, it had not paid the amounts within the period of 12 months. The amount was over due. ( 8 ) IN the present case, undisputedly, the respondent No. 1 was not suffering with any disqualification. The disqualification was suffered by vipnan Sahkari Samiti, as, according to the Joint Registrar, it had not paid the amounts within the period of 12 months. The amount was over due. The proviso to Section 19-AA provides that if a member suffers from any of the disqualification prescribed, it shall be lawful for the committee of the society to disqualify such member where he is elected as a Director, being member of that society. But this action has to be taken within a period of two months from the date of coming to the notice of the society, and after giving such member who has been elected as a Director of such society an opportunity of being heard. Clause (ii) of the proviso talks of a situation where the representative of the society suffers a personal disqualification for continuing as a representative to the higher level society, then, in such a case, the higher level society may take action to disqualify such representative from holding the post. Undisputedly, neither the respondent No. 1 was disqualified from being elected as a member of the committee nor he was suffering with any disqualification as prescribed. Undisputedly, he has not suffered a personal disqualification in his capacity as a representative. In fact, according to the bank and the Joint Registrar, the parent body i. e. Vipnan Sahkari Samiti had suffered a disqualification, therefore, the respondent No. 1 could not continue to hold the office of the Director. If that was so, than, a notice ought to have been issued to the society asking it that as they were defaulters and the amount was over due, they could be removed from the membership of the central co-operative society. At this stage, reference to Section 19-C of the Act would be material. If that was so, than, a notice ought to have been issued to the society asking it that as they were defaulters and the amount was over due, they could be removed from the membership of the central co-operative society. At this stage, reference to Section 19-C of the Act would be material. According to Section 19-C, a committee may be a resolution passed by three fourth majority of the members present and voting of a meeting held for the purposes, expel a member if he (a) intentionally does any act likely to injure the credit of the society or being it to disrepute; or (b) willfully deceives the society by false statement, or (c) carries on any business which comes or is likely to come into conflict with the business carried on by the society; or (d) persistently makes default in payment of his dues or falls to comply with any provisions of the bye-laws. However, such a resolution shall have to be passed after giving seven days' notice to the member proposed to be expelled. In the present case, the facts would clearly show that the meeting dated 6. 5. 1997 was not held for the purposes i. e. for expelling the member. The proceedings dated 6. 5. 1997 clearly record that this particular subject was taken in the agenda with the permission of the chair. It also does not appear that seven days' notice was given to the root society for expelling it. It also does not appear that a finding was recorded that the root society was making persistent defaults in payment of its dues. In any case, without unnecessarily dwelling into this question, suffice it to say that the resolution was not passed by three-fourth majority of the members present. It would clearly appear that out of 21 members present, 10 supported the Resolution while 5 including Shri Mall opposed the Resolution. The resolution was not supported by the respondent No. 1 himself. It would clearly appear that atleast 6 members were opposing the resolution. The finding that the resolution was passed by 16 to 5 is incorrect. It does not appear from this resolution that some of the members who did not sit either in support or against the resolution, in fact, voted in favour of the resolution. It would clearly appear that atleast 6 members were opposing the resolution. The finding that the resolution was passed by 16 to 5 is incorrect. It does not appear from this resolution that some of the members who did not sit either in support or against the resolution, in fact, voted in favour of the resolution. The findings simply record that the resolution was passed and there were only 5 members against the resolution. ( 9 ) AT this stage, it would also be useful to refer to Rule 45 of the Rules 1962. According to Rule 45, no society shall elect any member as its representative who suffers from any of the disqualifications mentioned in Rule 44. It further provides that a representative of a society representing it in the general body of committee of another society, shall cease to hold its office as such, on happening of the particular incident. Sub-rule (3) of Rule 45 however, provides that no representative of the society shall be eligible for election as the member of the committee (higher level society) and shall cease to hold his office as such if the society is or gets into default for a period exceeding 12 months in respect of any loan or loans taken by it from such Bank or society or apex society. The proviso to sub-rule (3) further provides that in case a dispute/application under Section 64, 84- A or 85 or any provisions of M. P. Co-operative Land Development Bank Act for recovery of the amount has already been filed against such root society, then, the representative of such root society shall not incur disqualification under Rule 45 (3 ). ( 10 ) FROM the reply-Annexure P-4 filed by the respondent No. 1 it clearly appears that the central co-operative bank had already filed a dispute under section 64 of the Act against the root society. This objection of the respondent no. 1 has not been taken into consideration. If the District Co-operative Bank has already filed a dispute, then, in such a case, the disqualification would not be attached. It does not appear from the Resolution that all these facts were taken into consideration. It appears that the Board of District Central co-operative Bank Shahdol was simply influenced by the letter of the Joint registrar and passed a resolution. It does not appear from the Resolution that all these facts were taken into consideration. It appears that the Board of District Central co-operative Bank Shahdol was simply influenced by the letter of the Joint registrar and passed a resolution. The Board of Revenue in the opinion of this court was justified in upsetting the order passed by the authority. ( 11 ) I find no reason to interfere. The petition deserves to and in accordingly dismissed. There shall be no order as to costs. Petition dismissed. .