Research › Search › Judgment

Madhya Pradesh High Court · body

2014 DIGILAW 1333 (MP)

Ankur Trivedi v. State of M. P.

2014-10-14

A.M.KHANWILKAR, SHANTANU KEMKAR

body2014
Judgment A.M. Khanwilkar; CJ.:- This petition is filed as Public Interest Litigation firstly to cancel the decision dated 26/27-8-2014 passed by the respondent No. 2 and essentially to declare that respondents No. 6 to 18 have rendered themselves ineligible to remain as Members of the Board of Directors due to expiry of the term of the existing Board of Directors, on 27.05.2014. 2. The respondent No. 5-Society is a District Cooperative Central Bank and governed by the provisions of Madhya Pradesh Cooperative Societies Act, 1960 as amended from time to time. The existing Board of Directors was elected in the year 2007. The first meeting of the Board was convened on 16.10.2007. As per the provisions of Section 49 of the Act of 1960, ordinarily, the term of office of the outgoing Board was till 15.10.2012. However, the Board was superseded by an order dated 30.09.2011, which order became the subject matter of challenge and culminated with the decision of Apex Court in favour of the Board in Civil Appeal No. 4691/2013 decided by the Supreme Court on May 16, 2013 in the case of State of M.P. and Others vs. Sanjay Nagayach and Others. As per the directions issued by the Supreme Court in the said decision, the Board of Directors was reinstated in office and could continue till 27th May, 2014 being extended term of that Board by virtue of Section 49(7-A)(i) proviso. These are indisputable facts and admitted by both the sides. 3. The matter in issue arises on account of expiry of the term of the outgoing Board on 27.05.2014. According to the petitioners, as the election to install newly elected Board of Directors was not conducted within the specified time, only option was to supersede the said Board by appointing Administrator to look after the affairs of the Society. 4. This grievance of the petitioner has been noticed even by the Commissioner respondent No. 2 whilst examining the claim of the private respondents, who in the said proceeding had asserted that their term is deemed to have been extended further beyond 27th May, 2014 by virtue of Notifications dated 07.07.2012 and 4.01.2013. 5. Those Notifications, admittedly, have been issued by the Competent Authority in exercise of powers under Section 49(7-AA) of the Act of 1960. That plea of the private respondents commended to the respondent No. 2 - Commissioner. 5. Those Notifications, admittedly, have been issued by the Competent Authority in exercise of powers under Section 49(7-AA) of the Act of 1960. That plea of the private respondents commended to the respondent No. 2 - Commissioner. Having said that, the Commissioner opined that the term of the present Board of Directors would, therefore, continue till expiry of the extended period specified in the aforesaid two notifications. 6. The correctness of this finding is the subject matter of this petition. The question is: whether the said Notifications will be of any avail to the fact situation of the present case. The answer is an emphatic 'No'. Inasmuch as, those Notifications, admittedly, have been issued in exercise of powers under Section 49(7-AA), which provision has been deleted by Amending Act of 2013 w.e.f. 05.02.2013. In the first place, the said Notifications were for specific purpose as stated in the respective Notification and, therefore, for specific period ascribable thereto. The Notification unambiguously mentioned that because of the impending Monsoon (to wit, of 2012 and at best of 2013), the holding of elections in the specified Cooperative Societies may not be feasible and for which reason the period of term of Board of Directors of the respective Societies, whose term was to expire during such interregnum period, would stand deferred and extended for the period specified in the said Notifications. 7. Admittedly, the term of the present Board of the Directors of the respondent No. 5 Society would, and has, come to an end on 27.05.2014. That itself was an extended term, as mentioned hitherto. As the said Notifications were issued under Section 49(7AA) with reference to specific period (of impending Monsoon), following the said Notification. For that reason, the said Notifications had lived its life only till the period referred to therein and not thereafter. Understood thus, the said Notifications could not be reckoned after April, 2013. Whereas, the term of the existing Board of Directors of respondent No. 5 Society, came to end on 27.05.2014. 8. A priori, the said Notifications can have no application to the case on hand. In any case, with the deletion of the principal provision, namely, Section 49(7-AA), the State Government could not have exercised any power with reference to the said provision after 05.02.2013. 8. A priori, the said Notifications can have no application to the case on hand. In any case, with the deletion of the principal provision, namely, Section 49(7-AA), the State Government could not have exercised any power with reference to the said provision after 05.02.2013. In other words, as on 27.05.2014, the provisions in vogue were as amended on 05.02.2013, which amendment was necessitated because of the amendment to the provisions of the Constitution providing for according autonomy to the Cooperative Societies. 9. Having said this, it would necessarily follow that the principle stated by the respondent No. 2 in his order dated 27.08.2014 is, to say the least, untenable. That cannot be countenanced. As a result, the order passed by the Commissioner deserves to be set aside. 10. The next question is: what will be the effect of non-holding of elections before expiry of the term of the outgoing Board of Directors, in this case on 27.05.2014? For that, the provisions, which are applicable consequent to the amendment of 2013, are Sections 49, 53 and 57 and provisions contained in Chapter - VA of the Act, providing for conduct of elections to Cooperative Societies. The earlier dispensation as envisaged in sub-section (8) of Section 49 of the Act of 1960, cannot be referred to as the said provision stood deleted on 05.02.2013 and corresponding amendment not only to Section 49 but also Section 53 and insertion of Chapter VA by the Act of 2013 was effected. These provisions, therefore, ought to govern the controversy brought before us. 11. The relief claimed in this petition is to issue a writ of quo warranto against the Members of the outgoing Board of Directors. That relief could be considered and taken forward only if there was no mechanism specified in the Act of 1960, as amended from time to time, to deal with the situation. No doubt, the tenure of the existing Board of Directors expired on 27.05.2014. But, in absence of any express provision to continue or take over the affairs of the Society without any semblance of inquiry whatsoever by any Authority, the only other option, which is expressly provided in the Act is to resort to action under amended Section 53 of the Act of 1960 to supersede the Board of Directors and to appoint any person or persons as Board of Administrators. In the wake of such express mechanism provided in the Act itself, it would not be appropriate for this Court to examine the matter further, much less on the disputed facts, about the allegations of misappropriation and maladministration of the Society. Those are "additional" matters relevant for inquiry under Section 53 of the Act, which the Competent Authority ought to resort to if the situation so warrants. 12. Needless to mention that during the inquiry of proceedings under Section 53, whether by way of interim arrangement, it is open to the competent Authority to supersede the Board of Directors and appoint any persons to manage the affairs of the Society for a specified period, is also a matter to be considered by the said Authority. We do not intend to explore that area in this petition. All relevant questions in respect of proceedings under Section 53 are kept open to be resorted to by the competent Authority forthwith. 13. At the same time, it is noticed that Chapter - VA has been incorporated by way of amendment. The provisions under the heading 'Conduct of Elections to Cooperative Societies' are of some relevance. It is indisputable that the Madhya Pradesh State Cooperative Election Authority (hereinafter called the "Authority"), empowered to conduct elections has already been constituted by the State Government. Section 57-D obligates that Authority to conduct elections of all the Cooperative Societies registered under the Act in the prescribed manner. The outgoing Committee of every Cooperative Society is obliged to send written request for conducting such elections four months prior to expiry of their term. In the present case, that request has been sent on 18.01.2014. If this fact is correct, it should necessarily follow that the said Authority has failed to discharge its statutory obligation in conducting elections immediately thereafter to ensure installation of newly elected Board of Directors on or before 28.05.2014. 14. We may proceed on the assumption that, perhaps, even the said Authority was misled in believing that the tenure of the existing Board of Directors is still continuing and would come to an end only in February, 2015, on account of the extended period in the Notifications dated 07.07.2012 and 24.01.2013. 14. We may proceed on the assumption that, perhaps, even the said Authority was misled in believing that the tenure of the existing Board of Directors is still continuing and would come to an end only in February, 2015, on account of the extended period in the Notifications dated 07.07.2012 and 24.01.2013. As aforesaid, those Notifications have no application to the fact situation of the present case, much less on the day when the election of respondent No. 5-Society had become due for installation of a newly elected Board of Directors. 15. Further, we may notice the expansive authority bestowed on the said Authority, by virtue of the proviso to sub-section (3) of Section 57-D of the Act. It enables the said Authority to conduct the election of concerned Society even suo motu. In view of the finding that the term of the present Board of Directors has come to end on 27.05.2014 coupled with the fact that the outgoing Board of Directors on 18.01.2014 had requested the said Authority to conduct elections, we direct the said Authority to commence the process of holding elections for installing new elected Board of Directors of the respondent No. 5-Society forthwith and, in any case, not later than two weeks from receipt of copy of this decision and to take that election process to its logical end as per the time frame specified in the Amended Act of 1960. In case of any obstructive attitude from any quarter, the said Authority may approach this Court for appropriate directions as may be necessary. This shall be done irrespective of initiation or pendency of action by the Registrar, Cooperative Societies under Section 53. For, these measures are mutually exclusive and ought to proceed on expiry of the term of the Board of Directors so as to ensure installation of the newly elected Board of Directors at the earliest opportunity. That is so because, as per the amended provisions of the Act, the Board of Directors, whose term has expired, cannot remain in the office - until the newly elected members of the Board take over the affairs of the Society, unlike was the situation before the amendment of the Act, w.e.f. 05.02.2013. 16. That is so because, as per the amended provisions of the Act, the Board of Directors, whose term has expired, cannot remain in the office - until the newly elected members of the Board take over the affairs of the Society, unlike was the situation before the amendment of the Act, w.e.f. 05.02.2013. 16. Accordingly, we dispose of this petition with the following order:- (i) The Registrar, Cooperative Societies is free to forthwith exercise the powers under Section 53 of the Act of 1960 as amended, for supersession of the existing Board of Directors and that proceedings will have to be taken to its logical end in accordance with law by giving opportunity to all concerned. Whether by way of interim arrangement, the existing Board should be superseded forthwith and replaced by any other persons may be considered on its own merits. (ii) Further, irrespective of institution or pendency of proceedings under Section 53 of the Act, the State Cooperative Election Authority shall forthwith "commence the process of conducting the elections" for installation of new Board of Directors of respondent No. 5-Society suo motu and, in any case, not later than two weeks from the receipt of copy of this decision and take that election process to its logical end expeditiously within the time frame specified in the amended provisions of the Act of 1960. (iii) The State Cooperative Election Authority shall submit compliance report about the status of election process on or before 21.11.2014. The said Authority is at liberty to approach this Court prior to that date in case it encounters any difficulty in taking the election process forward as per Rules. 17. Subject to above, the petition be treated as disposed of. However, the petition be notified under caption "Directions" for consideration of compliance report on the above matters by the concerned Authorities, on 24.11.2014.