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Madhya Pradesh High Court · body

2000 DIGILAW 276 (MP)

AIJUN LAL PATEL v. STATE OF MADHYA PRADESH

2000-03-16

DIPAK MISRA

body2000
DIPAK MISRA, J. ( 1 ) THE petitioner, the Director of Zila Sahakari Kendriya bank Maryadit Board. of Directors. Hoshangabad having been elected as such from Harda Vikas Khand and is a representative of the Sewa Sahakari Samiti maryadit, Nimgaon. The respondent No. 4, namely, District Co-operative Central bank Limited, is registered under Section 9 of the Madhya Pradesh Co-operative societies Act, 1960, (hereinafter referred to as 'the Act'}. The aforesaid act was enacted with an object to organise and develope co-operative as democratic instruments and peoples' institutions based on self help and mutual aid and for curbing exploitation and ensuring socio-economic development of people with particular emphasis on weaker sections of the society. According to the writ petitioner, the Registrar is executive head of the co-operative movement and the respondent No. 5 is the Chairman of the bank. Under Section 53-B of the Act, the Registrar is empowered to remove an officer of a Society in certain circumstances under Section 58 of the Act, the Registrar can cause. audit, enquiry, inspection and supervision over the Societies/ co-operative Societies. Section 56 of the Act empowers the Registrar to enforce performance of certain obligation by the society. Section 59 of the Act confers powers on the Registrar to conduct an enquiry. ( 2 ) THE election in respect of the respondent-bank took place in 1996 in which the respondent No. 5 was elected as the Chairman of the Board of directors of the Bank and the petitioner and others were elected as Directors of the Board of Directors. On some complaint being received in respect of the irregularities committed in the functioning of the bank by the Chairman and his associate Directors, when no action was taken the petitioner filed a writ petition before, this Court and the same was disposed of with a direction to the authorities to take action in accordance with law in respect of the complaints pertaining to irregularities and illegalities. The Joint Registrar, thereafter issued a show cause notice on 26. 11. 1998 to the respondent No. 5 and Lakhanlal Deora and Shiv Kumar Choudhary, the Directors directing the respondent bank to take action against the aforesaid three Director. As the petitioner and other Directors have brought the aforesaid irregularities and illegalities to the notice of the authorities leading to issue of notice dated 26. 11. 11. 1998 to the respondent No. 5 and Lakhanlal Deora and Shiv Kumar Choudhary, the Directors directing the respondent bank to take action against the aforesaid three Director. As the petitioner and other Directors have brought the aforesaid irregularities and illegalities to the notice of the authorities leading to issue of notice dated 26. 11. 1998 against the three persons including the Chairman of the bank, the respondent No, 5 and his associate Directors in collusion with the authorities of the department saw to it that show cause notices were issued against the petitioner on the ground that the Society to which he represents in the Board of Directors was in default for a period exceeding twelve months in respect of loan taken by it from the respondent-Bank/apex Society. It is averred in the writ petition that the show cause notice was issued to the petitioner was based on no enquiry and without affording an opportunity of being heard to the petitioner. The petitioner filed a revision before, the Board of Revenue against the said show cause notice. The Board of Revenue passed an interim order staying further action. After establishment of the Madhya pradesh Co-operative Tribunal the case was transferred by the Board of revenue to the Tribunal for adjudication. It was submitted before, the Tribunal that the whole proceeding initiated against the petitioner was mala fide, and as no opportunity was given to the petitioner the enquiry conducted against him was absolutely vitiated being violative of principles of natural justice. It was put forth before the Tribunal that Section 19-AA of the Act speaks of disqualification for membership of the Committee and for representation. The proviso to the aforesaid Section lays down that if the Society fails to take action, the Registrar shall disqualify such member from holding such post by an order in writing after giving him reasonable opportunity of being heard but the Deputy Registrar, Co-operative Societies without hearing the petitioner or the Society of the petitioner has reported that the petitioner suffers from the disqualification as provided in Rule 45 (3) of the Rules of 1962. ( 3 ) APPRECIATING the contentions raised by the petitioner, the Tribunal by its order dated 2. 11. 1999 disposed of the revision directing that the Society of the petitioner be also noticed along with a copy of the report of the enquiry made by the Deputy Registrar. ( 3 ) APPRECIATING the contentions raised by the petitioner, the Tribunal by its order dated 2. 11. 1999 disposed of the revision directing that the Society of the petitioner be also noticed along with a copy of the report of the enquiry made by the Deputy Registrar. The Tribunal also held that the provisions of section 59, do not speak of giving opportunity of hearing to the affected person. Therefore, the petitioner was not entitled to an opportunity of being heard at that stage. ( 4 ) IT is averred in the writ petition that the Tribunal has absolutely erred in law by not holding that as per provisions of the Act and Rules grant of an opportunity is mandatory and violation thereof, vitiates the initiation of the proceedings. It is also put forth that the Tribunal ought to have quashed the notice dated 23. 12. 1998 as being illegal and arbitrary, as it has been issued on the basis of report, which is untenable in the eyes of law and the revision should have been allowed as the same is wreaked with mala fide. It is further put forth that as per the order passed by the Tribunal the Bank has issued a notice on 15. 11. 1999 to the petitioner as well as to Sewa Sahakari Samiti maryadit Nimgaon directing them to submit their reply and defence between 15 days and the meeting of the members was fixed on 2. 12. 1999. The main grievance of the petitioner as has been narrated in the writ petition that the meeting of the Board of Directors has been fixed with a mala fide intention to oust the petitioner from the Board of Directors on the basis of the complaint. It is contended in the writ petition that the finding of the Tribunal and subsequent actions thereof, are unjustified, illegal, arbitrary and untenable as that violates the principles of natural Justice. It is also contended that issuance of notice to the petitioner is totally mala fide and against the mandate of law. It is also alleged that the enquiry conducted by the Deputy Registrar was behind the back of the petitioner. It is also stated that the report of the enquiry does not mention about the audit report. It is also contended that issuance of notice to the petitioner is totally mala fide and against the mandate of law. It is also alleged that the enquiry conducted by the Deputy Registrar was behind the back of the petitioner. It is also stated that the report of the enquiry does not mention about the audit report. It has also been pleaded that no certificate has been issued that the Society is a defaulter, and, therefore, the action is unjustified. ( 5 ) WITH these averments prayer has been made for quashment of the order of the Tribunal as contained in Annexure P-I and further to quash the notice to show cause dated 23. 12. 1998 and subsequent action and to declare that the action initiated by the respondents against the petitioner is mala fide, arbitrary and opposed to settled principles of law. ( 6 ) A return has been filed by respondent No. 5 contending, inter alia, that the petitioner is a representative of the Seva Sahkari Samiti Maryadit and the said assignment to the petitioner has made eligible to contest the election for the post of Director of the respondent No. 4 in the year 1997. But thereafter on Ramdayal Bhuriya of Neemgaon made a complaint purporting that the society whom the petitioner represents was in arrears for more than 12 months. An inquiry under Section 59 of the M. P. Co-operative Societies Act. 1960, was conducted in which it was reported that the complaint of Shri bhuriya was prima facie correct and on the basis of the said inquiry report a show cause notice dated 23. 12. 1998 was issued to the petitioner seeking his counter/reply there to within 7 days. The said show cause notice was subject matter of challenge in revision No. 411/1999. Finally the tribunal arrived at the conclusion that the Society should be given a show cause notice and the matter should be finalised. It is put forth in the return that in compliance with the order passed by the revisional authority the respondent No. 4 issued letter dated 15. 11. 1999 to the petitioner and his original Society. They were required to submit their show cause within 15 days. It is set-forth by the respondents that the order passed by the Tribunal does not suffer from any irregularity as envisaged under any provision of the Act. 11. 1999 to the petitioner and his original Society. They were required to submit their show cause within 15 days. It is set-forth by the respondents that the order passed by the Tribunal does not suffer from any irregularity as envisaged under any provision of the Act. It has also been put forth the finding of the Tribunal that the petitioner was not entitled to be heard in the matter is sound in the obtaining factual matrix, as the action is to be taken after conducting an inquiry in pursuance of 19-AA of the act. It is denied that such a matter is not covered under the concept of dispute as understood under section 64 of the Act. Emphasis is laid on Sections 19-A and 19-AA of the Act. ( 7 ) A counter-affidavit has been filed by the answering respondent No. 4 wherein it has been highlighted that the petitioner is a resident of village jhadpa which is situate in the operational area of Seva Sahakari Samiti maryadit Neemagaon. District Harda and the Society of which the petitioner is a representative, is a loanee from respondent No. 4 and the loan has not been cleared for more than 12 months. Therefore, the petitioner being a repre-sentative of the loanee Society is not eligible to represent. Reliance has been place to Rule 45 (3) of the M. P. Co-operative Society Rule, 1962. Respondent no. 4 has placed immense emphasis on Section 19-AA of the Act. It is also highlighted that there has been amendment of Rule 45 by the State government on 12. 4. 1999 and, therefore, the petitioner is bound to suffer the disqualification. 7-A. I have heard Mr. R. K. Gupta learned counsel for the petitioner, Mr. V. K. Shukla, learned G. A. for the State, Mr. S. K. Dwivedi for respondent No. 4 and Mr. S. A. Dharmadhikari for respondent No. 5. ( 8 ) MR. 4. 1999 and, therefore, the petitioner is bound to suffer the disqualification. 7-A. I have heard Mr. R. K. Gupta learned counsel for the petitioner, Mr. V. K. Shukla, learned G. A. for the State, Mr. S. K. Dwivedi for respondent No. 4 and Mr. S. A. Dharmadhikari for respondent No. 5. ( 8 ) MR. Gupta, learned counsel for the petitioner has placed Heavy reliance on a decision rendered in the case of Zila Sahakari Kendriya Bank Ltd. and another v. Jagdish Saraf and others, 1999 0 RN 263, wherein a learned single judge of this Court after referring to Section 19-AA, has held as under:"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 how that it does not apply to a member Society but it confines to a person in person. It 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. " ( 9 ) AFTER so holding the learned Judge opined that in the said case the respondent No. 1 was not suffering from any personal disqualification and the disqualification was suffered by the Society. The learned Single Judge held that 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 a member where he is elected as a Director being member of that Society. The learned Single Judge held that 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 a 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. Learned Single Judge referred to Clause (ii) of the proviso which speaks 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. ( 10 ) AFTER discussing in this regard the learned Judge referred to Rule 45 and held as under:"as this state, 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 disqualification mentioned in rule 44. If further provides that a representative of a Society representing it in the general body or 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 members 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 provision 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 ). ""from the reply-Annexure P-4 field 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. ""from the reply-Annexure P-4 field 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. It the District co-operative Bank has already filed a dispute, than, 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. The Board of Revenue in the opinion of this Court was justified in upsetting the order passed by the authority. " ( 11 ) MR. Dwivedi learned counsel per contra has referred to Rule 45, after the amendment, it reads as under :"45. Disquali/ication for representation. (1) No society shall elect any member as it's representative, who suffers from any of the disqualification. (3) No representative of the society shall be eligible for election as a members of a committee of co-operative Bank, Financing Bank, Federal society or Apex Society and shall lease to hold his office as such if the society is or gets into default for a period exceeding twelve months in respect of any loan or loans taken it from such co-operative Bank, financing Bank, Federal Society or Apex Society. " ( 12 ) SUBMISSION of learned counsel is that in view of the amendment of the Rules Section 19-AA would come into play. He has placed heavy reliance on the case of Basant Kumar v. Assistant Registrar, Co-operative Societies and others, 1969 0 RN 569. Wherein a Division Bench of this Court has held as under :"the representative of a society appointed under Bye-law 9 does not himself become a member of the general body or the managing committee of the store, he is only a representative of the Co-operative society which is the real member. This conclusion is further supported by the language used in Rule 45 which provides that no society shall elect any member, who suffers from may of the disqualification laid down in Rule 44 as its delegate, to the committee of another society or to represent it in another society. This conclusion is further supported by the language used in Rule 45 which provides that no society shall elect any member, who suffers from may of the disqualification laid down in Rule 44 as its delegate, to the committee of another society or to represent it in another society. The rule thus contemplates that a society can appoint one of its qualified members as its delegate to the committee of another society. Such a delegate can always be withdrawn and another delegate appointed in his place by the society as is provided in Rule 45 (2) (c ). The occasion for a society to nominate a delegate to the committee of another society can only arise when the society is a member of the committee and an individual is required to represent it in the committee. A delegate representing a society in the committee of another society is not himself a member but is only a representative of the society, which is really the member of the committee. " ( 13 ) THEIR Lordships further proceeded to lay down as under in paragraph 6 of the Judgment :"it was then contended that disqualification for a delegate or representative are all provided in Rule 45 and unless it can be said that the delegate or representative of the member society in the committee of another society has himself incurred the disqualification under Rule 45, the delegate or the representative does not lose his seat in the committee. There is no substance in this contention. A society to be a member in the committee of management of another society must not suffer from the disqualifications mentioned in Rule 44. As a society can only function in the committee of management through some individual, the society elect one of its members as its delegate. But Rule 45 provides that the delegate or representative so elected should also not suffer from any of the disqualifications mentioned in Rule 44. Thus, the retirements of the rules are two fold. The member society must not suffer from any disqualification mentioned in Rule 44 and the delegate elected by it to represent it should also not suffer from any of the disqualifications. The delegate however, has not independent existence. Thus, the retirements of the rules are two fold. The member society must not suffer from any disqualification mentioned in Rule 44 and the delegate elected by it to represent it should also not suffer from any of the disqualifications. The delegate however, has not independent existence. He only represents the society which is the real member in the committee and if the society ceases to be a member of the committee because of a disqualification incurred by it, the delegate will automatically cease to be delegate although he may not have himself incurred any disqualification under Rule 45. " ( 14 ) IN view of the amended provision in Rule 45, I am of the considered view that the decision laid down in the case of Zila Shahkari Kendriya Bank (supra) is distinguishable and the matter shall be governed by the ratio in the case of Basant Kumar (supra ). In view of the aforesaid premises, the order passed by the Tribunal is defensible and deserves the stamp of approval of this Court. ( 15 ) RESULTANTLY, the writ petition being devoid of merit stands dismissed. However, in the peculiar facts and circumstances of the case, there shall be no order as to cots. Petition dismissed. .