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2020 DIGILAW 753 (KAR)

N. B. Raveeshaiah v. State of Karnataka

2020-03-18

B.VEERAPPA

body2020
ORDER : Learned AGA is directed to take notice for respondent Nos.1 to 3. 2. The petitioner filed the present writ petition for a writ of mandamus directing the second respondent Registrar to consider the application filed by the petitioner under Section 106(3) of the Cooperative Societies Act, 1959 (‘Act’ for short), vide Annexure-F and pass appropriate orders within a reasonable period. 3. It is the case of the petitioner that he came to be elected as a Director of Hemagiri Multi Purpose Cooperative Society Limited, situated at Kamakshipalya, Magadi Main Road, Bengaluru in the year 1914-15 for a period of five years. One Sri Bettegowda was elected as President to the said society. During his tenure, he has indulged in various irregularities and misappropriation of funds which has resulted in loss and deficiency in funds and assets of the said society. Though the same was seriously opposed by the petitioner, the said act of the President has been continued. Therefore, the petitioner lodged a complaint before the third respondent on 27.8.2016 and third respondent failed to take action against the said Bettegowda. The petitioner tendered his resignation on 12.10.2016. Subsequent to his resignation, the society has not sent any notice of meetings and the petitioner has not also attended any of the meetings after his resignation. The third respondent initiated suo moto proceedings under Section 29C of the Act disqualifying all the Directors including the President and Vice President in No.RCS/OTS01/28(11)/201920 and no notice was served on the petitioner. 4. Against the order of disqualification, the petitioner filed an appeal before the second respondent under the provisions of Section 106 of the Act. Along with the appeal, he also filed an application for staying of further proceedings No.RCS/OTS01/28(11)/201920 initiated by the Additional Registrar of Cooperative Societies. The second respondent issued notice to the third respondent without granting any interim order. Therefore, the petitioner is before this Court. 5. I have heard the learned counsel for the parties to the lis. 6. Sri Y.R.Sadashiva Reddy, learned Senior Counsel for the petitioner would contend that against the allegations of misappropriation of funds by the President of Hemagiri Multi Purpose Cooperative Society Limited, petitioner being a Director of the society filed a complaint before the third respondent. But no action has been taken on the said complaint. Subsequently, the petitioner tendered his resignation on 12.10.2016 to the post of Director. But no action has been taken on the said complaint. Subsequently, the petitioner tendered his resignation on 12.10.2016 to the post of Director. After fifteen days of such resignation, the same is deemed to be accepted. In spite of the same, third respondent initiated suo moto proceedings under Section 29C of the Act disqualifying all the Directors. Hence, the petitioner filed an appeal before the second respondent appellate authority. Along with the said appeal, he also filed an application under Section 106(3) of the Act seeking for stay of further proceedings arising out of the disqualification order dated 24.7.2019. In all fairness, the second respondent ought to have considered the application for interim order. Instead of doing so, he simply issued notice to the third respondent. Therefore, the petitioner sought to quash the order passed by the second respondent without considering the application for interim prayer. 7. The learned Senior Counsel would contend that when the disqualification was the subject matter of the appeal before the appellate authority and if the original order disqualifying all the Directors is not stayed during the pendency of the appeal, the persons who are disqualified would suffer irreparable loss. Therefore, he requests this Court to grant the interim order staying the order dated 24.7.2019 passed by the third respondent. The said submission is placed on record. 8. In support of his contention the learned Senior Counsel relied upon the dictum of the Division Bench of this Court in the case of M.Thimmaiah & others Vs. The Additional Registrar of Cooperative Societies (I & M) & others, in WA.No.1666/2008, disposed of on 5.11.2018 (paragraph3), 9. Per contra, Sri Harsha, learned AGA submits that when an appeal is filed before the appellate authority along with an application for interim prayer, in all fairness the appellate authority ought to have considered the application for interim prayer as the very question of disqualification was the subject matter of the appeal. The appellate authority ought to have either rejected the application or granted the interim prayer. Therefore, he submits that the second respondent may be directed to consider the application filed by the petitioner under Section 106(3) of the Act on its merits. The said submission is placed on record. 10. The appellate authority ought to have either rejected the application or granted the interim prayer. Therefore, he submits that the second respondent may be directed to consider the application filed by the petitioner under Section 106(3) of the Act on its merits. The said submission is placed on record. 10. Having heard the learned counsel for the parties, when the order of disqualification is passed by the third respondent by exercising the power under Section 29C of the Act disqualifying all the Directors including the petitioner, even though he tendered his resignation on 12.10.2016 itself, in all fairness the appellate authority ought to have considered the application filed along with the appeal staying further proceedings. The appellate authority ought to have considered the said application either by rejecting or granting interim order, but it cannot simply issue notice, which is not the intention of the Legislature. 11. My view is fortified by the Division Bench while considering the identical circumstances M.Thimmaiah & others Vs. The Additional Registrar of Cooperative Societies (I & M) & others, in WA.No.1666/2008, disposed of on 5.11.2018 at paragraph3 has held as under: 3. It is true that as per the byelaws of the rd respondent-Bangalore City Cooperative Bank, a person who suffers disqualification has to lay down the office and accordingly the Vice President relieved the 4th respondent herein from the office of the Director and President of the 3rd respondent Bank. But the very same byelaw provides for appeal against such disqualification and a statutory appeal is provided under Section 106 of the Karnataka Cooperative Societies Act, 1959 and the Appellate Authority is empowered to pass interim order under Section 106(3). If that be so, the basic question regarding the disqualification itself is the subject matter in the appeal and if the appeal pending before the Appellate Authority is allowed, and if the order of the original authority disqualifying the 4th respondent is not stayed pending the appeal, the 4th respondent would suffer irreparable loss. It is not a case where by virtue of the order dated 27.09.2008 vacating the interim stay dated 23.07.2008 the appellants are entitled to continue as Directors, but on the other hand it is not in dispute that but for the disqualification, the 4th respondent is entitled to continue as a Director.” 12. It is not a case where by virtue of the order dated 27.09.2008 vacating the interim stay dated 23.07.2008 the appellants are entitled to continue as Directors, but on the other hand it is not in dispute that but for the disqualification, the 4th respondent is entitled to continue as a Director.” 12. In view of the above, writ petition is allowed the impugned order dated 13.3.2020 passed by the third respondent issuing notice is modified. A writ of mandamus is issued directing third respondent-appellate authority to consider the application filed by the petitioner under Section 106(3) of the Act for grant of interim order and pass appropriate orders within a period of one week from the date of receipt of a copy of this order. Till such application is considered by the appellate authority, the order dated 24.7.2019 passed by the second respondent disqualifying all the Directors including the petitioner is stayed for a period of two weeks. Ordered accordingly.