Full Judgment Text
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 8
PETITIONER:
PUNDALIK
Vs.
RESPONDENT:
DISTRICT DEPUTY REGISTRAR, CO-OPERATIVESOCIETIES, CHANDRAPUR
DATE OF JUDGMENT22/02/1991
BENCH:
SAIKIA, K.N. (J)
BENCH:
SAIKIA, K.N. (J)
PUNCHHI, M.M.
CITATION:
1991 SCR (1) 675 1991 SCC (2) 423
JT 1991 (1) 576 1991 SCALE (1)299
ACT:
Maharashtra Co-operative Societies Act, 1960: Section
78(1) and 73FF-Power of removal of members/committees-
Default in repayment of loan installments- Disqualifications
for being member of a committee.
HEADNOTE:
The appellant was elected on 18.8.1986 as one of the
Directors of the District Central Co-operative Bank,
Chandrapur, Maharashtra from the Brehmapuri Agricultural
Sales and Purchase Society. On 8.1.1987 the District Deputy
Registrar of the Co-operative Societies, Chandrapur issued a
notice to him under section 78(1) of the Act to show cause
as to why he should not be removed from the Board of
Directors of the Bank and from the Executive Committees of
other Co-operative Societies in the District for having
remained in arrears of the loan instalments due from him on
the date of filing of nomination papers for election to the
post of Director of the Bank and thereafter till 21.10.1986
when he actually repaid the dues thereby incurring the
disqualification as contemplated by section 73FF of the Act.
The appellant showed cause and by additional reply took the
stand that he had not committed any default after the
amended section 73FF came into existence. This was rejected
and by Order dated 7.12.1987 passed by the Assistant
Registrar Co-operative Societies, Chandrapur he was removed
from the post of Director holding him to be a defaulter
under section 73FF of the Act. Appeal against that order
was dismissed by the District Joint Registrar and his
revision therefrom made under section 154 of the Act too met
the same fate at the hands of the Cooperative & Textile
Department, State of Maharashtra, Bombay Dismissing his Writ
Petition filed thereafter, the High Court of Bombay held
that when the appellant contested the election he was a
defaulter and even though he had paid all the debts on
21.10.1986 yet he could not be absolved of the
disqualification on the day he contested the election.
In the appeal before this Court it was argued on behalf
of the appellant that the impugned order of the Assistant
Registrar removing him from the Board of Directors was
without jurisdiction in as-much-as
676
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 8
the Act prescribes separate procedure for calling in
question the election and that procedure having not been
followed the Assistant Registrar could not have acted under
section 78(1) of the Act; that the entire loan having been
repaid before the issue of notice under section 78(1) he was
not a defaulter in presenti and lastly even assuming that
the disqualification on the ground of default is common both
for election and continuation as Director in the Committee,
the special provision for calling in question an election
mut prevail over section 78. Rejecting the contentions and
dismissing the appeal, the Court.
HELD: If the impugned order is found to have been
passed by way of setting aside the election of the
appellant, it would be bad as his election had not been
called in question in accordance with the procedure
prescribed by the Act. However, the notice has ex facie been
issued under section 78 of the Act. No doubt there is
reference to his having been a defaulter and disqualified
for being elected but it has been addressed to him as
Director on the Board of Directors. It also refers to his
being disqualified "to be elected or to continue as Director
or Executive Committee member of the Executive Committee"
under section 73FF of the Act and about ceasing to be a
Director by committing default. From the above contents,
there is no room for holding that the appellant’s election
has been set aside by the impugned order. On the other
hand, the emphasis is on his being disqualified to continue
as Director or ceasing to be Director on account of his
having committed default. [682F-683A]
The day an instalment falls due on its due date,
failure to pay results in default and this default continues
day after day until it is repaid. The appellant can be said
to have made default on the first day of his directorship
and on every subsequent day till instalments were paid. The
appellant was a defaulter immediately on the coming into
force of section 73FF and so long that default continued he
must be taken to have made default until repayment. [683G-
684A]
Sub-section (2) of Section 73FF says that a member who
has incurred any disqualification under sub-section (1)
shall cease to be a member of the committee and his seat
shall thereupon be deemed to be vacant. Therefore, the
moment the appellant after election continued to be in
default and must be taken to have made default, stood
disqualified and thereby ceased to be a member of the
Committee and his seat deemed to have fallen vacant. In
this view of the matter the notice of the Deputy Registrar
was in effect to say that the appellant had already ceased
to be a director and his seat already fell vacant. In
Keshaorao
677
Narayanrao Patil v. District Deputy Registrar, reported in
1987 Maharashtra Law Journal 709, Bombay High Court held
that section 73FF(2) did not operate automatically and that
passing of an order of removal was necessary. This has to
be interpreted in the context of the provisions in the
section. [684B-D]
Hundraj Kanayalal Sajnani v. Union of India, A.I.R.
1990 S.C. 1106 at 1121; Zaverbhai Amaidas v. The State of
Bombay, [1955] 1 S.C.R. 799; Maharashtra State Board of
Education v. Paritosh Sheoth, [1985] 1 S.C.R. 29,
distinguished.
Keshaorao Narayanrao Patil v. District Deputy
Registrar, [1987] Maharashtra Law Journal 709, approved.
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 8
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4974 of
1990.
From the Judgment and Order dated 20.6.1990 of the
Bombay High Court in W.P. 2403 of 1989.
G.L. Sanghi, Mrs. Jayshree Wad, Dhruv Mehta and Ms.
Tamali Das Gupta for the Appellant
S.V. Deshpande, V.N. Patil and A. S. Bhasme (NP), for
the Respondents.
The Judgment of the Court was delivered by
K.N. SAIKIA, J. Pursuant to the Notification issued in
June 1986 the elections of Directors to the District Central
Cooperative Bank, Chandrapur, hereinafter referred to as
’the Bank’ the appellant filed his nomination papers in July
1986, and he was elected on 18.8.1986 as one of the
Directors of the Bank from the Brehmapuri Agricultral Sales
and Purchase Society. His election was not called in
question according to the procedure prescribed by the
Maharashtra Cooperative Societies Act, 1960, hereinafter
referred to as ’the Act’.
On 8.1.1987, the District Deputy Registrar of the
Cooperative Societies, Chandrapur, hereinafter referred to
as ’the Deputy Registrar’, issued a notice to the appellant
under section 78(1) of the Act to show cause within 15 days
as to why he should not be removed from the Board of
Directors of the Bank as per the provisions of section 73FF,
and directed him to remain present on 2.2.1987 at 11
678
A.M. in the Deputy Director’s office. The notice stated
that the appellant had borrowed a loan of total Rs. 10,000
(Rs. 7,000 as debt and Rs. 3,000 subsidy) from the Bank and
he kept the loan constanty in arrears till 21.10.1986, and
being elected as Director of the Bank on 18.8.1986. till
then he was working as the Director of the Bank. The notice
further said:
"Because you have remained in arrars of the loan
instalments as referred above to the Maharashtra
State Cooperative Land Development Bank, under
Section 73FF(i)(b) of the Maharashtra State
Cooperative Societies Act, 1960, you are
disqualified to be elected or to continue as
Director or Executive Committee Member of the
Executive Committee of a Cooperative Society and
u/s 73FF(2) of Maharashtra State Cooperative
Societies Act, 1960 a person committing defaults
ceased to be the Executive Committee (member) or
Director.
From the information above given because the loan
instalments of Maharashtra State Cooperative Land
Development Bank remained due from you on the date
of filing nomination papers for the election of
post of Director of Chandrapur District Central
Cooperative Bank and also on the date of your
election and thereafter, you are disqualified to
contest the election to the post of Director of
Chandrapur District Central Cooperative Bank as
also to be elected and to continue as Director.
And therefore under powers given to me by Section
78(1) of Maharashtra State Cooperative Societies
Act, 1960 and order No. CSL/1481/24982/15-C(87)
dated 1.7.81 of Agriculture and Cooperation
Department of Maharashtra State Government. I, K.M.
Deshpande, District Dy, Registrar, Cooperative
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 8
Societies, Chandrapur hereby ask you to show cause
in writing as to why you should not be removed from
the Board of Directors of Chandrapur District
Central Cooperative Bank and from the Executive
Committees of the other cooperative societies in
the District. Your explanation in writing should
be submitted to this office within 15 days from the
receipt of this notice."
The appellant showed cause and also filed an additional
reply on 10.11.87 stating that he "had not committed any
default after the
679
amended section 73FF came into existence."
The Assistant Regisrar, Cooperative Societies,
Chandrapur by his order dated 7.12.1987 removed the
appellant from the Committee of Directors of the Bank
holding that appellant was defaulter on 31.1.1986, on
31.3.1986 and he became defaulter under the provisions of
section 73FF(1) of the Act, and rejected the appellant’s
contention that section 73FF became applicable from 6.8.1986
as per the Government Notification issued on 18.4.1986 and
that as he had accepted that he paid the dues on 21.10.1986,
on 18.8.1986 when he was elected as Director, he was
defaulter under section 73FF(1) of the Act.
The order of the Assistant Registrar dated 7.12.1987
was served on the appellant on 8.12.87. The appellant’s
appeal against that order was dismissed by the Divisional
Joint Registrar of the Cooperative Societies, Nagpur on
15.2.1988, holding, inter alia, that section 73FF of the Act
came into force on 12.5.1986 and the appellant could be
treated as a defaulter under that section; and the mere
making of payment on 21.10.86 did not mean that the
disqualification on account of his being defaulter which
continued from 18.8.1986 to 21.10.1986 was extinguished and
hence the appellant was not at all eligible to contest the
election. The appellant’s revision petition therefrom under
section 154 of the Act was dismissed on 30.8.89 by the
Cooperation and textile Department, State of Maharashtra,
Bombay holding that the appellant was defaulter under
section 73FF of the said Act on 18.8.1986 i.e. the date when
he was declared elected as Director.
The appellant’s writ petition in the High Court filed
on 1.9.1989 challenging the above order dated 30.8.89 was
dismissed by the impugned Judgment and Order dated 20.6.90,
holding that the dues calculated on 31.1.86 became recurring
dues every following day and on 12.5.1986 when section 73FF
came into force the outstanding dues continued even on
18.8.1986 when the appellant contested the election; and
that the question of giving retrospective effect to the
section did not arise because the appellant was a defaulter
when he contested the election and though he paid all the
debts on 21.10.1986 yet he could not be "absolved of the
disqualification on the day he contested the election".
Hence this appeal by special leave.
Mr. G. L. Sanghi, the learned counsel for the appellant
submits, inter alia, that the impugned order of the
Assistant Registrar removing the appellant from the
Committee of the Directors is without jurisdiction inasmuch
as the Act prescribes a separate procedure for calling in
680
question the appellant’s election as a Director of the Bank
and that procedure having not been followed the Assistant
Registrar could not have acted under section 78(1) of the
Act which did not envisage the setting aside of an election
as has been done by the impugned order;that the appellant
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 8
having repaid the entire loan before the impugned notice
under section 78(1) of the Act was issued, he was surely not
a defaulter in presenti on the date of the notice and the
provisions of section 78(1) were not attracted; and that
even assuming that the disqualification on the ground of
default is common both for election and for continuation as
a Director in the Committee, the special provision for
setting aside an election must prevail over section 78 as
there would be apparent conflict between the two and the
maxim generalia specialibus non derogant general words do
not derogate from special, would apply,
Mr. V. N. Patil, the learned counsel for the State of
Maharashtra, submits that the disqualification as defaulter
continued after the election of the appellant and section 78
envisaged such a default and the appellant having continued
to be a defaulter was lawfully removed and the fact that he
repaid the loan before the notice was issued would not be
material for the purpose of taking action under section 78.
Chapter XI-A of the Act deals with election of
committees and officers of certain societies. Admittedly
this Chapter applies to the Bank. Section 144E deals with
disqualification for membership. Under sub-section (1)
thereof a person shall be disqualified for being elected as,
and for being a member, of the committee of any specified
society, ....(e) if he is so disqualified by or under any
other provision of this Act. Section 144T deals with
desputes relating to election and provides in sub-section
(1) that notwithstanding anything contained in section 91 or
any other provisions of this Act, any dispute relating to an
election shall be referred to the Commissioner of the
Division in which such election is held or to an officer not
below the rank of Additional Commissioner of division
authorised by the State Government in this behalf. The
procedure for an election petition is prescribed by the
subsequent section of that Chapter. Admittedly the
appellant’s election was not called in question under the
above provision. Section 144E, as have noted, over and
above the other specified disqualifications in sub-section
(e) included disqualifications by or under any other
provisions of the Act. Section 78(1) which deals with
powers of removal of committees or member thereof provides
as follows:
681
"78(1) If, in the opinion of the Registrar, the
committee of any society or any member of such
committee makes default, or is negligent in the
performance of the duties imposed on it or him by
this Act or the rules or the bye-laws, or commits
any act which is prejudicial to the interests of
the society or its members, or wilfully disobeys
interests of the society or its members, or
wilfully disobeys directions issued by the State
Government, or by the Registrar for the purposes of
securing proper implementation of cooperative
policy and development programme approved or
undertaken by the State Government or is otherwise
not discharging its or his functions properly and
diligently and the business of the society has or
is likely to come to a standstill, or where any
member of such committee stands disqualified by or
under this Act for being a member, the Registrar
may, after giving the committee or the member, as
the case may be, an opportunity of stating its or
his objections, if any, within 15 days from the
date of receipt of notice, and after consultation
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 8
with the federal society to which the society is
affiliated, by order-
(a) (i) remove the committee, and
(ii) appoint a committee consisting of three or
more members (who shall not be the members of the
committee so removed) of the society in its place,
or appoint one or more Administrators who need not
be the members of the society, but who shall not be
the members of the committee so removed, to manage
the affairs of the society for a period not
exceeding six months, which period, at the
discretion of the Registrar, be extended by a
further period not exceeding three months so,
however, that the total period does not exceed nine
months in the aggregate:
Provided that, the Registrar shall have the power
to change the committee or any member thereof or
the Administrator or Administrators appointed under
paragraph (ii) at his discretion even before the
expiry of the period secified in the order made
under this sub-section;
(b) xxx xxx
xxx"
Section 78(1) empowers the Registrar to remove a member of a
committee who "makes default" or where any member of such
committee
682
"stands disqualified by or under this Act for being a
member". Section 73FF deals with disqualification for
membership of committee. Sub-section (1) provides:
"Without prejudice to the other provisions of this
Act or the rules made thereunder in relation to the
disqualification of being a member of a committee,
no person shall be eligible for being appointed,
nominated, elected, co-opted or, for being a member
of a committee, if he-
(i) is a defaulter of any society;
Explanation-For the purposes of this clause, the
term "defaulter" includes-
(a) in the case of a primary agricultural credit
society, a member who defaults the repayment of the
crop loan on the due date;
(b) in the case of term lending society, a member
who defaults the payment of any instalment of the
loan granted to him;
xxx xxx xxx xxx xxx xxx
Sub-section (2) says: "A member who has incurred any
disqualification under sub-section (1), shall cease to be a
member of the committee and his seat shall thereupon be
deemed to be vacant."
This section was inserted by Maharashtra Act, XX of
1986 with effect from 12.5.86. If the impugned order is
found to have been passed by way of setting aside the
election of the appellant the order would be bad as the
appellant’s election had not been called in question in
accordance with the procedure prescribad by the Act.
However, the notice has ex facie been issued under section
78 of the Act. No doubt there is reference to the
appellant’s having been a defaulter and disqualified for
being elected but it has been addressed to the appellant as
Director of the Bank and also stated: "You have been elected
as Director on the Board of Directors of Chandrapur District
Central Cooperative Bank on 18.8.1986 and today on this date
you are working as the Director of the said Bank." It also
refers to the appellant’s being disqualified or to continue
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 8
as Director or Executive Committee member of the Executive
Committee’ under
683
section 73FF of the Act and about ceasing too be a Director
by committing default. From the above contents, there is no
room for holding that the appellant’s election has been set
aside by the impugned order; on the other hand, the emphasis
is on the appellant’s being disqualified to continue as
Director or creasing to be Director on account of his having
committed default. The question of generalibus specialia
derogant-special things take from general or generalia
specialibus non derogant general words do not derogate from
special, therefore, does not arise. What was stated in para
36 of the report in Hundraj Kanayalal Sajnani v. Union of
India, AIR 1990 SC 1106 at 1121 will not be relevant. The
question of repugnancy involved in Zaverbhai Amaidas. v. The
State of Bombay, [1955] 1 SCR 799 does not arise in this
case. The decision in Maharashtra State Board of Education
v. Paritosh Sheth, [1985] 1 SCR 29 is also not apposite.
The provisions relating to election have to be interpreted
harmoniously with other provisions of the Act such as in
section 78(1). Interpretare concordare leges legibus est
optimus interpretendi modus. To interpret and in such a way
as to harmonize laws with laws is the best mode of
interpretation.
Mr. Sanghi does not dispute that the appellant was in
arrear in respect of instalments on the date of his election
and till 21.10.1986 i.e. both prior and posterior to his
election on 18.8.1986. Admittedly the instalment was not
paid on due date. There was of course some dispute as to
the amount of interest payable and appropriation of the
amount paid against interest instead of capital but all this
would not exonerate the appellant from being in default on
non-payment of instalment on due date.
Mr. Sanghi, however, submits that the expression,
"makes default" or "stands disqualified" being in present
the default must have been committed after the coming into
force of section 73FF and that his default even, if any, was
prior to that date and not after that date. We are unable
to persuade ourselves to accept this submission. The day an
instalment falls due on its due date failure to pay results
in default and that default continues from day to day until
it is repaid. Every day thereafter until payment results in
making of default and, therefore, it could not be said that
default could be on the due date only and thereafter no
default but only liability. Considered by this principle
the appellant can be said to have made default on the first
day of his directorship and on every subsequent day till the
instalment or instalments were paid. The submission, has
therefore, to be rejected.
684
Similarly the submission that the defalult must have
been one committed after the Act came into force has also to
be rejected on the same ground that immediately on the Act
coming into force the appellant was a defaulter and so long
that default continued he must be taken to have made default
until repayment.
What then would be the consequence of such a default.
Sub-section (2) of section 73FF says that a member who has
incurred any disqualification under sub-section (1) shall
cease to be a member of the Committee and his seat shall
thereupon be deemed to be vacant. Therefore, the moment the
appellant after election continued to be in default, and,
therefore, must be taken to have made default, stood
disqualified and thereby ceased to be a member of the
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 8
committee and his seat deemed to have fallen vacant. In
this view of the matter the notice of the Deputy Registrar
was in effect to say that the appellant had already ceased
to be a Director and his seat already fell vacant. In
Keshaorao Narayanrao Patil v. District Deputy Registrar
reported in 1987 Maharashtra Law Journal 709 Bombay High
Court held that s. 73FF(2) did not operate automatically and
that passing of an order of removal was necessary. This has
to be interpreted in the context of the provisions in the
section.
In this view of the matter there could not be any
infirmity either in the notice or in the impugned order of
removal.
The result is that this appeal fails and is dismissed.
The interim orders, if any, stand vacated. No. costs.
R.N.J. Appeal dismissed.
685