Research › Search › Judgment

Bombay High Court · body

2022 DIGILAW 1636 (BOM)

Aniruddha Subhanrao Deshmukh v. State of Maharashtra

2022-07-07

AMIT BORKAR

body2022
JUDGEMENT : 1. Heard. 2. Rule. Rule made returnable forthwith by consent of the parties. 3. By this Writ Petition under Article 226 of the Constitution of India, the petitioners are challenging common order dated 06.09.2017 passed by respondent No.1 dismissing the Revision Application under Section 154 of the Maharashtra Co-operative Societies Act, 1960 challenging the order of disqualification under Section 73CA, an order imposing fine under section 79(3) and direction under section 79 of the Maharashtra Co-operative Societies Act, 1960. 4. The facts giving rise to the present petition are as under : Undisputedly, the petitioners are the Managing Committee Members of the District Central Cooperative Bank, who at the relevant time was specified Society under Section 73G of the Maharashtra Co-operative Societies Act, 1960 (hereinafter referred to as ‘the said Act’). There was some litigation in relation to appointment of the Administrator wherein the petitioners got protection from this Court restraining the Authorities from appointing the Administrator. 5. On 30.09.2016, the Divisional Joint Registrar, Co-operative Societies, in the exercise of purported power under Section 79(1) of the said Act, directed the respondent – Bank to comply with various Government Resolutions mentioned in the said order and further directed to disburse loans as contemplated under the Government Resolutions to the agriculturists. The Bank, by reply dated 14.10.2016, furnished an explanation to the Divisional Joint Registrar explaining its inability to comply with the directions considering financial difficulties. 6. The Divisional Joint Registrar, by a notice dated 19/20.10.2016 purportedly under Section 79(3) of the said Act, called upon the petitioners to show cause as to why action under Section 79(3) imposing the fine of Rs.100/- per day shall not be imposed on the petitioners. 7. The petitioners, by rely dated 03.12.2016, pointed out that the provisions of Section 79(1) are not attracted, and the notice under Section 79(1) was without jurisdiction. By order dated 03.12.2016, i.e. on the date of filing of reply itself, the order under Section 79(3) came to be passed against the petitioners directing them to pay an amount of Rs.100/- per day. Curiously, on the same day, i.e. on 03.12.2016, a show cause notice under Section 73CA of the said Act was issued to the petitioners seeking their explanation as to why they should not be disqualified for continuing as a Managing Committee Member of the Bank. 8. Curiously, on the same day, i.e. on 03.12.2016, a show cause notice under Section 73CA of the said Act was issued to the petitioners seeking their explanation as to why they should not be disqualified for continuing as a Managing Committee Member of the Bank. 8. Thereafter, in the petitions filed in this Court seeking protection from disqualification and appointment of Administrator, this Court protected petitioners. Ultimately, on 28.12.2016, the Divisional Joint Registrar passed orders of disqualification of petitioners under Section 73CA of the said Act. The petitioners challenged the said order by way of Revision before respondent No.1. By order dated 06.09.2017, the Revision Applications filed by the petitioners were dismissed. The present petition challenges the order of dismissal of Revision. 9. The learned Senior Advocate, on behalf of the petitioners, submitted that the order under Section 79(1) of the said Act passed by the Divisional Joint Registrar was beyond the purview of Section 79(1) as the Registrar had no powers except the powers which are specifically conferred under Section 79(1) of the Maharashtra Co-operative Societies Act, 1960. According to him, Section 79(1) pertains to obligations to file returns and statements as stated in Sub-Section (1) and Sub-Section (1A) of the said Act. According to him, the nature of Registers as contemplated under Sections 79(1) and (1A) are clarified under Rule 65 of the Maharashtra Co-operative Societies Rules, 1961. Therefore, the exercise of powers under Section 79(1) to enforce the Government Resolutions directing the disbursement of loans to agriculturists in a particular manner is beyond the purview of Section 79(1) of the said Act. 10. Per Contra, learned A.G.P. supported the orders passed by the Divisional Joint Registrar and respondent No.1, contending that the Authorities were within their powers to issue the said orders. According to her, the Government Resolutions mentioned in the order under Section 79(1), being policy decisions, were binding on the Bank. Therefore, the Registrar had the power to enforce the Government Resolution. 11. During the pendency of the present petition, the Advocate for respondent No.7 was absent. Therefore, on the last date, the Advocate for the petitioners was called upon to serve notice on the Advocate for respondent No.7, informing him of notice of today’s hearing. Therefore, the Registrar had the power to enforce the Government Resolution. 11. During the pendency of the present petition, the Advocate for respondent No.7 was absent. Therefore, on the last date, the Advocate for the petitioners was called upon to serve notice on the Advocate for respondent No.7, informing him of notice of today’s hearing. Today, the Advocate for the petitioners has filed an affidavit stating that the Advocate for respondent no.7 was informed telephonically as well as by SMS that the matter will be disposed of finally today. The affidavit is taken on record. 12. I have carefully considered the submissions made on behalf of both sides. 13. For adjudicating the issue involved, it is necessary to note Section 79(1) and (1A), which read as under : “79. [Society’s obligation to file returns and statements and Registrar’s power to enforce performance of such obligations] [(1) The Registrar may direct any society or class of societies to take action to comply with the provisions of this Act, rules made thereunder, by-laws of the society or any order passed by the Registrar under this Act; and the officer or officers of the society shall be bound to comply with order within the period specified therein.] [(1-1A)] The registrar may direct any society or class of societies, to keep proper books of accounts [in such form, including electronic or any other form, as may be prescribed] with respect to all sums of money received and expended by the society, and the matters in respect of which the receipt and expenditure take place all sales and purchases of goods by the society, and the assets and liabilities of the society, and to furnish such statements and returns and to produce such records as he may require from time to time; and the officer or officers of the society shall be bound to comply with his order within the period specified therein. [(1A) Every society shall file returns within six months of the close of every financial year to which such accounts relate, to the Registrar or to the person authorised by him. [(1A) Every society shall file returns within six months of the close of every financial year to which such accounts relate, to the Registrar or to the person authorised by him. The returns shall contain the following matters, namely:- (a) annual report of its activities; (b) its audited statement of accounts; (c) plans for disposal of surplus funds as approved by the general body of the society; (d) list of amendments to the bye-laws of the society, if any; (e) declaration regarding date of holding of its general body meeting and conduct of elections when due; (f) any other information required by the Registrar in pursuance of any of the provisions of this Act.” 14. Careful reading of Section 79(1) makes it clear that Section 79 of the said Act deals with the powers of the Registrar to enforce the performance of certain obligations. Sub-section (1) confers power on the Registrar to direct any society or class of societies to keep proper books of accounts in respect of all sums of money received and spent by the society and in respect of all the receipts and expenditure, sales and purchase of goods by the society, the assets and liabilities of the society, and to furnish such statements and returns and to produce such records as may require from time to time, and that the officer or officers of the society shall be bound to comply with orders within the period specified therein. Sub-Section (2) of section 79 of the said Act makes it obligatory for society to comply with such directions. A careful reading of section 79 of the said Act makes it clear that the Registrar's power to seek enforcement of performance of obligations by the society is only in relation to the maintenance of books of accounts and in relation to the receipts and expenditure by the society as well as with regard to the assets and liabilities thereof. Section 79(1) does not empower Registrar to direct Co-operative Banks to disburse agricultural loans in a particular manner. Section 79(1), (1A) empowers Registrar to issue directions to any Society to keep proper books of accounts and to furnish the record as and when called by the Registrar. Even sub Section (1A) of Section 79 does not empower Registrar to issue direction to a Co-operative Bank to disburse agricultural loans in a particular manner. Section 79(1), (1A) empowers Registrar to issue directions to any Society to keep proper books of accounts and to furnish the record as and when called by the Registrar. Even sub Section (1A) of Section 79 does not empower Registrar to issue direction to a Co-operative Bank to disburse agricultural loans in a particular manner. The control of the internal working of the business of the Bank is supervised by the Reserve Bank of India or NABARD and Auditor under Section 81 of the said Act. Under the Maharashtra Co-operative Societies Act, 1960, the Registrar has only those powers expressly conferred on it by the statute. 15. It has not been brought to the notice of this Court that the Registrar under section 79 has the power to enforce Government Resolutions regulating the disbursement of agricultural loans by Co-operative Banks. Once this Court concludes that the Registrar had no authority to issue directions to regulate the disbursement of agricultural loans of a Co-operative Bank, the consequential order under Section 79(3) of the said Act cannot be sustained. The petitioners have made out a case that such an order has been passed without giving them the opportunity of hearing. Hence the order under Section 79(3) cannot be sustained on merits. The order under Section 79(1) is without the authority of law. 16. The order under Section 79(3) was passed on 03.12.2016. The show-cause notice under Section 73CA was also issued on the same date. It needs to be noted that the petitioners had filed their reply to notice under Section 79(3) on 03.12.2016. The order was passed on the same day. The manner of issuance of show cause notice under Section 73CA for the imposition of fine under Section 79(3) speaks volumes about how the Divisional Joint Registrar exercised power. Once the order under Section 79(3) is set aside, as a consequence thereof, the order disqualifying the petitioners under Section 73CA cannot be sustained. Considering the facts and circumstances of the case and the manner in which the actions were initiated against the petitioners, it appears that the exercise of powers by the Authorities under the said Act was not in accordance with the settled provisions of law. 17. The Revisional Authority has confirmed the orders impugned on the ground that the petitioners needed to comply with the directions as the Registrar had powers to issue such directions. 17. The Revisional Authority has confirmed the orders impugned on the ground that the petitioners needed to comply with the directions as the Registrar had powers to issue such directions. However, the Revisional Authority dismissed the Revision on the ground that the power to direct Society to maintain account includes the power to issue directions to disburse the agricultural loan in a particular manner. In my opinion, such a course is not permissible considering the scope of Section 79(1) of the said Act. 18. As a result, the impugned orders cannot be sustained. I, therefore, pass the following orders. 19. Rule is made absolute in terms of prayer clause – (a), which reads as under : “quash and set aside the Common Order, dated 06.09.2017 passed by the Hon’ble Minister, at Annexure ‘Q’ as also order dated 28-12-2016, passed by the respondent No.3 Divisional Joint Registrar Amravati and received by the petitioners on 30-12-2016 at Annexure ‘K-1 to 13’ in the interest of Justice.” 20. Pending Civil Application(s), if any, stand(s) disposed of.