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2013 DIGILAW 435 (KER)

Sukumaran Nair v. Returning Officer

2013-06-03

A.M.SHAFFIQUE

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JUDGMENT A.M. Shaffique, J. 1. The writ petition is filed by a member of the 2nd respondent society at a time when his nomination to be a member of the Managing Committee was rejected by the Returning Officer, the 1st respondent herein on the allegation that the petitioner in the capacity of President of the society had taken an advance of Rs. 2,000/- on 21.05.2011 and the said amount was not repaid. The petitioner submitted Ext. P3 to the Assistant Registrar of Co-operative Societies stating that the said amount of Rs. 2,000/- was taken by him as advance for the purpose of the society and there is no specific provision to treat non-repayment of the advance, or not accounting for the same as a disqualification. Petitioner approached this Court and by an interim order dated 04.05.2012 this Court directed the petitioner's nomination to be provisionally considered on condition of the petitioner discharging the "defaulted advance amount". 2. According to the petitioner in so far as the amount taken by him as advance is not a default in terms of Rule 44 (1)(c)(i) of the Co-operative Societies Rules (hereinafter referred to as the 'Rules'), the rejection of his nomination is bad in law. 3. Pursuant to the interim direction issued by this Court the petitioner had remitted the balance advance amount and had participated in the election process and is elected as a member of the Managing Committee. The petitioner therefore seeks for a declaration that he is eligible to contest the election on 12.05.2012 as per Ext. P1 notification and that the nomination submitted was valid. Petitioner also challenges the action of the Returning Officer in rejecting his nomination. 4. Counter affidavit is filed by the 2nd respondent inter alia supporting the stand taken by the respondents. It is stated that there was no record in the society to substantiate that the petitioner had received an amount of Rs. 2,000/- as advance for purchase of stationery and ledger. There was a repayment of Rs. 100/- on 29.12.2011 and a further amount of Rs. 200/- on 03.01.2012. This according to the respondent would show that the petitioner owes an amount of Rs. 1,700/- to the society. On this basis, it is contended that the petitioner is in default as stated in Rule 44(1)(c)(i) of the Rules. Therefore, it is contended that the rejection of nomination was valid and proper. 200/- on 03.01.2012. This according to the respondent would show that the petitioner owes an amount of Rs. 1,700/- to the society. On this basis, it is contended that the petitioner is in default as stated in Rule 44(1)(c)(i) of the Rules. Therefore, it is contended that the rejection of nomination was valid and proper. The additional respondents 3 and 4 had also filed counter affidavit. They are the members of the society. They also support the stand taken by the Returning Officer as well as the society. 5. Heard the learned counsel for the petitioner and the learned counsel appearing for the additional 3rd and 4th respondents. 6. Having regard to the contentions raised in the above writ petition, the question to be decided is whether the petitioner was a defaulter as admittedly he had taken an advance of Rs. 2,000/- from the society and that he had repaid only Rs. 300/- and that no materials were produced before the society to prove that he had utilised the balance of Rs. 1,700/- for the purpose of the society. 7. The learned counsel for the petitioner relies upon Rule 44(1)(c)(i) of the Rules in order to indicate that the said provision will not apply to the petitioner. Rule 44(1)(c) (i) of the Rules reads as under:- "R.44. Disqualification of membership of committee.- (1) No member of the society shall be eligible for being elected, or appointed as a member of the committee of the society under S. 28 if he:- (c)(i) is in default to the society or to any other society in respect of any loan or loans taken by him or loan in which he had stood surety, for such period, as is prescribed in the bye-laws of the society concerned or in any case for a period exceeding three months or is a defaulter to the society or to any other society; or " 8. First part of the aforesaid Rule would indicate that a member of the society unless he is disqualified as mentioned in various other provisions including sub-clause (c)(i), is eligible to be elected or appointed as a member of the Committee. First part of the aforesaid Rule would indicate that a member of the society unless he is disqualified as mentioned in various other provisions including sub-clause (c)(i), is eligible to be elected or appointed as a member of the Committee. The first part of sub-clause (c)(i) would show that a member should be in default to the society or any other society in respect of any loan or loans taken by him or loan in which he had stood as surety, for such period, as specified in the bye-law of the society concerned or in any case for a period exceeding three months. Apparently this is not a loan taken by the petitioner. The amount repayable is not evident from any of the loan documents as well. The material available is the General Ledger, Ext. R2(d) which would show that the amount of Rs. 2,000/- was disbursed as "President advance" on 21.05.2011. Two payments are made on 29.12.2011 and 03.01.2012. This is apparently not a loan transaction. Ext. R2(d) which is an entry as on 07.05.2012 would show an outstanding amount of Rs. 1,700/- in the General Ledger which again shows the same as "President advance". Therefore it cannot be disputed that the first part of sub-clause (c)(i) will not be attracted as far as the petitioner is concerned, since the amount received was treated as an advance by the President of the Society. 9. The next part is whether he is a defaulter to the society or to other societies. The argument advanced by the respondent is that even if assuming that the aforesaid amount of Rs. 2,000/- is not to be treated as a loan and as an advance, still the petitioner is a defaulter to the society coming under the 2nd part of the sub-clause (c)(i) as there is an outstanding amount payable by the petitioner to the society. 10. The question is whether the petitioner would become a defaulter merely for a reason that there is an outstanding amount payable to the society as on the date when he submitted the nomination. 10. The question is whether the petitioner would become a defaulter merely for a reason that there is an outstanding amount payable to the society as on the date when he submitted the nomination. Default is defined under Rule 2(d) of the Rules as under:- "R. 2(d):- "Default" means failure on the part of any person, to repay to the financing bank or to any other society a loan or any other amount due to it within the time fixed for repayment or to return to the society within the time fixed the finished goods in respect of raw materials advanced or to keep any other obligation for the fulfillment of which a time limit has been specified in the bye- laws." Defaulter is defined under Rule 2(e) of the Rules as under:- "R. 2(e):- "Defaulter" means any Co-operative Society against which or any person against whom a decree has been obtained." 11. Going by the aforesaid definitions default in respect of any person is his failure to pay the financing bank or to any other society or a society loan or any other amount due to it within the time fixed for repayment or to return to the society within the time fixed the finished goods in respect of raw materials advanced or to keep any other obligation for the fulfillment of which a time limit has been specified in the bye-laws. Defaulter means any society against which or any person against whom a decree has been obtained. Going by the above definitions, no material had been produced before this Court to enable this Court to come to a conclusion that in respect of the advance received by the petitioner, any time limit had been fixed for repayment. There is no decree against him even there is no material to show that a demand had been made by the society against the petitioner to repay the balance amount of Rs. 1,700/- which he had taken as advance after fixing a time limit. In the absence of any such situation, merely for the reason that certain amount received by the petitioner as advance was not repaid by him will not make him a person in default or defaulter as defined under Rule 2(d) or 2(e) of the Rules. 12. Consequently the ineligibility mentioned under Rule 44(1)(c)(i) of the Rules also will not be attracted. 12. Consequently the ineligibility mentioned under Rule 44(1)(c)(i) of the Rules also will not be attracted. There is no case for the respondent that the society had made a demand as against the petitioner and there was failure to pay. Only in such instances a liability to pay becomes a default or else there should be some material to indicate that the petitioner had offered to repay the advance amount within a certain time limit. 13. In the absence of any such material one cannot hold that the petitioner was in default in terms of the above provisions. 14. Reference is also made to a Division Bench judgment of this Court in Rajagopalan v. Baby Alex [ 1994 (2) KLT 974 ] wherein this Court had considered the scope and the effect of Rule 44(1)(c)(i) of the Rules. The relevant paragraphs are 3 and 4 which reads as under:- "3. The appellant is a member of the managing committee of the society. The amount alleged to be due from him is stated to have been due from him even prior to the election on 28.10.1993 from 13.12.1990. Since he is a member of the managing committee of the society any disqualification to his continuance as a member has to be traced to sub-rule(2) of R.44 of the rules. The relevant provision is clause (c) of sub-rule (2). It states that a member of the managing committee shall cease to hold office, if he is subsequently seen to be disqualified under sub-rule (1) on the date of the election itself. The case of the writ petitioner is that the appellant was disqualified on the date of the election itself by virtue of clause (c) of sub-rule (1) which it will be only appropriate to quote: "R.44. The case of the writ petitioner is that the appellant was disqualified on the date of the election itself by virtue of clause (c) of sub-rule (1) which it will be only appropriate to quote: "R.44. Disqualification of membership of committee.- (1) No member of the society shall be eligible for being elected, or appointed as a member of the committee of the society under S. 28 if he:- xx xx xx xx (c)(i) is in default to the society or to any other society in respect of any loan or loans taken by him or loan in which he has stood surety, for such period, as is prescribed in the bye-laws of the society concerned or in any case for a period exceeding three months or is a defaulter to the society or to any other society" The sub-rule is in two parts. The first part relates to defaults in respect of any loan taken by a member of the society, or any loan in which he has stood surety. The second part deals with defaulters to the society or to any other society. The difference in the language of the two parts of clause (c) is significant - the first part deals with cases where the member is in default to the society, while the second part deals with defaulters to the society. R. 2(d) applies to the first part, and is attracted only if the default is in respect of a loan taken from the society or in respect of which the member is a surety. The second part deals with defaulter as defined in R. 2(e), that is a person against whom a decree has been obtained. 4. There is no case in the available pleadings-and for that matter, no case before us-that the appellant had taken any loan from the society, or that he was a surety for any defaulted loan. The first part of R. 44(1)(c) is not thus attracted to this case, and rule 2(d) on which the learned Single Judge relied, and which defines "default" has therefore no application to the facts of this case. The only other ground on which the appellant could be disqualified is under the latter part of the clause, which speaks of a member being a defaulter to the society or any other society. The only other ground on which the appellant could be disqualified is under the latter part of the clause, which speaks of a member being a defaulter to the society or any other society. "Defaulter" as under R.2(e) is only a person against whom a decree has been obtained. There is no case in the writ petition that any decree has been obtained by the society against the appellant. The appellant could not therefore be treated as a "defaulter" under rule 2(e) and the latter part of R. 44 (1)(c) is also not attracted to the case. If this be the position, the appellant does not entail any disqualification under sub-rule (2) (e) read with sub- rule 1(c) of R. 44. The order of the learned Single Judge holding that the appellant is disqualified under R. 44(1)(c) read with R. 2(d) has therefore to be set aside." 15. Having regard to the aforesaid circumstances, I am of the view that this writ petition is only to be allowed and it is allowed as follows:- i) It is declared that the petitioner was not a defaulter in respect of Rs. 2,000/- as on the date of nomination and therefore the rejection of his nomination by the Returning Officer was bad in law. ii) Since the petitioner's nomination had been accepted as per an interim order passed by this Court and he was since elected, the petitioner shall be treated as an elected member of the society.