ORDER
A.V. Savant, J.
1. Heard both the learned Counsel; Dr. Naik for the petitioners and Shri Apte, Addl. Advocate General for respondent Nos. 1, 2, 5, 6, 7 & 10.
2. This petition is by the members of the Pune Agricultural Produce Market Committee respondent No. 4 – which is a body corporate constituted in accordance with the provisions of the Maharashtra Agricultural Produce Marketing (Regulation) Act, 1963 (for short the Marketing Act”) and the Maharashtra Agricultural Produce Marketing (Regulation) Rules, 1967 (for short “the Marketing Rules”) framed under the said Act. Petitioners have challenged the validity of the order dated 26th March, 1998 superceding the Market Committee, which order has been passed by respondent No. 5, in exercise of his powers under sub-section (1) of section 45 of the said Act. The said provision empowers the State Government to supercede the Market Committee which is either not competent to perform or persistently makes defaults in performing the duties imposed on it under the Act or abuses its powers or wilfully disregards any Instructions issued by the State Government. Show cause notice was issued on 11th December, 1997 setting out as many as 21 serious charges of defalcation of crores of rupees and gross abuse of the powers. The petitioners gave their replies on 27th January, 1998 and 9th February, 1998. The State Marketing Board respondent No. 3 was consulted in accordance with the requirements of the proviso to sub-section (1) of section 45 and after considering the entire material on record charge-wise findings have been recorded and an order of supersession has been passed on 26th March, 1998, which is the subject matter of this petition.
3. We may briefly indicate the serious charges that have been held proved against the petitioners, members of the Market Committee. Charge 1 relates to the expenditure incurred to the tune of Rs. 3.46 crores for construction of banana market as against the sanctioned estimate of Rs. 1.61 crores. The excess expenditure is without a prior budgetary provision and the Market Committee had borrowed Rs. 4.60 crores for the construction. The prior permission of the Director of Marketing as required by section 12(1) of the Marketing Act, was not obtained for the additional expenditure which was unauthorised and unjustified. The explanation tendered by the Committee has been found to be wholly unsatisfactory. The second charge related to giving of an advance of Rs. 3,01,909.80 to the weighmen. The weighmen are not the employees of the Market Committee and there is no provision under the Marketing Act or Rules for giving such an advance. No steps have been taken for recovery of the said amount. Thus, the market funds have been used for a purpose which was not permissible by law. Charge 3 relating to the appointment of an internal auditor has been dropped. Charge No. 4 relates to the sale of petrol on credit from the petrol pump belonging to the Market Committee to the extent of Rs. 46,93,000/- though the earlier dues to the tune of Rs. 28,70,836/- were recoverable. There was no justification for giving individual credit and these transactions have resulted in loss to the Market Committee to the tune of Rs. 12.10 lacs. This is apart from the earlier loss of Rs. 8.4 lacs in the petrol pump account. The fifth charge relates to the leasing of the plots, galas and shops of the Market Committee without entering into any agreements. Since the necessary documents were not executed, it was not possible to ascertain as to how much amount the Committee actually received, how much amount was actually credited and how much was the balance recoverable from the lessees. Similarly the Market Committee allowed improper transfers of the plots, shops or galas and while deciding the lease rent the valuation of the property was not properly considered resulting in loss to the Market Committee. Charge No. 6 relates to the unauthorised expenditure on advertisements, Charge No. 7 relates to the purchase of stationary and printing material without inviting
tenders even once. The purchases are made from certain persons only. Charge No. 8 relates to an advance of Rs. 3.60 lacs given to the centre for Co-operative Marketing for a foreign tour three years back, out of which amount, Rs. 1.86 lacs has not yet been recovered. No steps were taken for recovery of the amount of Rs. 1,86,000/-.
4. Charge No. 9 relates to the serious lapses on the part of the Market Committee for its failure to remit the amount of Rs. 76.28 lacs towards employees’ provident fund and Rs. 46.86 lacs towards the gratuity of the employees to be deposited in the Bank. As against this amount of Rs. 76.28 lacs + Rs. 46.86 lacs = Rs. 1,23,14,000/- only Rs. 40,00,000/- have been deposited in the Bank. The short fall is Rs. 83,14,000/-. The Market Committee accepted the fact that out of the shortfall an amount of Rs. 42,93,000/- was spent for some other purpose not permissible in law. This amounts to serious lapse on the part of the Market Committee to the prejudice of the poor employees. Charge No. 10 relates to the advance of Rs. 66,05,739/- out of which only Rs. 49,24,490/- was alleged to have been recovered but there was no proof of such recovery. No steps were taken for recovery of the balance of Rs. 16,81,249/-. Charge No. 11 is in respect of advance given to Lift Irrigation Societies in the year 1993-94 to the tune of Rs. 14,19,610/-. This is wholly impermissible since this is not one of the purposes set out in section 37 of the Marketing Act dealing with the purposes for which the Market funds may be expended. Apart from this, no steps have been taken for recovery of the said loan and not a single paise was recovered from out of the advance of Rs. 14,19,610/-. Charge No. 12 relates to the violation of Rule 95(1)(iii) and (iii-a) of the 1967 Rules which cast a duty on the Market Committee to furnish the information to the Director after a proper check on receipts and payments, allotment of shops, galas, plots, their sale and purchase and the purposes for which such plots are used. No such control has been exercised by the petitioners which has resulted in the galas being used for the purposes other than those for which they were allotted and such purposes were not permissible in law. Charge No. 13 relates to the arbitrary advances given to the employees which are unjustified. In case of a Senior Clerk Shri Dhamdhere, the advance was to the tune of Rs. 2,63,626/-. Similar unjustified advances were given to Shri Boob, Ex-Secretary to the tune of Rs. 93,600/-; to Shri Satav i/e Secretary to the tune of Rs. 77,000/-, to Shri Salunkhe, Senior Clerk to the tune of Rs. 26,000/- and to Shri Choukar, Assistant Secretary to the tune of Rs. 37,900/-. None of the amounts have been recovered which has resulted loss to the Market Committee.
5. Another serious Charge No. 14 relates to giving of donations in violation of the provisions of section 37(1)(j-2) which permits spending of the market funds for grant of donations to any institution or body conducting any educational or welfare activities for the benefit of agriculturists in the market area subject to the condition that the amount of such grant or donation does not exceed, in the aggregate, 10% of the net amount remaining after deducting the expenditure from the revenues of the year immediately preceding the year in which such grant or donation is made. In the year 1993-94, though such net amount was Rs. 52.23 lacs and the donation could not have exceeded 10% thereof, donations were made to the extent of Rs. 17.65 lacs. Similarly in the year 1994-95, the net amount was Rs. 23/- lacs and in view of section 37(1)(j-2), the donations could have been upto 10% of Rs. 23 lacs, whereas the donations are to the extent of Rs. 19.95 lacs. The donations have been held to be in violation of the provisions of section 37(1)(j-2). Charge No. 15 relates to the financial assistance of Rs. 4.30 lacs to Haveli Taluka Sahakari Kharedi Vikri Sangh. Similarly, Rs. 3.60 lacs was due from Kaleshwar Majur Sanstha and Rs. 70,000/- was due from Haveli Kanda
Utpadak Sangh. No steps have been taken for recovery of the said amounts and no reasons are assigned for disbursement of such amounts which was in violation of provisions of section 37 of the Marketing Act.
6. Charge No. 16 is also a serious charge. It relates to the advance of Rs. 60 lacs for the purchase of a plot from Shri Jagade which land was not reserved for market-yard but was reserved for some other purpose. By obtaining loan from the State Marketing Board respondent No. 3 advance was paid to the tune of Rs. 60 lacs. Subsequently, the transaction was cancelled and only Rs. 30 lacs were recovered from Shri Jagade. Balance of Rs. 30 lacs plus interest of Rs. 13,87,500/- i.e. for the net loss of Rs. 43,87,500/- which the Market Committee had suffered, petitioners are held responsible. The amount advanced to Shri Jagade was secured by the Bank guarantee of Rajashree Shahu Sahakari Bank to the extent of Rs. 30 lacs- The Market Committee informed the Bank on 1st January, 1997 that the guarantee stood discharged and the amount of Rs. 30 lacs should be refunded to Shri Jagade. This clearly shows how public funds have been used for purposes which manifest dishonest intentions. The Market Committee had suffered a loss of Rs. 43,87,500/-. The explanation tendered by the petitioners has been found to be thoroughly unsatisfactory to say the least. Charge No. 17 relates to the advance of Rs. 7,42,200.95 to the credit society of the employees of the Market Committee. No steps were taken to recover this amount. The Market Committee thus grossly abused its powers and mis-utilised the funds resulting in loss to the Market Committee. Charge No. 18 relates to the plot allotted to Shri Sunil Pote at the concessional rate of Rs. 16.67 per sq. ft. though the rate fixed was Rs. 30/- per sq. ft. The rate of Rs. 30/- per sq. ft. itself was 10% less than the market rate. This has resulted in loss to the Market Committee to the tune of Rs. 66,500/-. Charge No. 19 relates to the purchase of a car, water tanks, and flower market sheds. The capital expenditure has been incurred without prior approval of the Director of Marketing as required by law. Charge No. 20 relates to the fact that the Market Committee had paid taxes to the extent of Rs. 36.97 lacs to the Municipal Corporation in respect of the galas which were later handed over to the traders. However, while deciding the market price of the galas, the taxes paid to the tune of Rs. 36,97,000/- were not taken into account which has resulted in loss to the Market Committee. Charge No. 21 relates to the purchase of land from Shri Kenjale for which the amount was borrowed from the State Marketing Board and without any justification the vendor was paid interest at the rate of 22%. This has been done without obtaining prior approval of Govt.
7. It is in respect of such serious charges that the petitioners have been held guilty of making a persistent default in performing the duties imposed on them under the Act and/or abusing their powers and/or wilfully disregarding the instructions issued by the State Govt. The findings recorded by the fifth respondent show that loss to the tune, of crores of rupees has been caused to the Market Committee as a result of the arbitrary indiscriminate and fraudulent conduct of the petitioners as indicated above.
8. Faced with the above facts, Dr. Naik the learned Counsel for the petitioners contended that there is failure to comply with the proviso to sub-section (1) of section 45 of the Act. Section 45 sub-section (1) reads as under :-
45.(1). If, in the opinion of the State Government, a Market Committee or any member thereof, is not competent to perform or persistently makes a default in performing the duties imposed on it or him by or under this Act or abuses its or his powers or wilfully disregards any instructions issued by the State Government etc., or any officer duly authorised by it in this
behalf arising out of audit of accounts of the Market Committee or inspection of the office and work thereof, the State Government may, after giving the Committee or member, as the case may be, an opportunity of rendering an explanation, by notification in the Official Gazette, with reasons therefor, supersede such Market Committee, or remove the member, as the case may be; and where a member is removed, the State Government shall appoint any person as a member of such Committee in his place for the remainder of his term of office;
Provided that, no Market Committee shall be superseded without the State Marketing Board referred to in section 44 being previously consulted.
All that the proviso requires is that no Market Committee shall be superceded without the State Marketing Board referred to in section 44 being previously consulted.
9. Affidavit in reply has been filed by Shri Y.B. Navgire, the concerned Deputy Registrar Co-operative Societies. He has categorically denied the averments made in para 4 of the petition in respect of the absence of previous consultation. It is averred in para 6 of the affidavit that there was effective previous consultation with respondent No. 3 namely the State Marketing Board and the affidavit sets out the details of the said effective previous consultation as under :
a). When the show cause notice was issued on 11th December, 1997 to the petitioners, a copy thereof was sent to the State Marketing Board with a request to submit its opinion.
b). The Chief Executive Officer of the State Marketing Board wrote to the Market Committee-respondent No. 4-requesting for a copy of the replies sent by the petitioners to the show cause notice dated 11th December, 1997. This was necessary to enable the State Marketing Board to form its opinion on the subject.
c). The copies of the replies sent by the petitioners to the show cause notice dated 11th December, 1997 were sent to the Chief Executive Officer of the State Marketing Board under 3 letters No. 213 dated 27th January, 1998, No. 215 dated 27th January 1998 and No. 217 dated 9th February, 1998 andp
d). It was after considering the above material that the State Marketing Board informed its decision on 23rd March, 1998 to the fifth respondent District Deputy Registrar that action should be taken on the said show cause notice on merits of the matter. It is also relevant to note that the petitioners’ Counsel had called upon the General Manager of the State Marketing Board to state as to whether the replies sent by the Directors of Pune Agricultural Produce Market Committee, on 27th January 1998 and 9th February, 1998 were placed before the State Marketing Board. This letter was addressed by the petitioners’ Counsel on 6th April, 1998 and, on the same day, General Manager of the Board informed the petitioners’ Counsel in the affirmative meaning thereby that the show cause notice and replies were placed before the State Marketing Board.
10. Dr. Naik sought to place heavy reliance on the decision of the Apex Court in Kewal Ram v. Maharashtra State Co-operative Societies and others, 1986 (2) SCALE 398. A perusal of the said decision will show that though it was a case falling under section 45 of the Marketing Act, there was no consultation with the State Marketing Board in the facts of the case before the Apex Court. Reliance was placed only on an affidavit to show that a request was made to the State Marketing Board
to elicit its opinion with regard to the proposed supersession and the Board had not given any reply one way or the other. No material was produced before the Apex Court, as has been produced before us, to show that the copies of the show cause notice and the replies given by the members of the Market Committee were placed before the State Marketing Board and after applying its mind it had given its opinion which, therefore, amounted to effective previous consultation within the meaning of proviso to sub-section (1) of section 45 of the Act. The ratio of the Apex Court decision in Kewal Rama’s case, therefore, can have no application to the facts of the case before us. In our view having regard to the material that is placed before us namely the affidavit of the Deputy Registrar Shri Y.B. Navgire and the correspondence between the petitioners Counsel and the State Marketing Board on 6th April, 1998, we have no hesitation in coming to the conclusion that there was effective and previous consultation with the State Marketing Board. We, therefore, find no substance in the contentions raised by Dr. Naik.
11. It was then faintly suggested by Dr. Naik that the procedure laid down by section 45(1) of the Marketing Act is arbitrary, in as much, as it is violative of Art. 14 of the Constitution which ensures that the State shall not deny to any person” equality before the law or equal protection of the laws within the territory qf India. We have already reproduced section 45(1) above. That provision contemplates taking action for supersession only when the Market Committee or its members are not competent to perform or persistently make defaults in performing duties imposed upon them under the Act or abuse their powers or wilfully disregard any instructions issued by the State Govt., in that behalf arising out of audit of accounts or inspection of the office and working thereof. Thus, there are guidelines indicating as to when and on what grounds the power has to be exercised. Compliance with the rule of audi alteram partem has been ensured in the very scheme of the provisions of sub-section (1) of section 45, in as much as, written notice is given to the members of the Market Committee which is sought to be superceded. The notice sets out the charges in extenso giving details thereof. Replies are elicited from the members of the Market Committee. Sufficient opportunity to represent their case was given and then, on consideration of the entire material and after previous and effective consultation with the State Marketing Board, a reasoned order is passed superceding the Market Committee. If that be the law, it is difficult to appreciate how such a procedure can be characterised as arbitrary. We find nothing either in the scheme of section 45(1) or in the actual exercise of the powers in the facts of the present case to hold that either the principles of natural justice are violated or that the fifth respondent has acted in an arbitrary or mala fide manner. There is thus no substance in this contention raised by Dr. Naik.
12. On merits of the alleged defalcations and financial irregularities, it is difficult for us to come to any conclusion other than the one reached by the fifth respondent. The conduct of the petitioners shows gross abuse of their powers and large scale financial defalcations and the reasons are not far to seek. We need say nothing more since res ipsa loquitur. In the view that we have taken, the petition is liable to be summarily rejected.
13. Dr. Naik, however, expressed an anxiety. The term of the present Committee is due to expire on 23rd September, 1998 and fresh elections are due to be held. Counsel’s apprehension was that in the event of an Administrator taking charge of the affairs of the Market Committee, elections may be delayed indefinitely. Shri Apte, the learned Additional Advocate General makes a statement that elections will be held in accordance with law as expeditiously as possible. Statement made by the Shri Apte is accepted.
14. Writ Petition is summarily rejected. Ad-interim order granted by this Court stands vacated forthwith.
15. At this juncture Dr. Naik prays for continuance of the ad-interim order for a period of two weeks. Shri Apte, opposes the prayer on the ground that the petitioners are held guilty of serious defalcation of crores of rupees and hence no indulgence should be granted to them.
16. In our view, it would be contrary to the public interest to allow the petitioners to continue in office for any further period. Having regard to the findings of fact as regards defalcations of crores of rupees and the view that we have taken on the two legal submissions, we do not think this is a fit case for grant of such indulgence. Hence prayer is rejected.
17. Writ petition rejected.