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2023 DIGILAW 2014 (BOM)

Ramchandra G. N Mule v. Registrar of Cooperative Societies

2023-10-11

B.P.DESHPANDE, M.S.SONAK

body2023
JUDGMENT/ORDER M.S.SONAK, J. - Heard Mr Gaurang Panandikar with Mr Vithal Naik for the Petitioners, Mr D. Pangam, learned Advocate General appears along with Ms Maria Correia, learned Additional Government Advocate for the State and Mr G. K. Sardessai appears along with Mr Prasanna Chaudikar and Ms S. Bangera for Respondent No.4. 2. Rule. The Rule is made returnable immediately with the consent of and at the request of the learned counsel for the parties. 3. The challenge in this petition is to the impugned order/ minutes of proceedings dtd. 11/9/2023 made/recorded by the Assistant Registrar of Cooperative Societies (respondent no.2), holding that the motion of no confidence was not passed against the fourth respondent. 4. The arguments in this batch of petitions including Writ Petitions No.651/2023 and 652/2023 concluded on 10/10/2023. We were informed that the election of the Chairperson was scheduled on 12/10/2023. Accordingly, it was imperative that these petitions are disposed of before 12/10/2023. 5. The background in which the impugned order/minutes came to be recorded has been discussed in the Judgment and Order disposing of Writ Petition No.651/2023. Accordingly, the said discussion therein may be taken as incorporated herein. On account of constraints of time and the necessity to dispose of this petition before 12/10/2023, reference will have to be made to the background facts discussed in the Judgments and Orders disposing of Writ Petitions No.651/2023 and 652/2023 to be pronounced along with this Judgment and Order. 6. One Dnyeshwar Kushta Sawant had also instituted Writ Petition No.656/2023 (Stamp No.2086/2023 (F)) challenging his disqualification under Sec. 67A of the Goa Cooperative Societies Act, 2001 (said Act) in gross breach of principles of natural justice and fair play. The order impugned in the said petition was stayed on 11/9/2023. On 4/10/2023, learned AG made a statement that this order stands withdrawn and fresh order would be made after compliance with the principles of natural justice and fair play. 7. Dnyaneshwar Kushta Sawant, the petitioner in Writ Petition No.656/2023 had placed on record the Roznama recorded by the Cooperative Officer who made the order dtd. 7/9/2023 under Sec. 67A of the said Act which reads as follows: "Minute No.70 As per Telephonic/Mobile discussion with minister for cooperation with A.R. the undersigned has given directions to prepare showcause notice to BOD of shampurush Dudh Utp. Sah. 7/9/2023 under Sec. 67A of the said Act which reads as follows: "Minute No.70 As per Telephonic/Mobile discussion with minister for cooperation with A.R. the undersigned has given directions to prepare showcause notice to BOD of shampurush Dudh Utp. Sah. Saunstha Maryadit sarvan, Bicholim Goa as they have not conducted/convened AGM in time u/s 58, non submission of s/A-i/s 73 and and audit of said sty u/s 74 of the Act. The draft to that effect is prepared and put up for approval." 8. Accordingly, the impugned order made in this petition will have to be seen and construed in the context of series of orders made by the Government or the Government Officials to disqualify or disable the Directors who requisitioned a special meeting to consider no confidence motion against the Chairman of the Goa State Cooperative Union Ltd. (Union). Such orders were made in the interregnum between the convening of the special meeting to consider the no confidence motion and just before the no confidence motion could be taken up for consideration on 11/9/2023. After the interim orders were granted by this Court and it became apparent that the no confidence motion would be passed, the order impugned in this petition was made to nullify the no confidence motion which was validly passed. 9. On 13/9/2023, this Court made an interim order, staying the impugned order/conclusion recorded in the minutes after this Court was satisfied that a very strong case was made out for the grant of such interim relief. 10. The interim order made on 13/9/2023 in this petition reads as follows: "P.C.: 1. Heard Mr Panandiker for the Petitioners. Mr. D. Pangam, learned Advocate General, appears along with Ms. Maria Correia, learned Additional Government Advocate, for Respondent Nos.1 and 2. 2. Mr Panandiker states that private service has been effected on all the Respondents, including Respondents Nos.3 to 7. However, except for Respondent Nos.1, 2 and 4, the other Respondents are neither present nor represented. 3. This petition concerns the motion of no confidence against Respondent No.4, the Chairperson of the Goa State Cooperative Union Ltd. (Union), which is a federal society. 4. The record bears out that the Board of Directors of this Society comprises 14 members, out of which two are nominated members having no right to vote. One of the members, i.e. Mr Balkrishna Prabhu Dessai, ceased to be a member on superannuation. 4. The record bears out that the Board of Directors of this Society comprises 14 members, out of which two are nominated members having no right to vote. One of the members, i.e. Mr Balkrishna Prabhu Dessai, ceased to be a member on superannuation. Thus, the effective strength of the Board members was 11 as of 21/8/2023, when almost 8 of the 21 members of the Union wrote to the Registrar of Cooperative Societies requesting him to convene a special meeting to consider the motion of no-confidence against Respondent No.4. 5. The communication dtd. 21/8/2023 is on page 29 of the paper book and bears the signatures of 8 members out of the effective Board strength of 11 members. 6. Based upon the above communication/requisition, the Registrar, by his notice dtd. 28/8/2023, convened a special meeting on 11/9/2023 to consider the motion of no-confidence against Respondent No.4. 7. On 08.092023, the very same Registrar, at least prima facie, in breach of principles of natural justice and fair play and perhaps, with a view to alter the level playing field, purported to debar or disqualify 4 out of 8 requisitionists. 8. Accordingly, 3 of the debarred members instituted Writ Petition Nos.2105/2023 (F), 2086/2023 (F) and 2090/2023 (F) before this Court. In two of the petitions, this Court granted interim relief and stayed the orders, debarring the Petitioners. In one matter, interim relief was refused. These orders were made by the Court on 11/9/2023 because the special meeting to consider the motion of no-confidence was scheduled on 11/9/2023 at 3:30 p.m. 9. As a result of the debarring and the interim orders granted by this Court, the effective strength of the Board was reduced from 11 to 9 members. On 11/9/2023 at 3:30 p.m., when the motion was taken up in the special meeting, 5 out of the 9 members remained present and voted in support of the motion. This means that 5 out of the 9 members present expressed their no-confidence in Respondent No.4. 10. Still, the Assistant Registrar deputed to oversee the special meeting, decided that the motion was defeated and the Respondent could continue as Chairperson of the union. The officer completely ignored the provisions of Sec. 59A of the Goa Co-operative Societies Act, 2001 (said Act). 11. 10. Still, the Assistant Registrar deputed to oversee the special meeting, decided that the motion was defeated and the Respondent could continue as Chairperson of the union. The officer completely ignored the provisions of Sec. 59A of the Goa Co-operative Societies Act, 2001 (said Act). 11. Sec. 59-A of the Goa Co-operative Societies Act, 2001 reads as follows:- "[59 A Motion of no confidence against officers of societies.- (1) A President, Vice-President, Chairman, Vice-Chairman, Secretary, treasurer or any other officer, by whatever designation called, who holds office by virtue of his election to that office shall cease to be such President, Vice-President, Chairman, Vice-Chairman, Secretary, treasurer or any other officer, as the case may be, if a motion of no confidence is passed at a special meeting of the board of directors/committee of management of society by a simple majority of the total number of the members of board of directors/committee who are for the time being entitled to attend and vote at any meeting of the board of directors/committee and the office of such President, Vice-President, Chairman, Vice Chairman, Secretary, treasurer or any other officer, as the case may be, shall thereupon be deemed to be vacant. (2) The requisition for convening special meeting of the board of directors/committee for considering such motion of no confidence shall be signed by not less than one-third of the total number of members of the board of directors/committee who are for the time being entitled to attend and vote at any meeting of the board of directors/committee and shall be delivered to the Registrar: Provided that no such requisition for a special meeting shall be made within a period of six months from the date on which any person/officer referred to in sub-sec. (1) has entered upon his office. (3) The Registrar shall, within seven days from the date of receipt of requisition under sub-sec. (2), convene a special meeting of the board of directors/committee which shall be held not later than fifteen days from the date of issue of the notice of such meeting. (4) The special meeting called under sub-sec. (3) shall be presided over by the Registrar or any person authorized by him in this behalf. (2), convene a special meeting of the board of directors/committee which shall be held not later than fifteen days from the date of issue of the notice of such meeting. (4) The special meeting called under sub-sec. (3) shall be presided over by the Registrar or any person authorized by him in this behalf. The Registrar or such person shall, when presiding over the meeting of the board of directors/committee, have the same powers as the President or Chairman when presiding over a board of directors'/committee's meeting has, but shall not have the right to vote. (5) The meeting called under this Sec. shall not be adjourned for any reason. (6) Voting at the meeting shall be by raising of hands. The names of the directors/members of the committee voting for, and against the motion, shall be read in the meeting and recorded in the minute book of the special meeting of the board of directors/committee: Provided that if one-third of the directors/members of the committee present so demand, the voting shall be by secret ballot. Provided further that when there is an equality of votes, the motion shall be deemed to have lapsed. (7) If the motion of no confidence is rejected, no fresh motion of no confidence shall be brought before the board of directors/committee within a period of six months from the date on which the motion is rejected.]." 12. The provisions of Sec. 59-A of the said Act are quite clear. The Assistant Registrar was required to follow the said provisions instead of referring to the bye-laws. In any case, the Division Bench of this Court in the case of Ivo Almeida Coutinho and Ors. vs. P.M. Naik and Ors. - 2012 (3) Mh.L.J. 627 , on considering the almost identical issue has held that the provisions of Sec. 59-A would prevail over any bye-law inconsistent with the provisions of the said Act. The Division Bench has held that if a rule or bye-law of the society is in conflict with the provision of Sec. 59-A, the statutory provisions would prevail over such rule or bye-law. The learned Advocate General, most fairly handed over the above decision and agreed that the Assistant Registrar's reasoning conflicted with the decision of this Court in Ivo Almeida (Supra). 13. The learned Advocate General, most fairly handed over the above decision and agreed that the Assistant Registrar's reasoning conflicted with the decision of this Court in Ivo Almeida (Supra). 13. The Assistant Registrar's reasoning and order holding that the no-confidence motion has failed by relying on the bye-law, therefore, suffers from perversity and is practically a nullity. The decision is contrary to the provisions of Sec. 59-A of the said Act and contrary to the decision of the Division Bench of this Court which was binding on the Assistant Registrar or the Registrar. 14. Although we do not elaborate on this aspect, we cannot help observing that an attempt was made to debar or disqualify the requisitionists on the eve of the special meeting to consider the motion of no-confidence. Even after the motion was passed consistent with the provisions of Sec. 59-A, an attempt is made to stultify the same by reference to bye-laws and by ignoring the provisions of Sec. 59-A of the said Act and the ruling of the Division Bench of this Court in Ivo Almeida Coutinho (supra). These attempts are made by the officials from the office of the Registrar of Co-operative Societies and even the Registrar, who are expected to be neutral and independent in such matters. 15. Recently, the Hon'ble Supreme Court in the case of Union Territory of Ladakh and Ors vs. Jammu and Kashmir National Conference and Anr. - 2023 SCC OnLine SC 1140, has held that the executive authorities given the responsibility to hold elections, (which, in our opinion, would include presiding over meetings to consider no-confidence motion against elected representatives), must be completely independent of any extraneous influence or consideration. The Hon'ble Supreme Court expressed surprise at the officials of the Union Territory of Ladakh not only denying Respondent No.1 the electoral symbol but even upon timely intervention of the learned Single Judge of the Jammu and Kashmir High Court, leaving no stone unturned not only to resist but to frustrate a cause simply by efflux of time. 16. The Hon'ble Supreme Court was constrained to take note of the broader aspect of the lurking danger of authorities concerned using their powers relating to elections arbitrarily and thereafter being complacent, rather over-confident, that the Courts would not interfere. 16. The Hon'ble Supreme Court was constrained to take note of the broader aspect of the lurking danger of authorities concerned using their powers relating to elections arbitrarily and thereafter being complacent, rather over-confident, that the Courts would not interfere. The misconceived notion being that in the ultimate eventuate after elections are over when such decisions/actions are challenged, by sheer passage of time, irreversible consequences would have occurred, and no substantive relief could be fashioned is just that -misconceived. The Court noted that, however, the conduct by the authorities as exhibited in the case before it may seriously compel the Court to have a comprehensive re-think, as to whether the self-imposed restrictions may need a more liberal interpretation, to ensure that justice is not only done but also seen to be done, and done in time to nip in the bud any attempted misadventure. The Court refrained from commenting any further on the Appellants, noting the pendency of the contempt proceeding. 17. Besides, we would also refer to yet another decision of the Hon'ble Supreme Court in the case of Vipulbhai M. Chaudhary vs. Gujarat Cooperative Milk Marketing Federation Limited and Ors. - (2015) 8 SCC 1 , in which it was held that institutions like Panchayats or Cooperative Societies must run on democratic principles. In a democracy, all persons heading public bodies can continue, provided they enjoy the confidence of the persons who comprise such bodies. This is the essence of democratic republicanism. Democracy demands accountability and transparency in the activities of the Chairperson, especially in view of the important functions entrusted to the Chairperson. Such duties can be discharged by the Chairperson only if he/she enjoys the continuous confidence of the majority of members. So, any statutory provision to demonstrate that the Chairperson has lost the confidence of the majority is conducive to the public interest and adds strength to such bodies of self-governance. The Court held that Democratic functioning and autonomy have now become the core constitutional values of a cooperative society. Such societies are to be registered only if they are founded on cooperative principles of democracy, equality, equity and solidarity. 18. Despite the decision of the Hon'ble Supreme Court in the case of Union Territory of Ladakh and Ors. (supra), the learned Counsel for Respondent No.4 submitted that we should not entertain this petition because the Petitioners have alternate remedies available to them. 18. Despite the decision of the Hon'ble Supreme Court in the case of Union Territory of Ladakh and Ors. (supra), the learned Counsel for Respondent No.4 submitted that we should not entertain this petition because the Petitioners have alternate remedies available to them. Considering the gross nature of the present case and the background, which suggests that every attempt was made to protect Respondent No.4 for clinging on to the Chairmanship, even though he has lost the confidence of the majority, we do not think we should now relegate the Petitioners to alternate remedy and thereby facilitate the continuance of Respondent No.4 as Chairperson, even though he has completely lost the confidence of the majority. Such a course of action would not only conflict with the provisions of Sec. 59-A of the Act, which the Assistant Registrar was duty bound to comply with, but also the decision of the Division Bench of this Court and the decisions of the Hon'ble Supreme Court in the cases of Union Territory of Ladakh and Ors. (supra) and Vibulbhai M. Chaudhary (supra). 19. For all the above reasons, a strong case is made out to grant interim relief. The balance of convenience favours the grant of interim relief as otherwise, a person who has lost the confidence of the majority will unauthorisedly continue as the Chairperson with the assistance of the officials who saw nothing wrong in violating the clear provisions of the said Act, defying decisions of this Court, and ignoring the democratic principles which must inform the functioning of Co-operative Societies. 20. Accordingly, we stay the Assistant Registrar's decision to the extent she holds that the motion of no-confidence was not validly passed in the special meeting held on 11/9/2023 at 3:30 p.m. Plainly, both on facts as well as in law, the motion was validly passed, and as a result of such passing, the Respondent No.4 ceases to continue as the Chairperson of the Union, i.e. the federal society. The position of the Chairperson is, therefore, deemed to be vacant with effect from 11/9/2023. 21. Now, the Registrar, in terms of the Act and the Rules, will have to hold elections expeditiously for the election of the Chairperson. Accordingly, we direct the Registrar to take emergent steps for holding such an election. This process should be completed no later than 15 days from today. 22. 21. Now, the Registrar, in terms of the Act and the Rules, will have to hold elections expeditiously for the election of the Chairperson. Accordingly, we direct the Registrar to take emergent steps for holding such an election. This process should be completed no later than 15 days from today. 22. In the meantime, some director/member will have to officiate as the Chairperson. Considering the background of this case and the prima facie role played by the Registrar in disqualifying members on the eve of the special meeting to consider the motion of no-confidence, we do not think that the Registrar should now be allowed to appoint an administrator. Instead, having regard to democratic principles, we direct the Registrar to convene a meeting of the nine Directors/Board members within 48 hours from today. At such a meeting, the Registrar must, this time independently, ascertain which of the members/directors enjoy the support of the majority and appoint him as the ad-hoc Chairman until regular elections are held within 15 days. This time, the Registrar must go by the principle of simple majority from out of the nine Board members/directors. 23. The Ad-hoc Chairman so appointed must not take any policy decisions or must not expend the Union's funds for any extraordinary purposes. Only routine day-to-day functioning of the Union can be carried out and amounts spent therefrom. Strict accounts will also have to be maintained by this ad-hoc Chairperson. Once the regular election is held within 15 days, the ad-hoc chairperson will cease to function, and the regularly elected Chairperson should take over. 24. Today, we were inclined to dispose of the Petition finally with the consent of the Counsel for the contesting parties. Only because some of the Respondents did not appear despite private service, we defer the final hearing. The Petitioners should once again take steps to serve the Respondents who are today not represented and file an affidavit of service. 25. We now post this matter on 27/9/2023 to enable the Registrar to report compliance and to also dispose of this petition finally at the admission stage. 26. The notice to the Respondents who are not represented today should indicate that this petition is posted on 27/9/2023 for final disposal. 27. All concerned to act on an authenticated copy of this order. 28. 26. The notice to the Respondents who are not represented today should indicate that this petition is posted on 27/9/2023 for final disposal. 27. All concerned to act on an authenticated copy of this order. 28. Ms Maria Correia is requested to inform the gist of this order to the Registrar immediately since this order is dictated in the open Court." 11. Learned Advocate General and Mr Sardessai, learned counsel for respondent no.4, submitted that if relief is granted to the petitioners in the connected Writ Petitions No.651/2023 and 652/2023, then Rule will have to be made absolute in the present petition. By separate Judgments and Orders, we have allowed Writ Petitions No.651/2023 and 652/2023 by granting relief to the petitioners therein. As a corollary, therefore, even this petition will have to be allowed, and the interim order made on 13/9/2023 will have to be made absolute. The interim order was modified by an order dtd. 25/9/2023. Accordingly, the interim order dtd. 13/9/2023, as modified by the order dtd. 25/9/2023, is made absolute. 12. As noted in the interim order, the effective strength of the Union was 11 as of 21/8/2023. On this date, 8 (eight) out of the 11 (eleven) Directors expressed their lack of confidence in the Chairperson (respondent no.4) and requested convening of a special meeting to consider motion of no confidence. 13. By notice dtd. 28/8/2023, the Registrar convened the special meeting on 11/9/2023 at 3.30 p.m. From this date, however, the Registrar, the Assistant Registrar and the Government made a series of orders to disqualify or disable the requisitionists from participating in the special meeting scheduled on 11/9/2023. 14. Based upon the interim orders granted by this Court, as of 11/9/2023, the effective strength of the Board of Directors of the Union was effectively 9 (nine). On 11/9/2023 at 3.30 p.m., when the motion of no confidence was taken up for consideration, 5 (five) out of the 9 (nine) members remained present and voted in support of the motion of no confidence. This means that 5 (five) out of the 9 (nine) members expressed their want of confidence in respondent no.4. 15. On 11/9/2023 at 3.30 p.m., when the motion of no confidence was taken up for consideration, 5 (five) out of the 9 (nine) members remained present and voted in support of the motion of no confidence. This means that 5 (five) out of the 9 (nine) members expressed their want of confidence in respondent no.4. 15. Sec. 59A of the said Act contemplates the passage of a motion of no confidence by a simple majority of the total number of members of the Board of Directors who are for the time being entitled to attend and vote at any meeting of the Board of Directors. As of 11/9/2023 at 3.30 p.m. the Board comprised 9 (nine) members who were for the time being entitled to attend and vote at the special meeting. As noted earlier 5 (five) out of these 9 (nine) members attended the special meeting and expressed their no confidence in respondent no.4. Thus, in terms of Sec. 59A of the said Act, the motion of no confidence was validly passed as against respondent no.4. 16. The Assistant Registrar, however referred to the by-laws of the Union and based upon the same declared that the motion has failed because it was not supported by 7 (seven) out of the 12 (twelve) members of the Board. This reasoning borders on perversity. Considering the background in which such reasoning was adopted, we are sorry to say that the Assistant Registrar breached the principles of neutrality which was expected from this officer in a matter of such nature. This officer even went to the extent of defying the binding precedent in Ivo Almeida Coutinho and Ors. vs. P.M. Naik and Ors. - 2012 (3) Mh.L.J. 627 to assist the forth respondent to cling to power after having lost the support of the majority. 17. The Assistant Registrar grossly erred in taking the strength of the Board members as 12 (twelve) when in fact, the strength was only 11 (eleven). Admittedly one of the Board members had retired from the primary society due to his superannuation much before a special meeting to consider no confidence motion was convened. Out of these 11 (eleven), the Registrars and Assistant Registrars, without compliance with the principles of natural justice or fair play disqualified four out of the 8 (eight) requisitionist directors. One of the directors chose not to challenge the disqualification. Out of these 11 (eleven), the Registrars and Assistant Registrars, without compliance with the principles of natural justice or fair play disqualified four out of the 8 (eight) requisitionist directors. One of the directors chose not to challenge the disqualification. Two of the directors secured interim reliefs from this Court. As a result the strength of the Board was reduced to 9 (nine) as of 11/9/2023. Since 5 (five) members out of 9 (nine) voted in support of the motion of no confidence, the same was validly passed in terms of Sec. 59A of the said Act. The Assistant Registrar grossly erred in relying upon the by-laws when it was well settled that in case of a conflict between the by-laws of the society and the statutory provisions contained in the said Act, it is the latter that would prevail. 18. In the precise context of virtually identical by-laws and the provisions of Sec. 59A of the said Act, the Division Bench of this Court in the case of Ivo Almeida Coutinho & Ors. (supra) had already held that the statutory provisions in Sec. 59A would prevail over the by-laws. This decision was binding upon the Assistant Registrar. Still, the Assistant Registrar, disregarding the legal position and even disregarding the binding precedent of this Court, declared that the motion of no confidence was not validly passed in a bit to assist the fourth respondent to cling to power even though he had lost the support of the majority of the members of the Board of Directors. 19. The approach of the Assistant Registrar in this case was contrary to the law laid down in the case of Union Territory of Ladakh and Ors vs. Jammu and Kashmir National Conference and Anr. - 2023 SCC OnLine SC 1140 and Vipulbhai M. Chaudhary vs. Gujarat Cooperative Milk Marketing Federation Limited and Ors. - (2015) 8 SCC 1 . The approach of the Assistant Registrar was contrary to the democratic principles and the principles of neutrality which the Assistant Registrar was duty-bound to respect. 20. Now that Rule has been made absolute in Writ Petitions No.651/2023, 652/2023 and 656/2023, Rule will have to be made absolute in the present petition as well. 21. Accordingly, the impugned order/minutes of proceedings dtd. 11/9/2023 made by respondent no.2 are quashed and set aside. 20. Now that Rule has been made absolute in Writ Petitions No.651/2023, 652/2023 and 656/2023, Rule will have to be made absolute in the present petition as well. 21. Accordingly, the impugned order/minutes of proceedings dtd. 11/9/2023 made by respondent no.2 are quashed and set aside. It is declared that the motion of no confidence was validly passed against respondent no.4, who consequently stood removed as a Chairperson of the Union, and the position held by him fell vacant on 11/9/2023. The interim order made on 13/9/2023 as modified by order dtd. 25/9/2023 is made absolute. The Registrar will have to proceed with the elections for the post of Chairperson scheduled on 12/10/2023. 22. The Rule is made absolute in the above terms. Although we were contemplating a direction that Smita Kankonkar, Assistant Registrar of Cooperative Societies, pays costs of Rs.50,000.00 to the petitioners, we refrain from imposing such costs in the fond hope that, at least hereafter, the Government Officials will implement the law impartially and promote democratic principles instead of attempting to scuttle the same.