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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH
WRIT PETITION NO. 795 OF 2010
Mukesh s/o Zanaka Paserkar,
aged 45 years, occupation -
Private, resident of 12 Signal
Borkar Nagar, Ghat Road,
Nagpur. ... PETITIONER
ig Versus
1. State of Maharashtra
through the District Deputy
Registrar, Cooperative
Societies, Hindustan Colony,
Amravati Road, Nagpur.
2. The Election Returning Officer,
Nagpur Mehtar Vividh Udhesia
Sahakari Sanstha Maryadit,
having office c/o District
Deputy Registrar, Cooperative
Societies, Hindustan Colony,
Amravati Road, Nagpur.
3. Nagpur Mehtar Vividh Udhesia
Sahakari Sanstha Maryadit,
Nagpur, through its President/
Secretary, having office at
Budhwar Bazar Complex, in
front of Raj Vilas Talkies, Mahal,
Nagpur 440 002.
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4. Sanju s/o Murli Khare,
aged about 41 years,
occupation - Service,
r/o 83, Durga Nagar,
Koradi Road, Nagpur. ... RESPONDENTS
Shri N.A. Vyawahare, Advocate for the petitioner.
Shri A.S. Sonare, AGP for respondent No. 1.
Shri V.N. Morande, Advocate for respondent No. 2.
Shri K.V. & S.V. Deshmukh, Advocate for respondents No. 3 & 4.
.....
ig CORAM : B.P. DHARMADHIKARI, J.
JUNE 16, 2010.
ORAL JUDGMENT :
Heard Shri Vyawahare, learned counsel for the
petitioner, Shri Sonare, learned AGP for respondent No.1, Shri
Morande, learned counsel for respondent No.2 and Shri
Deshmukh, learned counsel for respondents No. 3 & 4.
2. By this writ petition filed under Articles 226 and 227
of Constitution of India, the petitioner has challenged the order
of Respondent No. 2 dated 03.02.2010 rejecting his objection to
Election programme of Respondent No. 3 Society as published
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on 02.01.2010. The contention of the petitioner is that until and
unless all contesting candidates deposited the necessary amount
as per the circular dated 01.09.2007 issued by Commissioner &
Registrar for Co-operation and for that purpose the Bye-laws of
Respondent No. 3 society are amended, the elections cannot be
permitted to take place. This Court has on 16.02.2010 issued
notice and vide order dated 04.03.2010 the elections are
permitted to proceed further but the same have been subject to
further orders in the matter. Accordingly, after hearing parties,
writ petition came to be admitted on 23.03.2010 and it has been
thereafter listed for final hearing.
3. The Circular dated 01.09.2007 is not in dispute.
According to Shri Vyawahare, learned counsel, by the impugned
order, Respondent No. 2 – Election/Returning Officer has held
that that circular is not applicable to Respondent No. 3 – Society
and hence there was no need to either amend the bye-laws or to
hold elections after compliance with that circular. He points out
that Respondent No. 3 – society is a Urban Credit Cooperative
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Society and hence the circular is applicable to it fully. According
to him, defence that the society is not Urban Credit Cooperative
Society, but a Salary Earners’ Society and, therefore, circular is
not applicable to it, is artificial and unsustainable. He has
invited attention to relevant provisions of Maharashtra
Cooperative Societies Act, 1960 (hereinafter referred to as the
Act) particularly to Rule 10 of 1961 Rules framed under the said
Act with contention that classification or categorization of
societies as per said rule is only illustrative and not exhaustive.
He has also urged that the last column i.e. column No. 3 of table
mentioned in Rule 10 clearly reveals the intention to govern all
societies of type stipulated therein by same law and the
description of societies therein cannot be treated as
determinative for the purposes of application of said circular. He
has relied upon the judgment of Division Bench of this Court in
the case of Baburao vs. Brihmadeo, reported at 1980 Mh. L.J. 75,
for this purpose.
4. He has invited attention to provisions of Section 14 of
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the Act to show that said Act empowers the Registrar to direct
amendment to the bye-laws of a society. In addition, he has also
pointed out the provisions of Section 79-A to urge that in the
interest of members and depositors, powers thereunder can also
be exercised and such direction is sustainable thereunder. He
has invited attention to said circular to point out that it has been
issued with the object of forcing personal interest in the Directors
while advancing loans to members of Society by pointing out
that deposits mandated thereby of such Directors with the
society are also jeopardized if bad loans are sanctioned. Looking
to this object of circular, the same is applicable to all Urban
Credit Cooperative Societies i.e. to all societies which sanction
loans to its members. He has placed heavy reliance upon the last
para of said circular pointing out that it expects various officers
like Assistant Registrars, District Deputy Registrar to point out
the obligations imposed by it to respective societies in their
jurisdiction and to insist for amendment to its bye-laws on these
lines before approving any Election Programme. He states that
the circular emphasizes that the election programme can be
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approved only after bye-laws are amended in consonance with
said circular. As the efforts made by the petitioner to secure
compliance with that circular failed and as Respondents No. 1 &
2 have failed to discharge their statutory obligations, according
to him, the petition deserves to be allowed and after the bye-
laws are properly amended, an Election Programme needs to be
published. He further states that the order of this Court dated
04.03.2010 and 23.03.2010 are within the knowledge of
Respondent No. 3 – Society and as the elections are already
subjected to further orders of this Court in the present matter,
the elected candidates are also aware that their tenure is subject
to further orders in the matter.
5. Lastly, he has invited attention to the fact that though
added Respondent No. 4 has filed return separately, Respondent
No. 3 has not placed any separate affidavit on record after the
matter came to be admitted. He has stated that before
admission, the stand of Respondent No. 3 – Society was in
consonance with the circular dated 01.09.2007 and that stand
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has still not been changed in accordance with law. Affidavit
allegedly filed by newly elected secretary on its behalf taking a
different stand therefore can not be looked into.
5A. Shri Sonare, learned AGP for respondent No. 1 and
Shri Morande, learned counsel for respondent No. 2 – Election
Officer have opposed the petition. They contend that Circular
dated 01.09.2007 is not relevant in the present matter because
Respondent No. 3 – Society is not a Urban Credit Cooperative
Society at all and it is only a salary earner’s society. According to
them, the circular specifically restricts itself to Urban Credit
Cooperative Societies and as salary earner society is not covered
thereunder, compliance therewith is not warranted. The
publication and further prosecution of Election Programme and
rejection of objection raised by the petitioner is, therefore,
sought to be justified by them.
6. Shri Deshmukh, learned counsel for respondents No. 3
& 4 has at the outset stated that Respondent No. 4 is the
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President elected in elections conducted pursuant to impugned
election programme. He further states that earlier, Respondent
No. 4 was not party and stand of Respondent No. 3 – Society
taken at that time (before election) is not relevant. His
contention is, Respondent No. 3 – Society has after issuance of
“Rule”, filed separate affidavit through one Gyaneshwar Badhel
and the said person is the Secretary newly elected in place of the
petitioner. He points out that the said affidavit filed on behalf of
Respondent No. 3 Society is in accordance with the affidavit filed
by Respondent No. 4 – President and it cannot be argued that
there is no final stand of Respondent No. 3 – Society on record.
7. He has also invited attention to provisions of Section
79-A and Section 14 of Maharashtra Cooperative Societies Act to
urge that these provisions are not at all attracted in present
matter. According to him, the circular dated 01.09.2007 cannot
be connected with any of these provisions. He has invited
attention to provisions of Rule 13 of 1961 Rules framed under
Maharashtra Cooperative Societies Act to show the procedure to
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be followed for amendment of Bye-laws by a society or then by
Cooperative department, when the society refuses to abide by
directions issued by the department in this respect. He has
placed reliance upon the judgment in the case of Eknath Hinge
vs. State of Maharashtra, reported at 1985 Mh. L.J. 727, to urge
that the amendment to bye-laws is possible only in the mode and
manner prescribed under Section 14 read with Rule 13.
According to him, the instructions issued on 01.09.2007 are at
the most executive instructions and the same do not have force
of law. He has relied upon the judgment in the case of Chief
Commercial Manager, South Central Railway vs. G. Ratnam,
reported at (2007) 8 SCC 212, for the said purpose. He has
further pointed out that under Section 79A of the Act, the power
to issue directions has been given to State Government and the
State Government cannot delegate that power either to Registrar
or any other subordinate authority. He points out that party
aggrieved by action of Registrar under Section 14 or Rule 13 has
a remedy of filing appeal under Section 152 of the Act and then
a revision before the State Government under Section 154 of
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Maharashtra Cooperative Societies Act. Inviting attention to
Circular dated 01.09.2007, the learned counsel contends that by
said circular, directions are given to its subordinate by the
issuing authority and those directions are not to Respondent No.
3 or any other society. In this background, he contends that
when Registrar exercises powers under Section 14 or Rule 13,
that authority is discharging quasi judicial functions and in
discharge of those functions, it cannot be guided by its superiors.
The reliance is being placed upon the judgment of this Court in
the case of Karvenagar S.G.R.S.M. vs. State of Maharashtra,
reported at 1989 Mh.L.J. 320. He further points out that the
circular, therefore, is in conflict with the provisions of Section 14
and in any case it at the most directs amendment to Model Bye
Laws and not to the Bye-laws of Respondent No. 3 – Society. He
further relies upon the judgment of this Court in the case of
Kartarsingh vs. State of Maharashtra, reported at 1993 Mh. L.J.
1206, to urge that bye-laws come into force only after its
registration. He has further contended that this Court has not
made election subject to result of writ petition and the elected
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Managing Committee members, therefore, ought to have been
joined as party respondents. According to him, newly elected
Managing Committee members are also entitled to an
opportunity of hearing before this Court. He further states that
the orders of this Court subjecting the elections to its further
orders at the most can stop the respondents from taking plea of
availability of alternate remedy to the petitioner and it does not
mean that newly elected members can be unseated behind their
back. He has cited the judgment of this Court in the case of
Ramkishan vs. State of Maharashtra, reported at 1994 Mh. L.J.
369, in support of his submission. Lastly, the learned counsel
argues that the present petitioner never sought any amendment
to bye-laws but he is party to a resolution by which the Election
Officer came to be appointed. According to him, even if circular
dated 01.09.2007 is held to be applicable, at the most the
contesting candidates have to maintain a compulsory security
deposit of Rs.5,000/- with Respondent No. 3 – Society and their
actual compulsory deposits with it are much more than that. He
invites attention to the provisions of Bye-laws particularly clause
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18 to show that amount in deposit towards saving schemes like
Shakti and Anivarya Bachat cannot be refunded. He, therefore,
states that even on merits, the election of newly elected members
is in accordance with law and circular dated 01.09.2007.
8. In his reply, Shri Vyawahare, learned counsel has
stated that Respondent No. 3 – Society is very much party before
this Court and the elections have been conducted by Respondent
No. 2 who is/was also aware of the orders passed by this Court.
According to him, the Secretary and President both elected
because of permission granted by this Court to proceed further
with the election, are aware of the interim orders and hence they
represent the interest of Society as also of new committee, and
hence it is not necessary for the petitioner to join each newly
elected member as respondent. He further points out that the
circular dated 01.09.2007 has not been challenged by
Respondents No. 3 & 4 and hence said circular needs to be
implemented. According to him, Respondent No. 2 ought to
have obtained clarification from his superiors before rejecting the
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objection of the petitioner on technical grounds.
9. With the assistance of learned counsel, I have perused
the records. It is to be noted that there is no challenge to
circular dated 01.09.2007 before me though Respondents No. 3
& 4 have attempted to show that said circular has no legal
sanction and, therefore, can at the most constitute an executive
instruction. More over the State Government is joined as party
through District Deputy Registrar of Co-operative Societies at
Nagpur. The authority issuing the circular is also not party
respondent.
10. The perusal of said circular reveals that it is issued by
the Commissioner for Cooperation and Registrar of Cooperative
Societies at Pune. It does not expressly point out any statutory
provision under which the same has been issued and it also does
not disclose any direction by any superior authority/ State
Government to the issuing authority for that purpose. The
Commissioner for cooperation has noted that a review of
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working of various Credit Cooperative Societies in State was
undertaken as the amounts received as deposits were not being
returned. The faulty procedure for distribution of loan was
found to be the reason thereof. The authority also states that the
Directors of such societies do not have their amounts as deposits
with the societies and in many cases such directors have
themselves taken the loan indiscriminately without considering
the interest of society or depositors. To avoid such working and
tendency, the authority found it necessary to impose a condition
that such Directors must always maintain particular amount as
deposit with the society. The authority has found that
imposition of such condition will constrain such directors to
function more seriously and with responsibility. Thereafter the
authority has stated that to secure this purpose, the provisions of
model bye-laws laying down qualification for contesting
elections to the post of Director are being amended and a
condition of maintaining deposit of stipulated amount always
with such society is being imposed. The types of societies
depending upon the area of their operation has been then
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mentioned with amount of deposit against each such type of
society. It is not in dispute that if this requirement is held
applicable to society like the Respondent No. 3 – Society, the
person desirous of contesting election to the post of Director of
such society will be required to have & maintain deposit of
Rs.50,000/-. The circular further states that if said Director
withdraws this amount of deposit before expiry of his term as
Director, he will be disqualified to continue as Director
thereafter. It is also mentioned that no loan can be borrowed or
disbursed against security of such deposit. In the penultimate
para, the said authority has stated that all Urban Credit
Maharashtra Societies in State Government should accordingly
get their model bye-laws modified. In last para, obligation has
been cast upon subordinate authorities to bring this decision to
the knowledge of respective cooperative societies functioning in
their jurisdiction with further direction to ascertain whether such
societies got their bye-laws modified before sanctioning their
Election Programmes. The circular at its ends lays down that if
the bye-laws are found to be not so amended, the Election
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programme be approved only after the amendment is carried
out. For the purposes of Credit Cooperative Societies of Other
Backward Classes and Women, the said security deposit is stated
to be 10% of what is laid down in its earlier para. Thus for
Directors of such a Society, the said security deposit works out
to Rs.5,000/-. It is, therefore, apparent that the circular
nowhere directly calls upon any society to amend its Bye-laws.
The model bye-laws are mentioned only in penultimate para of
said circular but then again it is qualified by all Urban Credit
Cooperative Societies in the State. It is, therefore, apparent that
the word “model” appearing in that para cannot be construed to
mean that there was direction to amend model bye-laws. After
each society gets registered, it has its own bye-law and when
this position is read with said last para, it clearly indicates an
intention that all societies must amend their bye-laws in order to
bring it in conformity with Circular dated 01.09.2007.
11. The provisions of Section 79-A of the Act show that it
deals with powers of Government to give direction in public
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interest. The said section enables State Government to issue
instructions in public interest or for the purposes of securing
proper implementation of co-operative production and other
development programmes approved or undertaken by
Government, or to secure the proper management of the
business of the society generally, or for preventing the affairs of
the society being conducted in a manner detrimental to the
interests of the members or of the depositors or the creditors
thereof. The directions can be issued on receipt of report from
the Registrar or otherwise. It is to be noted that the circular
dated 01.09.2007 nowhere states that the obligation sought to
be imposed therein are in view of any direction issued by the
State Government. The said circular is issued by the
Commissioner for Cooperation and Registrar of Cooperative
societies and that authority is not made a party. It is, therefore,
prima facie apparent that this circular cannot be viewed as
direction falling under Section 79-A of the Act.
12. Section 13 of the Act deals with amendment of Bye-
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laws of the society. As per its sub-section (1), no amendment to
Bye-law to society is valid until registered under the Act and the
procedure prescribed for securing such registration and
amendment is also laid down therein. Section 14 gives power to
Registrar to direct amendment of Bye-laws. Sub-section (1)
requires Registrar to form an opinion that it is necessary or
desirable in the interest of such society to have amendment and
thereafter the Registrar can call upon the society to make the
amendment. If the society thereafter fails to make amendment
within time stipulated, the Registrar can after giving society an
opportunity of being heard and after consulting such State
Federal Society as may be notified by State Government, register
the amendment and issue to the society such amendment
certified by him. After the date of registration of amendment in
this manner, bye-laws of society are deemed to have been
amended. However, even such amendment is made subject to
appeal. It is, therefore, apparent that even when the power is
sought to be exercised, amendment cannot be brought into force
unilaterally and steps as contemplated by Section 13 or Section
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14 are required to be undertaken. In this matter, even if it is
presuming that steps under Section 13 are not initiated, as
Respondent No. 3 is opposing such amendment, still under
Section 14(2) before registering such amendment, the Registrar
has to grant an opportunity of hearing to Respondent No. 3,
consult federal society and thereafter only the amendment can
be registered. These steps are not taken in the present matter.
The circular does not contemplate an amendment to Bye-laws
automatically but only directs that societies should get their own
Bye-laws amended accordingly. The circular is dated 01.09.2007
and neither the petitioner – Society nor the department has
taken any steps thereafter till date to have its bye-laws amended
accordingly.
13. It has been pointed out to this Court that on
03.08.2009, the Managing Committee of Respondent No. 3
society has passed a resolution appointing Election Officer for
the purposes of elections in dispute before this Court. The
petitioner before this Court was the Secretary and was party to
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this resolution dated 03.08.2009. Even after 03.08.2009, he has
not taken any steps to secure compliance with said circular dated
01.09.2007, The Election programme has been published by
Respondent No. 3 on 02.01.2010 and present writ petition has
been filed thereafter by him on 11.02.2010.
14. The petitioner has made a grievance for the first time
before Respondent No. 2 vide his representation dated
03.02.2010. In this representation, he has made reference to the
fact that for elections due for the year 2010-2015, 118 members
have filed their nominations and has requested Election Officer
to verify whether every nomination form is with deposit slip of
Rs.10,000/- and then he has invited attention to requirement of
Government circular dated 01.09.2007. He has requested the
Returning Officer to reject all nomination papers if they are not
fulfilling such security deposits. On 03.02.2008, the Returning
Officer has rejected this representation by pointing out that
Circular dated 01.09.2007 does not apply to Respondent No. 3 –
Society and there is no provision in sanctioned Bye-laws of the
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society for such deposit . There is no dispute that sanctioned
bye-laws do not contain a provision requiring the aspirant to
deposit the amount of Rs.10,000/- with the society. In the light
of provisions of Section 14(2) discussed above, it is apparent that
the elections already scheduled could not have been made to
wait till the Bye-laws are changed in consonance with the
circular dated 01.09.2007.
15. The Returning Officer has found that the circular
dated 01.09.2007 is not applicable to respondent No. 3 –
Society. The Bye-laws of respondent No. 3 – Society show that it
is classified as Resource society with its sub classification as
Credit Resource Society. This is in consonance with Rule 10,
Entry 8(a) of the 1961 Rules. The registration certificate dated
02.11.2007 produced by Shri Vyawahare, learned counsel also
reveals a similar classification and sub-classification. The
column 3 of Rule 10 gives examples of society falling in said
clause or sub-clause and those illustrations are “agricultural
credit, thereafter urban credit and salary earners societies”. It is,
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therefore, clear from bare examples given therein that Urban
Credit Societies as also salary earners societies are covered by
this classification and sub-classification. The perusal of
judgment in the case of Baburao vs. Brihmadeo, (supra) shows
consideration of this aspect in paras 7 & 8. The Division Bench
has concluded that the definition in Section 2 of Maharashtra
Cooperative Societies Act, is though in relation to objects of
those societies or the nature of their business or their
composition but not in relation to territorial limits of their
operation. The contention that the Act does not contemplate any
society known as “Urban Society” was found to be misconceived.
The Division Bench has further found that the classification of
societies is illustrative and not exhaustive. In para 8, provisions
of Rule 10 are looked into and again Division Bench has found
that classification and sub-classification of various societies
under Rule 10 are the natural concomitant to section 2 and
pertain to the societies defined in that section. The classification
and sub-classifications under rule 10 is found also merely
illustrative and not exhaustive. Here, as already observed above,
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the examples appearing in column 3 against entry 8 of rule 10
include Urban Credit society and salary earner society. Thus, the
contention raised before the Division Bench there can not have
be raised now in the light of entry as it stands after 04.01.1985.
16. Though the respondents have come up with a case that
it is salary earners society, the perusal of bye-laws of the society
also show that it extends credit/ loan to its members. It,
therefore, cannot be accepted that it is only salary earners
society and the circular dated 01.09.2007 is not meant for it.
The said circular and its objects are already stated by me in brief
above and it is apparent that contingencies which laid to its
issuance can also arise in working of Respondent No. 3 – Society.
The reason that said circular is not applicable to Respondent No.
3 – Society as given by Respondent No. 2, therefore, is
unsustainable.
17. Shri Deshmukh, learned counsel for respondents No. 3
& 4 has already pointed out that the elected members always
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have and had compulsory deposit of more amount than what is
contemplated by circular dated 01.09.2007. The Bye-laws of the
society show that only person belonging to Sweeper Caste can
become its member. Thus, the society is of members belonging
to Backward Class. Hence, the amount of deposit to be
maintained by its Directors has to be 10% of Rs.50,000/- i.e.
Rs.5,000/- each. The perusal of return of Respondent No. 4
particularly document R-IV (2) with it shows that the elected
members maintain deposit in excess of the said sum. Bye-law
No. 18 also shows that the amount in deposit by them under
schemes by name “Shakti Bachat and Anivarya Bachat” cannot
be refunded or allowed to be withdrawn till the member
continues to be a Member. It is, therefore, apparent that even in
absence of express stipulation in the Bye-laws of Respondent No.
3 society, the purpose of Circular dated 01.09.2007 has been
achieved in present matter. Thus the policy envisaged therein
already stands implemented and, in any case, is not being
defeated.
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18. In this situation, it is apparent that no interference is
warranted in writ jurisdiction in the matter. Various contentions
about said circular or scheme therein advanced by rival parties
can not be considered effectively as neither State Government
nor Authority issuing the same are parties before me. The
contention that elected members ought to have been made party
respondents in writ petition, therefore, has not been examined
by me and the issue is left open for consideration in appropriate
case. Writ Petition is thus dismissed. Rule discharged. However,
there shall be no order as to costs.
JUDGE
*******
*GS.
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