IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION

WRIT PETITION No.457 of 2007

 

Gulab Rameshnath Khote, Res. at B-607, 36 Avishkar Building, Khatavwadi Tenant Co-op. Housing Society Ltd, Grant Road, Mumbai 400 007...Petitioner

 

Versus

 

1. State of Maharashtra

2. The Agricultural & C-op. Department, Mantralaya, Mumbai.

3. The Secretary, The Agricultural & Co-op. Department, Mantralaya, Mumbai.

4. The Advocate General, State of Maharashtra...Respondents

Mr.A.V.Anturkar for the Petitioner

Mr.A.A.Kumbhakoni, Associate Adv. General for the Respondents 1 to 3

 

CORAM: B.H.MARLAPALLE &

S.R.SATHE, JJ

 

Dated: 27th Nov., 2007

JUDGMENT (PER S.R. SATHE, J)

 

1. Being aggrieved by the provision made in Section 73(1AB) of the Maharashtra Co-operative Societies Act, 1960 (hereinafter referred to as the said Act) that the Member who fails to execute such bond within a specified period shall be deemed to have vacated his office as Member of the Committee, the petitioner has filed this Writ Petition under Article 226 of the Constitution of India, 1950 and prayed that the said provision be declared ultra virus.

 

2. Brief facts giving rise to this Writ Petition are as under: 

There is a Co-operative Housing Society by name Khatauwadi Tenants Co-operative Housing Society Limited (hereinafter referred to as KTCH Society) at Grant Road, Mumbai. Election for the Managing Committee of the said KTCH Society took place on 16.2.2005 and 8 Members were declared as elected. The Petitioner is one of the elected Members. One Mrs. N.M.Kumta was removed from the post of Chairman of KTCH Society. Some litigation was going on between the said Kumta and the society. 

During the inquiry of the said proceeding, the petitioner and other Members of the Managing Committee of KTCH Society came to know that it was necessary for them to give a bond within 15 days as per the provisions of Section 73(1AB) of the said Act. Realising the mistake or default committed by them, the petitioner and two other Members of the Managing Committee of the said KTCH Society executed a bond and handed over the same to the Deputy Registrar of Co-operative Society, D Ward.

 

3. The relevant provisions are as under Section 73(1AB)

The Members of the committee shall be jointly and severally responsible for the decisions taken by the committee during its term relating to the business of the Society. The Members of the committee shall be jointly and severally responsible for all the acts and omissions detrimental to the interest of the society. Every such Member shall execute a bond to that effect within fifteen days of his assuming the office, in the form as specified by the State Government by general or special order. 

The Member who fails to execute such bond within the specified period shall be demand to have vacated his office as a Member of the committee. 

Rule 58A reads as under: 

Bond to be executed by elected Members of Managing Committee:-Every elected Member of the Managing Committee shall execute a bond in Form M-20 within fifteen days of his assuming the office. Such bond shall be executed on the stamp paper as provided under the Bombay Stamp Act, 1958. The expenditure on stamp paper shall be borne by the society. The Chief Executive Officer/Secretary of the Society shall receive such bonds and keep them on record of the society and accordingly inform the Registrar within fifteen days from formation of the Committee. 

After coming to know the above provisions the petitioner felt that the above mentioned provision has the effect of nullifying the election which was held in a democratic way and after spending considerable time and money. According to petitioner, the provision whereby it was said that the Member who has failed to execute a bond within specified period shall be deemed to have vacated his office as a Member of the Committee, was in fact illogical, particularly, when in earlier part of the said section it was clearly stated as to what would be the liability of the Members of the Managing Committee. 

According to the petitioner, he and other Members did not execute the bond within specified period because they were not at all aware of the said provision. According to the petitioner, the effect of non execution of the said bond mentioned in the provision is very harsh and if this section is to be implemented scrupulously then the management of thousands of societies would be required to be taken over by the administrators. Hence, the petitioner has filed the present petition and prayed that a Writ of Mandamus or Writ in the nature of mandamus or any other appropriate direction under Article 226 of the Constitution of India, 1950 be issued and above mentioned portion of Section 73(1AB) of the said Act be struck down. 

The Petitioner also prayed that the petitioner and the Managing Committee Members be allowed to hold the office till their present term of the office expires.

 

4. One D.S.Yempalle, Officer on Special Duty, Department of Co-operative and Textile, filed affidavit on behalf of respondents and opposed the petition. The respondents contended that the above mentioned provision is to be read along with Rule 58 of Maharashtra Co-operative Society Rules, 1961 and the Rules amended by the Maharashtra Co-operative Society (Amendment Rules), 2002.

 

5. The Respondents contended that the petitioners have not shown as to how the above mentioned provision transgresses any of the constitutional provisions. In fact, the legislature having experienced and realised that the Members of the Managing Committee of different societies are acting in most arbitrary and careless manner, with a view to have some accountability amongst the Members of the Managing Committee, the above mentioned provision has been made by the legislature.

It was contended that as a result of the provision with regard to execution of a bond, the intention of the legislature is to make the Members fully aware of their personal Responsibility / liability. The respondents also contended that the above mentioned provision or rather the time limit prescribed in the same is mandatory and not directory. The respondents, therefore, contended that there is no scope for the court to interfere and grant any relief under Article 226 of the Constitution of India in the present petition.

 

6. Shri Anturkar, learned Advocate for the petitioner has urged three points before us. Firstly, he submitted that when the first part of the above mentioned provision was clarifying the liability of the Member of the Managing Committee, there was no necessity of directing the Members to execute a bond and that too within a stipulated period and then to provide penalty for non execution of the said bond. 

According to him, even if such bond is not executed, still then if any default or fraud is committed by the Member, then the Member is certainly liable and accountable. So, when even in the absence of non execution of a bond, a Member can be held responsible or liable and accountable, there was no necessity to provide harsh punishment of discontinuation of his Membership. 

He, therefore, submitted that the above mentioned later portion of the provision is in fact redundant and if the same is read with the aims and objects of the said Act, then it is in fact creating hindrance in achieving the object of the said Act. Secondly, he canvassed before us that the period mentioned for executing a bond has also no basis and it is arbitrary. 

According to him, this provision can at the most be read as directory and it cannot be treated as mandatory. Lastly, he submitted that though it has been mentioned in the said provision and the rule that the Member has to execute a bond as per the provisions of Bombay Stamp Act, 1958, one is not even in a position to know for how much amount the bond has to be executed and whether it has anything to do with the assets of the society or the overall financial position of the society. 

He, therefore, initially submitted that the above mentioned provision be struck down. However, subsequently he submitted that he is not presently pressing the point with regard to virus of the said provision and only restricting himself for the relief that the petitioner and the other Members be allowed to hold the office till their tenure expires, as they have already submitted the bond. 

The learned advocate also submitted that before giving effect to this later portion of the said provision, it is in fact necessary to have inquiry as to whether in fact the Members have committed default in executing a bond and for that purpose it is necessary to hold enquiry under Section 78 of the said Act.

 

7. As against this, Shri Kumbhakoni, learned Addl. Advocate General submitted that this Court has already held that the provision of Section 73(1AB) of the said Act is ultra virus and the said provision is certainly mandatory and not directory. He also submitted that the bond to be executed as per Rule 58 of the Maharashtra Cooperative Society Rules and the provisions of the Bombay Stamp Act, 1958, the Member can submit such bond on a stamp of Rs. 100/-. 

He, therefore, submitted that in the instant case the petitioner has admittedly not submitted the bond within the specified period and hence there is no question of granting any relief to the petitioner in the present petition and the petition be rejected.

 

8. From the averments in the petition and the submissions made before us, it appears that the attempt of the petitioner is to show that the above mentioned provision and in particular later portion of the said provision whereby the Member is called upon to execute a bond within specific period and effect of such non execution is concerned, the same is ultra virus. 

It is needless to say that it is well settled that there is always presumption in favour of the constitutionality of the enactment and the burden is upon him who alleges otherwise to show that there has been clear transgression of the Constitutional principles. The Apex Court has also time and again emphasized that it must be presumed that the legislature understands and correctly appreciates the needs of his own people and laws are made to solve the problems faced in proper implementation of the Act. 

Bearing in mind the said principle, if we see the averments in the petition, as well as the submissions made by the learned advocate for the petitioner, it appears that not even a single specific ground is shown by the petitioner on the basis of which it can be said that the above mentioned provision is ultra virus. On the contrary, having realised that in many societies the Members of the Managing Committee exercise their powers indiscriminately the above section has been added.

 

9. Shri Anturkar, learned Advocate for the Petitioner submitted that the provisions contained in later portion of Section 73(1AB) of the said Act is not mandatory. For that purpose he had placed reliance on a case Salem of Advocates Bar Association v. Union of India . We have carefully gone through the said ruling. 

At the outset it must be mentioned that the facts of the said case and the facts of the case in hand are totally different. There was no question of considering the provisions of Section 73(1AB) of the said Act, but it was a case where the Apex Court was considering the provisions of Section 35, 35A of Civil Procedure Code, 1908 and Order VIII Rule 1 of CPC. So, the above said ruling is of no use to the present petitioner.

 

10. Shri Anturkar, learned Advocate for the petitioner has also drawn our attention to a case Keshavrao Patil v. District Deputy Registrar and Ors. wherein the Division Bench has held that where no order of removal was passed under Section 78 in the matter of incurring disqualification of "A" under Section 73(1) the order of discontinuation of Membership of "A" under Section 73(2) would be invalid as the passing of Order of removal as required under provisions of Section 78 in the matter of incurring disqualification under Section 73(1) is not automatic. It must be noted that in the above cited ruling their Lordships were not considering the issue as to whether the provision of Section 73(1AB) was mandatory or directory. 

Besides this, as in the said case enquiry under Section 78 was necessary Their Lordships observed that discontinuation of Membership is not automatic under Section 73(2) of the said Act. Hence, the above cited ruling is also of no use to the present petitioner.

 

10. Shri Kumbhakoni, learned Addl. Advocate General has placed reliance on a case Assissi Co-op. Hsg. Soc. Ltd. and Ors. V/s State of Maharashtra and Ors wherein while deciding the appeal No 683 of 2006 the Division Bench of this Court has clearly observed that the provision of Section 73(1AB) is not directory, but it is mandatory. We are in full agreement with the view expressed by the Division Bench of this Court in the above matter. So, relying upon the said ruling we hold that the said provision is mandatory.

 

11. The petitioner has tried to submit that he was not aware of the above mentioned provision and as such he did not execute the bond. However, it is needless to say that ignorance of law cannot be the excuse. So, there is no substance in the argument that as the petitioners have executed the bond after the period mentioned in the provision they can be allowed to hold the office.

 

It is needless to say that the moment the period of 15 days was over, the petitioner and other Members who had not executed the bond in time have ceased to be Members. Merely because the punishment or penalty or consequence provided under the said provision for non execution of the bond in time is harsh, it cannot be said that the said provision is ultra virus or that this Court can ignore the said time period.

 

12. It is tried to be suggested on behalf of the petitioner that though the Member is required to execute a bond there is no clear cut provision indicating as to the value of the stamp on which the bond is to be executed. Firstly, it must be noted that the bond contemplated under this provision only means binding agreement. So, it need not be on the basis of the assets of the Society or the financial position of the society. 

Schedule I of the Bombay Stamp Act, 1958, lays down the stamp duty required to be paid in respect of different bonds. As described in Clause 5(B) of the said Schedule when the stamp duty paid for particular agreement is not otherwise provided in the schedule then the proper stamp duty is Rs. 100. So, there is no substance in the argument advanced by the learned advocate for the petitioner that there is some lacuna in the provision of the said Act and Rule 58.

 

13. In the instant case there is no question of holding any enquiry under Section 78 of the said Act to find out as to whether actually bond has been executed by the petitioner and whether the same has been forwarded to the concerned authority by the Secretary in time, because the petitioners themselves have clearly admitted that they have not executed a bond within 15 days, but they executed the same after lapse of about one year. So, it is not open to the petitioner to submit that there is no breach of the above mentioned provision.

 

14. Thus, looking to the case from any angle, it is very clear that the petitioner is not entitled to get the relief as prayed.

 

15. In this view of the matter the petition is rejected.

(B.H.Marlapalle, J)

 

(S.R.Sathe, J.)

 

SOURCE COURTESY: Indiakanoon

Link: http://www.indiankanoon.org/doc/1983435/

  

 

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY

CIVIL APPELLATE JURISDICTION

WRIT PETITION NO.1671 OF 2009

 

Mr. Shashikant Jesrani & Ors...Petitioners

Vs.

Assistant Registrar & Ors...Respondents

Mr.Satyajeet Mirajkar i/b.Gabriel Pillai for the Petitioners

Mr.S.N.Patil, A.G.P. for the Respondents 

CORAM: - V.C.DAGA, J.

DATE: 27TH JANUARY, 2009

P.C

1. Heard learned Counsel for Petitioner. This Petition is directed against the order dated 13th January, 2009 passed by the Divisional Joint Registrar, Cooperative Societies, Mumbai Division, Mumbai.

 

2. The factual matrix canvassed during the course of hearing, is as under:

 

3. On 8th August, 2005, the Managing Committee of The Society entered into the office for a term of five years.

 

4. As per Section 73(1) (AB) of the Maharashtra Cooperative Societies Act, 1960, the Members of the Managing Committee were bound to execute bond by 23rd August, 2005 (i.e. Within 15 days from the date of assuming office).

 

5. The Members of the Managing Committee failed to execute bonds. Consequently, by operation of law, the Managing Committee automatically vacated their office on 24th August, 2005. Thereafter, there was no validly elected Managing Committee in the office of the Society.

 

6. It appears that out of 7 members, 6 members who constituted Managing Committee in the month of August, 2005 continued to look after the affairs of the Society till 2008 though unauthorized. It further appears that sensing action from the Cooperative Department; these 6 Members adopted resolution dated 10th September, 2008 and appointed Advocate Mr. Borade as an Election Officer to conduct Election, who appears to have conducted Election in the month of October, 2008. The present Petitioners are claiming to be the validly elected Members of the Managing Committee in the election held in October, 2008.

 

7. The fault was found by the Cooperative Department with regard to the contention of the Petitioners with regard to the validity of the election held in the month of October, 2008, since old Managing Committee could not have held election for want of authority. Consequently, the Assistant Registrar in exercise of power under Section 73(1) (AB) read with Section 78 of the Maharashtra Cooperative Societies Act, 1960 appointed an Administrator. Challenge to this order failed. The said order has also been confirmed in Appeal by the Divisional Joint Registrar, which is impugned in this Petition filed under Article 227 of the Constitution of India.

 

8. Having heard learned Counsel for Petitioner, :3: it is clear that the Members of the Managing Committee were elected on 8th August, 2005, had automatically vacated their office on 24th August, 2005, in view of the lapse committed by them leading failure to execute bond under Section 78(1) (AB) of the Maharashtra Cooperative Societies Act,1960. Thereafter, there was no legal Managing Committee in the office. Therefore, the resolution dated 10th September, 2008 adopted by the Managing Committee, who was illegally holding office could not have adopted resolution to hold fresh election. The action is bad & illegal.

 

9. If the aforesaid resolution was the foundation for holding election giving birth to the existing Managing Committee, then it suffers from the illegality. The Election conducted by the Society in the month of October, 2008 being bad and illegal, the Respondent Cooperative Department was perfectly justified in appointing an Administrator under Section 78 of the Maharashtra Cooperative Societies Act, 1960.

 

10. In this view of the matter, the Petition is devoid of any substance and liable to be dismissed.

 

11. In the result, Petition is dismissed. No order as to costs.

(V.C.DAGA, J.)

 

*****

The Bombay High Court recently ordered fresh elections to the Managing Committee of an industrial cooperative society in Chunabhatti. Following their removal from the Committee for non-execution of Bonds under the Maharashtra Cooperative Societies Act. Deepak Rao and others had moved the HC contesting the order passed by the Divisional Joint Registrar as he was “facing corruption charges and his anticipatory bail application was rejected by the sessions court”.

The Managing Committee of the Shri Mahalakshmi Industrial Premises Cooperative Society Ltd was superseded by an order of the Deputy Registrar of Cooperative Societies on July 6. The members challenged the order before the Divisional Joint Registrar Shivaji Pahinkar — who is under suspension, according to Assistant Government Pleader G W Mattos. Pahinkar dismissed their appeal on October 23, following which the members moved the HC.

According to Mattos, the petitioners contested Pahinkar’s order as he had passed it on October 23, a day after his anticipatory bail application was rejected by the session’s court. The petitioners expressed apprehension that the order was “based on consideration other than merit”, according to Mattos.

According to Mattos, Justice A M Khanwilkar observed that if the petitioners' contention was accepted, the court would have to order an inquiry into the allegations and, if found true, the matter will have to be referred back to the appellate authority for fresh hearing.

Mattos contended before Justice Khanwilkar that the managing committee was removed on technical grounds as they ceased to be members for non-execution of bonds. Mattos submitted that instead of going into allegations and counter-allegations, it would be appropriate to hold fresh elections to the committee.

According to Mattos, observing that the removal was technically correct, the court directed that the three members of the seven who had executed the bonds should continue to function as the Board of Administrators (BoA) instead of the single administrator appointed by the Deputy Registrar of Cooperative Societies on July 6.

Mattos said the HC then directed the Deputy Registrar of Cooperative Societies to issue order in this regard by December 27. The court also directed that elections to the committee should be held within three months. The court has, however, asked the BoA not to take any major policy decisions during this period.

 

*****

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

CIVIL APPELLATE SIDE: WRIT PETITION NO.7774 OF 2007

 

Raj Residency Co-Op. Housing Society limited: Petitioner

Versus

Divisional Joint Registrar, Co-op. Society and others: Respondent.

Ms. Divya Trivedi for the petitioner

Mr. A.C.Tamhane for Respondent no.2

Mr. Shrihari Aney Sr. advocate I/b Mr. Amit Potnis for respondents 3 and 4 

CORAM; A.P. DESHPANDE, J

DATED; 19TH OCTOBER, 2007

P.C;

 

1. This Writ Petition is filed by the society espousing the cause of members of the Committee which has been superseded. The Deputy Registrar, after issuing show cause notice under section 78 of the Co-operative Societies Act, called upon the Committee Members as to why the committee should not be superseded and an administrator may be appointed at its place.

Various grounds were set out in the show cause notice and one of the said grounds is non-compliance of section 73(1AB) of the Maharashtra Co-operative Societies Act, which provides that every member shall execute a bond to the effect, within 15 days of his assuming the office, that the members of the committee shall be jointly and severally responsible for all the decisions taken by the committee during its term relating to the business of the society and that the members of the committee shall be jointly and severally responsible for all the acts and omissions detrimental to the interest of the society.  

Thus sub section (1AB) obliges every Member of the Committee to execute the bond to the above effect within 15 days of assuming the office. In the present case it is an admitted position that the Committee Members did not comply with the requirement of sub section (1AB). The said sub section further provides that the member, who fails to execute such bond within the specified period, shall be deemed to have vacated the office as a Member of the Committee.

As referred to hereinabove, it is undisputed that the committee members have failed to comply with the mandatory obligation under section 73(1AB) and thus by operation of the deeming fiction, the committee members shall be deemed to have vacated the office.

 

2. The Deputy Registrar having found the committee members guilty of various acts and omissions passed an order under section 78 after consultation with the Federal society. Instead of the committee members challenging the order passed under section 78, the society chose to file an appeal. The society cannot be said to be an aggrieved person when the committee is superseded under section 78.

Thus the society could not be said to have locus to file appeal, and the Appellate Authority has dismissed the appeal after concurring with the view taken by the Deputy Registrar. Aggrieved by the order passed by the appellate authority, the present writ petition has been filed.

Yet again this writ petition is filed by the society, a juristic person, through no one, and the Committee Members are not even parties to the petition, whereas the society is seeking orders for the protection of the Committee Members. The present petition is misconceived and cannot be entertained at the behest of the society, more so when the committee members who are unseated are not parties to this petition.

 

3. In the result there being no merit in the petition, the same is dismissed. At this stage, the learned counsel for the petitioner seeks stay of this order. The prayer is rejected.

 

 

*****