Full Judgment Text
2012:BHC-OS:10060
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acd IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 578 OF 2012
Vithal Nagar Co-operative Housing
Society Ltd. ...Petitioners.
Vs.
Divisional Joint Registrar, CS, Mumbai
Divison & Ors. ..Respondents.
-----
Mr. Shiraz Rustomjee Sr. Counsel with Mr. Viral Amin
i/b M/s B. Amin & Co., for the Petitioners.
Mr. Ravi Kadam, Sr. Counsel with Mr. Shailesh Shah, Sr. Counsel
for Respondent No.3.
Mr. M.M. Vashi, Counsel for the Respondent No.4.
Mr. G.W. Mattos, A.G.P. for Respondent Nos.1 and 2.
----
CORAM: A.A. SAYED, J.
RESERVED ON : MAY 07, 2012.
PRONOUNCED ON:AUGUST 10,2012
JUDGMENT:
1 Rule. Learned Counsel waive service on behalf of respective
Respondents. By consent of the learned Counsel, rule is made returnable
forthwith and the Petition is heard finally.
2 The Petition impugns an order-cum-show cause notice dated
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9.11.2011 of the Respondent No.2-Deputy Registrar, Co-operative
Societies, K- West Ward, Mumbai and the order dated 17.1.2012 of the
Respondent No.1-Divisional Joint Registrar, Co-operative Societies,
Mumbai Division, passed in Revision, wherein the aforesaid order-cum-
show notice dated 9.11.2011 of the Respondent No.2-Deputy Registrar was
subjected to challenge.
3 The relevant portion of the impugned order-cum-show cause
notice dated 9.11.2011 of the Deputy Registrar reads as under:
“Whereas, out of 9 Managing Committee members who got
elected in the year 2006, 7 Managing Committee members
who are functioning as of today, committed default in not
executing Bonds as per rule 58-A of Maharashtra Co-operative
Societies Act, 1960. And therefore, as per Section 73 (1AB) of
the Maharashtra Co-operative Societies Act, 1960, they,
ceased to be members of the Managing Committee. Moreover,
because of cessation of membership of 7 Managing
Committee members out of total 9 Managing Committee
members of the Society, the Managing Committee has come in
minority. Therefore, you are called upon to submit an
explanation in writing on 25/11/2011 as to why you should not
be removed from the membership of the Managing Committee
as per Section 78 of the Maharashtra Co-operative Societies
Act, 1960.....”
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4 The above order-cum-Show Cause Notice was initially
challenged in this Court by filing Writ Petition No.10091 of 2011. On
28.11.2011, the Division Bench of this Court (Coram: B.H. Marlapalle &
Smt. Nishta Mhate, J.J.) passed the following order:
“..........
2. We have perused the impugned order-cum-Show Cause
Notice dated 9.11.2011. In the first part of the impugned order,
the Deputy Registrar of the Co-operative Housing Societies
has recorded a finding that seven out of nine members of the
Managing Committee have sustained disqualification under
Section 73(1AB) of the Maharashtra Co-operative Societies
Act, 1960 and therefore, the second part of the Show Cause
Notice is based on the said finding.
3. The findings recorded for disqualification under Section
73(1AB) of the Maharashtra Co-operative Societies Act, 1960,
could be challenged by filing Revision Application under
Section 154 of the said Act.
4. Hence, the impugned Show Cause Notice is stayed for a
period of two weeks from today and in the meanwhile the
Petitioner-Society may approach the Revisional Authority
under Section 154 of the Maharashtra Co-operative Societies
Act and seek further appropriate orders.
5. The Petition is disposed of accordingly.” (emphasis
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supplied)
5 Thus, the Division Bench while relegating the Petitioner-Society
to the Revisional Authority, made it clear that the order-cum-Show Cause
Notice dated 9.11.2011 was in two parts. The first part was a finding of fact
that 7 out of 9 members of the present Managing Committee had not
executed Bonds pursuant to the elections held in the year 2006 and had
sustained disqualification, and second part was that since the aforesaid
Bonds were not submitted at that time by the said 7 members of the present
Managing Committee, the Petitioner-Society was called upon to Show
Cause why action should not be initiated under Section 78 of the
Maharashtra Co-operative Societies Act, 1960 ('MCS Act' for the sake of
brevity) for their removal as members of the present Managing Committee.
6 Pursuant thereto, the Petitioner-Society filed Revision
Application No.446 of 2011 before the Respondent No.1-Divisional Joint
Registrar. By the impugned order dated 17.1.2012, the Respondent No.1-
Divisional Joint Registrar held that since the Petitioner-Society had not
submitted copies of the Bonds executed in 2006 before any Authority,
therefore, it is presumed that they had not executed Bonds in 2006. He
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held that the Bonds were submitted from 2008. The Respondent No.1-
Divisional Joint Registrar concluded that seven out of nine Committee
Members are deemed to have vacated their office in the year 2006 and held
that the finding of the Deputy Registrar was correct. Thus, insofar as the
first part is concerned, the Respondent No.1-Divisional Joint Registrar
concurred with the finding of the Respondent No.2-Deputy Registrar that 7
out of 9 of the present Managing Committee members had not executed the
Bonds in the year 2006 and had sustained disqualification. However, so far
as the second part is concerned, the Respondent No.1-Divisional Joint
Registrar observed that since an opportunity is given by the Respondent
No.2-Dy. Registrar to show cause, the Respondent No.1-Divisional Joint
Registrar remanded the matter to the Respondent No2-Deputy Registrar
with a direction to take appropriate decision insofar as the action to be
initiated under Section 78 of the MCS Act, 1960, which section inter alia
deals with the removal of the Managing Committee or member thereof and
appointment of an Administrator.
BACKGROUND FACTS:
7 On 14.10.1956, by a Deed of Assignment, the Petitioner-Society
which is classified as a 'Tenant Ownership Housing Society' under the
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Maharashtra Co-operative Societies Act, 1960 ('MCS Act' for the sake of
brevity) purchased a plot of land from Bombay Housing Board (now
MHADA) situated at Juhu Vile Parle Development Scheme (J.V.P.D.
Scheme) that was divided into several plots which were leased out to its
members on certain terms and conditions.
8 On 10.12.1965, the Plot No.64 ( hereinafter referred to as “the
th
said Plot”) on 12 Road, JVPD Scheme was leased out to one Shri
Harbhagwan Malhotra for the purpose of residence and was alloted shares
bearing distinctive Nos.406 to 410. The said Shri Harbhagwan Malhotra
Member expired in the year 1967. On 27.2.1981, an Indenture of Lease was
executed in respect of the said Plot between the Petitioner-Society, as
Lessor and the heirs of deceased Harbhagwan Malhotra (hereinafter
referred to as 'Malhotras'), as Lessees. On 1.10.2005, one Shri Mohite from
the Co-operation Department of State of Maharashtra was appointed as an
Administrator of the Petitioner-Society and was incharge of the said
Society’s affairs. The said Administrator, Shri Mohite by Advocate's notice
dated 28.3.2006 purportedly terminated the lease of the said plot to the
Malhotras on various grounds viz. attempting to assign the lease in favour
of a third party without the consent of the Society, failure to develop and
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maintain the said plot, causing nuisance to other members of the Petitioner-
Society etc. On 11.12.2006, the Malhotras allegedly assigned their right,
title and interest in the said Plot to the Respondent Nos.3 and 4 herein.
9 On 9.11.2006, a Dispute being Dispute No.378 of 2006 was
filed before the Co-operative Court, Mumbai against the Petitioner-Society
by the Malhotras challenging the termination of the lease on 28.3.2006. It
appears that upon their Application, the Respondent Nos.3 and 4 herein
were added as party-Disputants to the said Dispute. An Application also
came be filed therein by the Respondent Nos.3 and 4 inter alia seeking
directions that the Petitioner-Society be restrained from obstructing
sanction by the MCGM of their plans for development of the said plot. The
Application was allowed on 15.2.2008 which was set aside in Appeal by
the Maharashtra State Co-operative Appellate Court on 8.7.2008. This
order was challenged by the Respondent Nos.3 and 4 in Writ Petition
No.5042 of 2009 which was came to be dismissed by an order dated
30.9.2009 and the hearing of the Dispute was expedited. In the meanwhile,
the Dispute came to be dismissed for non prosecution and a restoration
Application has been filed by the Respondent Nos. 3 and 4 which was
apparently pending before the Co-operative Court at the relevant time.
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10 On 18.10.2006, a learned Single Judge of this Court (Coram: Dr.
D.Y. Chandrachud, J.) in Writ Petition No.2657 of 2006 filed by some
members of the Petitioner-Society, by an order dated 18.10.2006 directed
the Registrar of Co-operative Societies to appoint an Officer under its
control and supervision for holding election of the Managing Committee of
the Petitioner-Society. On 26.12.2006, the Administrator's control over the
affairs of the Society ceased and sometime in December end of 2006, fresh
elections were held and pursuant thereto a new Managing Committee
assumed office.
11 On 31.5.2007, the Managing Committee of the Petitioner-
Society ratified the decision of the Administrator of termination of lease in
respect of the said Plot. This decision of the Managing Committee was
further ratified by the General Body of the Society at its AGM held on
8.11.2008.
12 On 21.6.2007, the Petitioner-Society received an Application
dated 13.4.2007 from the Respondent Nos.3 and 4 for transfer of the lease
of the said Plot to their name and to admit them as members of the
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Petitioner-Society. The said Application was placed before the Managing
Committee at its meeting held on 30.8.2007. However, the said Application
came to be rejected by the Managing Committee of the Petitioner-Society
on the ground that since the lease in respect of the said Plot in favour of
Malhotras has been terminated by the Petitioner-Society, the Application
for transfer of the lease could not be considered. The Respondent Nos.3 and
4 and the Malhotras were informed about the same by letter dated 5.9.2007.
13 According to the Petitioner-Society, as the Application to admit
the Respondent Nos.3 and 4 as members of the Petitioner-Society came to
be rejected, the Respondent No.3 has started a campaign of harassment
against the members of the Petitioner-Society and particularly the members
of the Managing Committee. According to the Petitioner-Society, between
years 2006-2011, the Respondent Nos.3 and 4 have filed a plethora of
proceedings against the Petitioner-Society in various Courts including
Criminal proceedings with a view to harass and intimidate the Petitioner-
Society and to force the Petitioner-Society to give in to their demands with
regard to the said Plot. The Petitioner-Society has set out various
proceedings filed by the Respondent Nos.3 and 4 against the Petitioner-
Society in the last five years which according to them were motivated,
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frivolous and vexatious which are enumerated hereinafter.
FACTS LEADING TO THE PRESENT PETITION:
14 The facts leading to the present Writ Petition are that on
16.7.2010, the Petitioner-Society received letter dated 15.7.2010 from the
Respondent No.2-Deputy Registrar stating that two members viz. Mrs. P.K.
Valecha and Mrs. J. Valia have complained that the members of the
Managing Committee of the Petitioner-Society have not executed M-20
Bonds. The Petitioner-Society was called upon to respond within 15 days
failing which action under the MCS Act would be taken.
15 On 19.7.2010, the Petitioner-Society’s Advocate addressed a
letter seeking copies of the letters of Mrs. P.K. Valecha and Mrs. J. Valia
and stated that the Bonds had been executed and would be furnished soon.
In this letter, it was pointed out that the letter dated 15.7.2010 was served
by Shri Narendra Awasthi and that it is Respondent No.3 who was behind
the two Complaints. On 23.7.2010, the Petitioner-Society forwarded copies
of M-20 Bonds from the year 2008 to 2010 of Managing Committee
members along with their Advocate’s letter and a request was again made
for copies of letters of Mrs. P.K. Valecha and Mrs. J. Valia. After couple of
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reminders, the Respondent No.2-Deputy Registrar by letter dated 6.1.2011
frunished copies of the said letters to the Advocate for the Petitioner-
Society.
16 On 14.1.2011, a Show Cause Notice was issued by the
Respondent No.2-Deputy Registrar to the Petitioner-Society in respect of a
Complaint made by the Malhotras and Respondent Nos.3 and 4 dated
27.12.2010 through their Advocate Shri Nachiket Bhatt. By the said letter
dated 27.12.2010 of Advocate Shri Nachiket Bhatt, a Complaint was made
to the Respondent No.2-Deputy Registrar that since the Bonds in form M-
20 were not filed by either by the Administrator as well as the Managing
Committee members in the year 2006 within the prescribed period of 15
days under the provisions of Section 73 (1AB) of the MCS Act and Rule
58-A of the Rules thereunder, the Respondent No.2-Deputy Registrar
ought to exercise powers under Section 78 of the MCS Act, 1960 to
dissolve the present Managing Committee and appoint Administrator in
place and instead of the present Managing Committee.
17 The said Show Cause Notice dated 14.1.2011 was challenged in
this Court by the Petitioner-Society by filing Writ Petition No.1617 of
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2011. By an order dated 29.8.2011, the Division Bench of this Court
(Coram: D.D.Sinha & R.Y. Ganoo, J.J.) permitted the Petitioner-Society to
withdraw the petition and granted liberty to challenge the order, if any,
passed by the Respondent No.2-Deputy Registrar, if it was adverse to the
Petitioner-Society. The Application (Stamp) No.17473 of 2011 which was
filed by the Respondent Nos.3 and 4 in the said Writ Petition interalia for a
direction to appoint an Administrator was also disposed of in view of the
disposal of the Writ Petition. The Petitioner-Society thereafter filed Reply
as well as Written Arguments to the Show Cause Notice dated 14.1.2011.
Pursuant thereto, the impugned order-cum-show cause notice dated
9.11.2011 was passed/issued by the Respondent No.2-Deputy Registrar
which was subjected to challenge before the Respondent No.1-Divisional
Joint Registrar (after filing and disposal of Writ Petition before this Court
as indicated earlier), who passed the impugned order dated 17.1.2012
which are the subject matter of challenge in the present Writ Petition.
18 I have heard Mr. Shiraz Rustomjee, learned Senior Counsel on
behalf of Petitioner-Society, Mr. Ravi Kadam, learned Senior Counsel on
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behalf of the Respondent Nos.3, Mr. Vashi, learned Counsel on behalf of
Respondent No.4 and Mr. Mattos, learned A.G.P. on behalf of Respondent
Nos.1 and 2.
SUBMISSIONS:
19 Mr. Shiraz Rustomjee, learned Senior Counsel for the Petitioner-
Society made the following submissions:
(i) that the Respondent Nos.3 and 4 having failed to obtain
membership of the Petitioner-Society by legitimate
means, have filed a plethora of false, motivated and
malafide complaints and the proceedings against the
Petitioner-Society and/or its office bearers. The intent of
the Respondent No.3 in doing so is to harass and
intimidate the Petitioner-Society and to pressurise the
Petitioner-Society to giving into his demands with
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regard to the said Plot. The attempts of the 3
Respondent have been unsuccessful and in fact the
Courts, including this Court have already made strong
observations regarding the conduct of Respondent No.3;
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(ii)that the Respondent No.3 is in the habit of adopting
frivolous proceedings in order to attain his ends;
(iii) that the impugned order is based on malafide,
collusion and it is abuse of process of law and the
Respondent No.2 is colluding with Respondent No.3
and is acting at his behest with a view to further his
cause in his private dispute with the Petitioner-Society.
The Respondent No.2-Deputy Registrar has therefore
not exercised his powers bona fide for the statutory
purpose for which he has been entrusted with;
(iv) that Affidavit dated 24.12.2010 of erstwhile
Administrator Shri Mohite who was at the relevant time
and presently is an officer of the Department of the Co-
operation Maharashtra indicates the level of collusion
and malafide conduct on the part of the Respondent
No.3;
(v) that the Respondent No.2-Deputy Registrar has not
exercised the statutory power in good faith and/or has
been exercised for extraneous or irrelevant purpose, and
therefore, it is illegal and must be quashed and set aside
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on that ground alone.
(vi) that the impugned order cum show cause notice
dated 9.11.2011 is tainted with malafides and amounts
to a colourable exercise of power.
(vii) that the proceedings initiated by the Respondent
No.2-Deputy Registrar is hit by delay and latches
inasmuch as the Bonds in question were required to be
submitted in the early January 2007 and the Complaint
filed by the Respondent No.3 to the Respondent No.2-
Deputy Registrar is dated 27.10.2010 and the Show
Cause Notice on the basis of Respondent No.3’s
Complaint issued on 14.1.2011. Therefore, there has
been delay of four years in initiating the present
proceedings and in any event, there have been three/four
elections of the Managing Committee of the Petitioner
Society since then. The power that vested in Authority
was to be exercised within a reasonable period of time
and is therefore vitiated on the ground of delay in the
facts and circumstances of the present case;
(viii) that the basis on which the order-cum-show cause
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notice dated 9.11.2011 and the order dated 17.1.2012
proceed is patently untenable and arbitrary;
(ix)
That according to the impugned order-cum-show cause
notice, the members of the Managing Committee of
December 2006 vacated office on account of non
submission of Bonds and on the basis of this assertion,
it is proposed to remove 7 members out of 9 members
of the present Managing Committee and to appoint an
Administrator. However, before this Court it is
contended that subsequent elections of 2008, 2009,
rd
2010 and 2011 of which 1/3 members retired and fresh
elections were held, is invalid. If that be so all 9
members of the present Managing Committee would
have to be removed as none of them would have been
validly elected. This, according to learned Senior
Counsel, is not the case of the Respondent No.2-Deputy
Registrar in the order-cum-show cause notice and it
does not proceed on this basis. The order-cum-show
cause notice only purport to remove 7 members and
does not propose any action in respect of the other 2
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members who were not the Members of the Managing
Committee of December, 2006. Therefore, the basis of
the order-cum-show cause notice cannot be changed and
be different than what has been mentioned in the
impugned order-cum-show cause notice of Respondent
No.2-Deputy Registrar. It is impermissible in law to
abandon the reasoning contained in the show cause
notice or order and to seek to support it on a different
one;
(x)that the action proposed by Respondent Nos.1 and 2 is
in reality, action against the Managing Committee of
December 2006 and that Committee does not exist and
proceedings therefore invalid on that account. The
Bonds were filed by the members of the Committee of
December 2006 at the relevant time. And even assuming
while denying that the Bonds were not executed by the
Managing Committee of 2006 at the relevant time,
Section 77 of the MCS Act provides inter alia that no
act of a Society or Committee done in good faith in
pursuance of the business of the Society should be
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deemed to be invalid by reason only of some defect,
inter alia, in the Constitution of the Committee or in the
appointment or election of an officer or on the ground
that such officer was disqualified for his office;
(xi) that assuming that the members of the Managing
Committee of December 2006 were deemed to have
vacated office in January 2007 on account of a failure to
execute Bonds, that would not invalidate the subsequent
four elections of 2008, 2009, 2010 and 2011.
20 Learned Senior Counsel for the Petitioner-Society, in order to
lay emphasis on the contention of conduct of the Respondent no.3 and
abuse of process of Court and the plea of malafide has highlighted various
proceedings initiated by the Respondent Nos.3 and 4 against the
Petitioner-Society and/or members of the Managing Committee and
made submissions thereon as under:
(i) Criminal Case No.MECR-07 of 2007
This Criminal Complaint was filed by the Respondent No.3
against the office bearers of the Petitioner-Society making false
allegations of physical intimidation at the instance of the Chairperson of
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the Petitioner-Society, who is elderly lady suffering from Parkinson
disease. The Chairperson and the Hon. Secretary of the Petitioner-Society
were arrested and detained in the police lock-up for two days after which
they were released on bail. By an order dated 22.3.2010, both these
persons were discharged as accused.
(ii)Criminal Case No.1080/SS/2008
This Criminal Complaint has been filed by the Respondent No.3
alleging criminal defamation by members of the Petitioner's Managing
Committee. By an Order dated 16.2.2009, the Sessions Court quashed the
process issued. The Respondent No.3 challenged the said order in
Criminal Application No.1645 of 2009 which was dismissed by an order
of this Court dated 2.5.2009. He has challenged that order by preferring
an SLP on which notice has been issued and which is pending.
(iii) Criminal Case No.MISC/08/2010
This Criminal Complaint has been filed by the Respondent No.3
in January 2010 alleging cheating, criminal breach of trust, forgery and
criminal intimidation against various office bearers of the Petitioner-
Society and the Petitioner-Society's Chartered Accountant. The members
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of the Managing Committee challenged the order directing investigation
of the alleged offence in Criminal Application No..4467 of 2010. By an
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order dated 27 October, 2010, the proceedings were stayed. The
submissions that the Complaint had been filed malafide with an intent to
harass members of the Managing Committed has been accepted by this
Court. While accepting the said submissions, this Court (Coram: Kanade,
J.) has observed as follows:
“7. …........ prima facie, case is made out for grant of ad-
interim relief. The applicants are the members of the
managing committee. No complaint has been filed against
them by any of the members of the society. The Respondent
No.2 is not yet admitted as a member of the managing
committee. Prima facie, it does appear that complaints are
being filed with a mala fide intention of harassing them since
they did not admit him as a member”
By an order dated 27.1.2011, the said Application has been admitted and
the stay order continued.
(iv) Dispute No.378 of 2006 in IVth Co-operative Court Mumbai:
In November 2006, the Malhotras filed this Dispute challenging
the termination of the lease. Respondent Nos.3 and 4 got themselves
added as Disputants by an Intervention Application and then filed an
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Application inter alia seeking that the Petitioners be restrained from
obstructing sanction by the MCGM of their plans for development of the
th
said Plot. The Application was allowed by an order dated 15 February,
2008, which was set aside by an order in Appeal dated 8.7.2008.
Respondent Nos.3 and 4 challenged the said order dated 8.7.2008 in Writ
Petition No.5042 of 2009 which was dismissed as not prosecuted by an
order dated 30.9.2009. The hearing of the Dispute was, however,
expedited. The Dispute was dismissed for default on 3.2.2012 and a
Restoration Application filed by the Respondent No.3 who pending at the
relevant time.
(v) Application No.9 of 2007 for deemed membership:
In August, 2007, the Respondent Nos. 3 and 4 filed this
Application for deemed membership under Section 22(2) of the Act. They
were declared deemed members by an order dated 15.10.2007 which was
confirmed by an order in Revision dated 15.7.2008. The Petitioner
challenged the said order in Writ Petition No.6114 of 2008. By an order
dated 15.10.2008 the Petition was admitted and the operation of the
impugned order was stayed.
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(vi) Proceedings for an enquiry u/s 83 of the MCS Act:
In January 2009, the Respondent No.3 made a Complaint
seeking statutory enquiry into the working of the Petitioner-Society.
Although the Petitioner pointed out that the Complaint was motivated and
rd
that the 3 Respondent had no locus, the Deputy Registrar held that such
an enquiry be held by an order dated 25.3.2010. The said order was
challenged by the Petitioner in Writ Petition No.817 of 2010, wherein, by
st
an order dated 27.4.2010, the order was set aside and the 1 Respondent
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was directed to consider the Application of the 3 Respondent afresh.
st
Subsequent orders of the 1 Respondent were challenged by the Petitioner
in Writ Petition No.1609 of 2010. By an order dated 18.8.2010, the
Petition was admitted and the impugned orders were stayed.
21 Learned Senior Counsel also pointed certain observations of the
Sessions Court in CRA No.469 of 2005 dated 28.9.2006 filed by one
Shrinath Pushkarana & Ors., against the issuance of process on the
Criminal Complaint filed by the Respondent No.3, which are as under:
“..........Respondent No.1/Complainant is using alleged
criminal complaint for oblique purpose to suppress the
opposition of Applicants/Accused and others who are
similarly situated. This view is fully supported by previous
complaints made by the applicants/Accused and all other
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residents of the building against the Respondent
No.1/Complainant.
….......This incident cannot be believed for a moment. It is
fictitious and cooked one and therefore Respondent
No.1/Complainant cannot be permitted to use criminal
process by way of abuse of process of law and therefore it is
liable to be quashed and set aside.
….....I am fully convinced that Respondent-Complainant
Gautam Patel is using the criminal court for oblique purpose
for repressing the Applicants/Accused Nos.1,2 and 3 by
filing frivolous complaint and there is no point in continuing
the said prosecution therefore the Revision Application
succeeds and it deserves to be allowed. I allow the revision
application.”
22 Learned Senior Counsel for the Petitioner-Society submitted
that apart from the above, the following facts establish malafide conduct
and exercise of powers by the Respondent No.2 in collusion with
Respondent Nos.3 and 4:
(i) the office of Respondent No.2 has repeatedly shown, and
continues to show, a willingness to act upon the complaints
of Respondent No.3 with extreme alacrity regardless of their
subject matter and validity, the background of the matter, or
the prevailing situation;
(ii)this approach is, in fact, amply demonstrated by the
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present proceedings. The complaint is in respect of matters
which transpired over five years ago and is, in fact, against
the erstwhile Managing Committee of December 2006,
whose term of office has long since concluded. Yet, action for
removal of members of the present committee is sought to be
taken by adopting an extreme stand that all actions taken
since December 2006 are invalid.;
nd
(iii) On the other hand, the 2 Respondent has either ignored
or been extremely slow to act upon the complaints and
nd
grievances of the Petitioner-Society. For instance, the 2
Respondent took as long as six months to simply provide the
Petitioners with a copy of the complaints of Smt. Valecha and
Smt. Walia;
(iv)
that it is an admitted position that the communication of
nd th
the 2 Respondent dated 15 July 2010, which was on the
basis of the Complaint of Smt. Valecha and Smt. Walia, was
delivered to the Petitioner by Mr. Narendra Avasthi, an
employee of the Respondent No.3;
(v) that at the instance of Respondent No.3, the Respondent
No.2 has by an order dated 26.3.2010 ordered an enquiry
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(albeit by another officer) into the affairs of the Petitioner-
Society under Section 83 of the MCS Act;
(vi)
all the proceedings initiated by the Respondent Nos.3 and
nd
4, some of them through the office of the 2 Respondent,
have either been stayed or set aside at the level of this Court;
(vii) that the contentions of Respondent No.3 in Writ Petition
(St.) No.9450 of 2011 filed by him themselves display clear
collusion and malafide conduct. The Respondent No.3 has
stated in para 3(xi) as follows:
“On further inquiry, the Respondent No.1 assured the
Petitioner No.3 that once the notice period is over, he would
immediately appoint the administrator as the managing
committee members of Respondent society have
continuously committed illegality since 2006 due to non-
execution of M 20 bond, which are mandatory in in terms of
section 73(1AB) and Rule 58A of MCS Act. The Respondent
no.1 have also confirmed and admitted to the Petitioner no.3
that he is fully convinced and as per his opinion there is no
other alternative but to appoint the administrator by
dissolving the managing committee of Respondent No.2.”
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23 According to the learned Senior Counsel for the Petitioner-
Society the allegations have not at any stage been refuted or denied by the
Respondent No.2 and no Affidavit in reply has been filed on his behalf
and no attempt has been made to rebut the allegations of malafide.
Learned Senior Counsel further submitted that the Affidavit of the
erstwhile Administrator Shri. S.M. Mohite, who was at the relevant time
and remains at present an officer of the Department of Cooperation,
indicates the level of collusion and malafide conduct on the part of the
Respondents. He submitted that the said Affidavit constitutes an
rd
undisguised and naked attempt to further the case of the 3 Respondent.
Shri. Mohite goes to the extent of disowning his own action as an
Administrator and purports to withdraw a notice of 28.3.2006 on which
action has been taken several years earlier. He seeks to do this although he
is admittedly no longer the Administrator of the Petitioners and ceased to
hold that position over five years ago. However, no action has been taken
by against Shri. Mohite by the department.
24 Learned Senior Counsel further submitted that the history of the
matter shows a consistent pattern of abuse of process and malafide
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proceedings in the form of criminal complaints etc being initiated by the
rd
3 Respondent further lends weight to the allegations of malafide.
25 Learned Senior Counsel submitted that when a statutory power
is not exercised in good faith and/or has been exercised for an extraneous
or irrelevant purpose, it is illegal and must be quashed and set aside on
that ground alone. He submitted that in any event, the Court can examine
the legal malafide even though the concerned party is not arrayed in his
individual capacity. He has placed reliance upon the following judgments
on the issue of malafide:
(i) S. Pratap Singh Vs. State of Punjab by a Constitution Bench
of the Hon'ble Supreme [AIR 1964 SC 72],
(ii) State of Punjab Vs. Gurdial [AIR 1980 SC 319];
(iii) Collector (District Magistrate), Allahabad Vs. Raja Ram
Jaiswal [AIR 1985 SC 1622].
26 On the issue of non-filing of Bonds, the learned Senior Counsel
on behalf of the Petitioner-Society submitted that the Bonds in M-20 form
were infact submitted by the members of the Managing Committee of the
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year 2006 and that after they ceased to be members of that Managing
Committee the said Bonds were returned to them. The learned Senior
Counsel placed reliance on the following decisions on the issue of Bonds:
i) Jagannath Rajaram Patil & Ors. Vs. Asstt. Registrar of
Cooperative Societies, F/South Ward & Ors. dated 2.08.2001 in
Writ Petition No.2552 of 1998 of this Court
ii) Bhupesh M. Rathod & Ors. Vs. State of Maharashtra &
Ors. dated 1.01.2010 of this Court in Writ Petition (L) No.2588
of 2009.
27 Mr. Ravi Kadam, learned Senior Counsel on behalf of the
Respondent No.3, on the other hand, submitted as under:
(i) that after the death of Harbhagwan Malhotra, an
Indenture of Lease was executed between his heirs and
the Petitioner-Society. The Malhotras could not develop
the said plot because their names could not be muted on
Revenue Records as Lessees on account of failure on
the part of the Petitioner-Society to produce ULC
clearance and consequently, M.C.G.M. did not approve
the Plans and therefore the heirs of Harbhagwan
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Malhotra were prevented from making construction on
the plot;
(ii)that the delay in completing the registration was caused
deliberately by some of the Managing Committee
members who were interested in acquiring the said Plot
at a throw away price who wanted to usurp the property
for them. That the majority of the members of the
Petitioner-Society had also strained relationship with the
Administrator and that the Managing Committee had
issued a Public Notice in the newspapers disowning and
repudiating all the actions taken by the Administrator
and declaring that the same were not binding upon the
Petitioner-Society. Thus, the Petitioner-Society had also
questioned the bonafides of the Administrator in issuing
the termination notice. Pertinently, the Managing
Committee while disowning all other actions of the
Administrator, ratified the action of the Administrator of
illegal issuance of the show cause notice of termination
of lease to the said Malhotras;
(iii) that on 31.5.2007, the Petitioner-Society wrongly
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passed a Resolution ratifying the action of the
Administrator in terminating the lease in respect of the
said Plot by Advocate’s notice dated 28.3.2006;
(iv) that the Petitioner-Society was formed to perform
administrative duties and held the plots as trustees for
its members who had paid the consideration for
purchase. The Lease Deed in favour of Malhotras for a
term of 999 years virtually grants the said Malhotras
ownership of the said plot and that the said lease could
not be terminated on the specious ground that they
failed to develop the land and there was encroachment
on the said plot and it was only because the Committee
members were interested in grabbing the plot of the said
Malhotras;
(v)that the Managing Committee of the Petitioner-Society
while adopting illegal termination overlooked the law
that no termination can take place as long as
membership continues and therefore, the alleged
ratification of termination would not hold any water
unless the Malhotras were expelled from the
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membership and that the Managing Committee in
furtherance of its intention to grab the said Plot initiated
totally untenable and false action for expulsion of the
Malhotras and in September 2007 passed a Resolution
expelling the Malhotras as members was malafide and
non est as it was against the bye-laws of the Society and
without giving an opportunity of being heard and in
violation of principles of natural justice and that in any
event it was without the approval of the Registrar of the
Societies. The said Resolution was therefore rejected by
the Deputy Registrar which was affirmed by the
Divisional Joint Registrar. The Petitioner-Society
moved the Minister of State for Co-operation which
proceedings are pending;
(vi) that the Criminal Proceedings were filed as one
Kanta Kaushal on the basis of an absolutely forged
document alleged to have been executed by the
deceased the original member Mr. Harbhgwan Malhotra
10 years after his death had managed to get her name
entered on P.R. Card relating to the said Plot and the
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said Kanta Kaushal had also approached the Petitioner-
Society to accept her as a member which was rejected
by the Petitioner-Society on the ground that the
documents of alleged transfer was forged and bogus.
When the Respondent No.3 adopted proceedings for
deleting her name from the Property Card, the
Managing Committee of the Petitioner-Society opposed
his Application and supported the said Ms.. Kanta
Kaushal and the Managing Committee was thus
colluding with the said Kanta Kaushal whose claim was
bogus only to deprive the Respondent Nos.3 and 4 of
the said plot;
(vii) that most of the Criminal Proceedings are sub
judice this Court, therefore, it would not be proper to
comment on the same;
(viii) that when malafides are alleged, the concerned
Respondents have to be impleaded in their personal
capacity and if this is not done, then the allegations of
malafides cannot be countenanced and must be rejected
and in the present case, the Respondent No.2-Deputy
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Registrar has not been impleaded as party Respondent
in his personal capacity;
(ix) that the observations of Justice V.M. Kanade are for
the purposes of interim stay. Any comment by this
Court on those proceedings would prejudice the said
proceedings. As regards Mr. Pushkarna, he is a third
party and the Respondent No.3 is not concerned with
him and the observations therefore in Pushkarna’s
matter are irrelevant for the present matter;
(x)that the identical and verbatim allegations were made in
the earlier two Writ Petitions by the Division Bench of
this Court which were ignored by the Court on both the
occasions and the issues referred to in paras 7 to 12 of
the petition are sub judice and pending final
adjudication and this Court cannot be asked to sit in
appeal nor go into merits of such pending matters to
decide on the alleged malafides. As regards the incident
of Mr. Narendra Avasthi is concerned, it has been
explained that the said Mr. Avasthi being employee of
the Respondent No.3 was deputed to the office of the
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Respondent No.2-Deputy Registrar to make some
inquiries and some staff of the Deputy Registrar
informed him that some notice/paper was required to be
served on the Petitioner-Society and that when he went
to serve them in the office of the Petitioner-Society, the
same was found locked. He, therefore, inquired with the
said Mr. Avasthi whether he can guide the said
representative of the Respondent No.2-Deputy Registrar
to the residence of the Hon. Secretary of the Petitioner-
Society and the said Mr. Avasthi knew the residence of
the Hon. Secretary of the Petitioner-Society, he
innocently agreed to guide him. While returning to the
office of the Respondent No.3 the said Mr. Avasthi
merely accompanied the man from the office of
Respondent No.2-Deputy Registrar to enable him to
find the address and therefore this issue is unnecessarily
raised is a non-issue;
(xi) that the affidavit filed by the Administrator in the
proceedings before the Co-operative Court was after the
said Mr. Mohite realized his mistake;
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(xii) that the protection under Section 77 can only be
claimed for normal functioning of the Managing
Committee and protection under the said Section cannot
be claimed for violation of statutory acts where
obligations are mandatorily required to be complied
with and therefore since there was no Managing
Committee since 2006, any act or illegality committed
without authority cannot be protected under the said
Act;
28 On the issue of non-filing of M-20 Bonds, Mr. Kadam. learned Senior
Counsel on behalf of the Respondent No.3 submitted that from the facts of the
case it is clear that no M-20 Bonds were filed by all Managing Committee
members in December 2006/January 2007 and that merely because 3 members
who were elected in the year 2008, 2009 and 2010 filed the M-20 Bonds, did not
mean that failure of others to file M-20 Bonds can be condoned and in any event
3 members could not have constituted Managing Committee as under the bye-
laws of the Society there has to be 9 Managing Committee members. That there
were concurrent finding of fact that the Petitioner-Society's members have failed
to execute/file M-20 Bonds in 2006-2007 which finding of fact cannot be
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questioned in writ jurisdiction. The assertion that the M-20 Bonds were filed
with the Society but returned back to the members is unbelievable and false and
this case was made for the first time only in December 2012 in Written
Arguments submitted in the Revision before the Respondent No.1 and it was
therefore an afterthought.
29 On the issue of necessity to join the party in his individual
capacity by name, against whom malafides are alleged, the learned Senior
Counsel for the Respondent No.3 placed reliance upon the following
judgments:
(i) M. Adbutha Rao Vs. Government of A.P., Irrigation and
Cad Dept. & Ors. [(2001) Indlaw AP 314];
(ii)Gopala Krishna Belur & Ors. Vs. B.S. Yeddiyurappa,
Chief Minister, Karnataka & Anr. [(2010) Inlaw KAR 488];
(iii) Madhav Prasad Vs. Deputy Managing Director (P and S)
[(2004) Indlaw ALL 459].
30 Mr. Vashi, learned Counsel for the Respondent No.4 (who is
daughter of Respondent No.3), has supported the submissions of the
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learned Senior Counsel Mr. Kadam. He has further submitted that the
impugned order of the Respondent No.1-Divisional Joint Commissioner
can be challenged under Section 154 of the MCS Act, 1960 before the
Government, and therefore the present petition ought not be entertained.
31 Mr. Mattos, learned A.G.P. has adopted the submissions of the
learned Senior Counsel Mr. Kadam insofar on the issue of non-submnission
of the M-20 Bonds are concerned. He further submitted that there was no
question of malafides on the part of the Respondent No.2- Deputy
Registrar. He submitted that the concerned Deputy Registrar ought to have
been made a party in his own name, if at all Petitioner-Society wanted to
assert their contention regarding malafide. He placed reliance on the
judgment of the Apex Court in State of Bihar Vs. P.P. Sharma [AIR 1991
SC 1260].
32 I have considered the rival contentions raised on behalf of the
parties.
33 At the outset, it may be stated that though elaborate arguments
have been advanced before me on behalf of the Petitioner-Society and the
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Respondents as recorded hereinabove, the issues which arise for
consideration in the petition really lie in a narrow compass, particularly as
the Petitioner-Society has agreed for to go in for a fresh election of the
Managing Committee, as stated hereinafter.
FRESH ELECTION
34 During the course of hearing, a suggestion was made by this
Court that without going to the merits or otherwise of the matter and
without prejudice to their rights and contentions and so as to obviate an
eventuality of an Administrator being appointed, whether the Petitioner-
Society is willing to go in for a fresh election of the Managing Committee.
35 Learned Senior Counsel for the Petitioner-Society in deference
to this suggestion and on instructions from the Petitioner-Society, came
back to the Court and fairly stated that in terms of what has been suggested
by this Court, the Petitioner-Society is willing to go in for a fresh elections
of the Managing Committee, keeping all their contentions open.
36 In view of the above, I have issued directions as set out in the
operative part of this judgment as regards the holding of fresh elections of
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the Managing Committee.
37 In these circumstances, there would now be no necessity for the
Petitioner-Society to show cause before the Respondent No.2-Deputy
Registrar as to why the members of the Managing Committee should not be
removed under Section 78 of the MCS Act. The grievance of the Petitioner-
nd
Society to the 2 part of the order-cum-show cause notice dated 9.11.2011
would therefore not survive.
MALAFIDE ACTION AND CONDUCT OF THE RESPONDENT
NOS.2/3.
38 Substantial part of the arguments were devoted by the learned
Senior Counsel for the Petitioner-Society on the purported malafide action
by Respondent No.2-Deputy Registrar in issuing the Show Cause Notice
and the conduct of the Respondent No.3. It was sought to be argued as
stated earlier, that the impugned order-cum-show cause notice dated
9.11.2011 issued by the Respondent No.2 is tainted with malafides and
amounts to colourable exercise of power for extraneous and irrelevant
purpose and was issued in collusion and at the instance of the Respondent
No.3 and therefore the same is bad in law and required to be quashed and
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set aside on that ground alone.
39 Insofar as the allegations of malafides against Respondent No.2-
Dy. Registrar are concerned, I find that the law on the subject of malafides
is well settled. In absence of the party against whom the allegations of
malafides have been levelled having been impleaded as party Respondent
by name in their personal capacity, no enquiry into those allegations can be
made.
40 In State of Bihar Vs. P.P. Sharma (supra), the Hon'ble Supreme
Court in para 55 held as under :
“It is a settled law that the person against whom malafide or bias
was imputed should be impleaded eo nominee as party
Respondent to the proceedings and given an opportunity to meet
those allegations. In his/her absence no inquiry into those
allegations would be made. Otherwise it itself is violative of the
principles of natural justice as it amounts to condemning a
person without an opportunity.”
In the present case, admittedly the concerned Deputy Registrar has not been
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impleaded by name in his personal capacity and therefore I do not deem it
appropriate to consider the validity of the allegations of malafides against
the concerned Deputy Registrar
41 Apart from the above, it is noticed that the impugned order-
cum-show cause notice dated 9.11.2011 emanated from an earlier show
cause notice dated 14.1.2011. This show cause notice dated 14.1.2011 was
subjected to challenge by the Petitioner-Society by filing Writ Petition
No.1617 of 2011 in this Court. Pertinently, however, the said Writ Petition
was withdrawn as recorded in the order dated 29.8.2011 (Coram: D.D.
Sinha & R.Y. Ganoo, J.J.). While withdrawing the petition, no grievance
appears to have been made by the Petitioner-Society that on account of
malafide conduct of the concerned Deputy Registrar, the Petitioner-Society
was not willing to go for hearing respecting the show cause notice before
the same Deputy Registrar.
42 In the circumstances, the contention of the Petitioner-Society
that the impugned order-cum-show cause notice ought to be quashed and
set aside on the ground of malafides against the Respondent No.2-Deputy
Registrar, cannot be accepted.
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43 Insofar as the conduct of Respondent No.3, who the Court is
informed is a Developer, and the allegations of malafides against him are
concerned, in my prima facie opinion it would not be incorrect to assume
that the Respondent No.3 does appear to exude a considerable amount of
influence. I have perused the Affidavit, dated 24.12.2010 of Shri S.M.
Mohite who was the erstwhile Administrator of the Petitioner-Society
sometime in the year 2006. By the said Affidavit Shri Mohite, who
continues to be in the employment of the Department of Co-operation,
State of Maharashtra, purports to withdraw a notice dated 23.3.2006 after a
period of almost 5 years after he had ceased to be an Administrator of the
Petitioner-Society. In the said Affidavit, Shri Mohite has stated that he had
inadvertently instructed Advocate Ms. Rupa B. Kadam at the relevant time
when he was the Administrator to issue show cause notice dated 28.3.2006
on the basis of misinformation, ill advise and lack of knowledge and
without realizing its subsequent consequences. As to what prompted Shri
Mohite to make this Affidavit after almost half a decade disowning his own
action is indeed curious and require some more explaining to do by the said
Shri Mohite. However, as Shri Mohite is not a party to these proceedings, I
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would not like to say anything further.
44 That said, it is however equally curious to note the manner in
which the leasehold rights of 999 years in respect of the said Plot belonging
to Malhotras (which rights have purportedly been assigned to the
Respondent Nos. 3 and 4) have been terminated by the said Administrator
Shri Mohite at the relevant time, and the Petitioner-Society, whilst
disowning other actions of the Administrator, having ratified the action of
the Administrator in respect of the termination of the lease of the said Plot.
45 I would only conclude, insofar as the issue of the conduct of
Respondent No.3 (at whose instance the present proceedings were initiated)
is concerned, by saying that even assuming that the Respondent No.3 may
have genuine grievances so far as he and Respondent No.4 being denied
membership by the Petitioner-Society and consequently to the lease-hold
rights in respect of the said Plot is concerned, it is hoped that wiser counsel
would prevail and the Respondent No.3 would henceforth show some
restraint in adopting proceedings, at least personally, against the members
of the Managing Committee of the Petitioner-Society and I leave it at that.
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46 It must, however, be stated that I am conscious of the fact that
the aforesaid issue as regards conduct of Respondent No.3 or for that matter
the Petitioner-Society may be subjudice. It is therefore clarified that the
aforesaid observations are only prima facie and would not in any manner
influence the final outcome of the proceedings in which the aforesaid issue
has been raised and is pending determination.
NON FILING OF M-20 BONDS:
47 The statutory provisions in respect of filing of Bonds are
contained in Section 73(1AB) of MCS Act (which was inserted by
Maharashtra Act 41 of 2000 and brought into force w.e.f. 23.8.2000) and
Rule 58-A of MCS Rule (which was introduced by Notification dated
18.2.2002). They read as under:
Section 73(1AB)
“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. The members of
the committee shall be jointly and severally be responsible for
the acts and omissions detrimental to the interest of the society.
Every such member shall execute a bond to that effect within
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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 deemed to have vacated his office as a member
of the committee.
Provided that …….
Rule 58-A
“Every elected member of the Managing Committee shall
execute a bond in Form M-20 within fifteen days of his
assuming office. Such bonds shall be executed on 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 the
formation of the Committee.”
48 It is required to be noted that the Byelaws of the Petitioner Society
provide that the minimum members of the Managing Committee shall be 9 and
every year, 3 members of the Managing Committee shall retire by rotation and 3
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new members shall be elected at the Annual General Meeting.
49 Undoubtedly, the provisions contained in Section 73(1AB) of MCS Act are
mandatory and the consequence of not executing bonds within the prescribed
period of 15 days of assuming office would result in vacation of the office by the
members of the Managing Committee by operation of law. There are two
judgments of two Division Benches of this Court viz- (i) Asssissi Cooperative
Housing Society vs. State of Maharashtra, 2007 (2) Bom CR 403 and (ii) Gulab
Rameshnath Khote vs. State of Maharashtra, 2008 (1) Bom CR 252, which in
terms have held so.
50 Perusal of the impugned order-cum-show cause notice dated 9.11.2011
would reveal that the Respondent No. 2 – Deputy Registrar has arrived at a
finding of fact that 7 out of 9 existing Managing Committee members who were
Managing Committee members pursuant to the elections held in December 2006
had not executed the M-20 Bonds. This finding of fact has been upheld by the
Respondent No. 1-Divisional Joint Registrar. The learned Senior Counsel on
behalf of the Petitioner-Society has not been able to point out any perversity in
this finding of fact arrived at by the Authorities below. In view thereof, no fault
can be found in this concurrent finding of fact of the Authorities and the same
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does not warrant any interference by this Court in exercise of writ jurisdiction.
51 However, insofar as the impact or consequence of non-execution of Bonds
by the Managing Committee members constituted pursuant to the elections of
December 2006 on the present Managing Committee members is concerned, it
is noticed that in the impugned order-cum-show cause notice, it is stated as
follows:
“Therefore, as per Maharashtra Cooperative Societies Act, 1960,
Section 78, why you should not be removed from the membership of the
Managing Committee.....”
The aforesaid sentence would indicate that the Respondent No. 2-Deputy
Registrar had granted an opportunity to show cause why 7 out of 9 members of
the present Managing Committee should not be removed from membership of the
present Managing Committee as they had not executed M-20 Bonds in December
2006/January 2007. In Revision, as far as this issue is concerned, the Respondent
No.1-Divisional Registrar has merely remanded the matter back to the
Respondent No. 2-Deputy Registrar, without expressing any opinion. The
contentions of the Petitioner-Society therefore as regards delay and latches for the
action of removal being taken, the impact of 4 subsequent elections having been
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held in the years 2008, 2009, 2010 and 2011 and section 77 of the MCS Act were
open to be argued before the Respondent No. 2 – Deputy Registrar. Thus, the
issue as regards the removal of the members of the present Managing Committee
who had failed to execute M-20 Bonds in December 2006/January 2007 was still
at large before the Respondent No. 2 – Deputy Registrar. It needs to be borne in
mind that the issue of non-execution of Bonds and sustaining disqualification by
members of the 2006 Managing Committee is one thing, and the removal of those
members from the membership of the present Managing Committee (as
consequence of the non-execution of Bonds by the said members of the 2006
Managing Committee) is quite another.
52 Inasmuch as the Petitioner-Society has fairly agreed for a fresh
election of Managing Committee, there would now be no necessity for the
Respondent No. 2-Deputy Registrar or for this Court to go into the issue of the
impact or consequence of the non-execution of Bonds by the members of the
Managing Committee of year 2006, on the present Managing Committee.
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DELAY AND LATCHES:
53 It is argued by the learned Senior Counsel for the Petitioner-
Society that the initiation of the present proceedings itself is hit by delay
and latches inasmuch as the M-20 Bonds in question were required to be
submitted in early January 2007 and the show cause notice on the basis of
the Complaint of Respondent No. 3, is dated 14-1-2011 and therefore there
is a delay of 4 years in initiating the present proceedings and that in any
event 4 elections of the Managing Committee of the Petitioner-Society have
been held since and that the impact of section 77 of the MCS Act has also
not been considered before the issuance of the show cause notice. It is
therefore contended that the initiation of the present proceedings would be
vitiated interalia on the ground of delay and latches and this aspect has not
been considered by the Authorities below.
54 T hough prima facie, I do find substance in the above legal
submission of the learned Senior Counsel on behalf of the Petitioner-
Society, it may be stated that there has been no proper debate before me on
this point of delay and latches and I have not been shown any authoritative
judicial pronouncement on this aspect. I have therefore, without expressing
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any final opinion on this issue sustained the factual finding arrived at by the
Authorities below as regards the non-filing of M-20 Bonds by the then
members of the Managing Committee pursuant to the elections held in
December 2006. There can be no quarrel on the issue that the provisions
contained in Section 73(1AB) of MCS Act are mandatory and that the
consequence of not executing the Bonds within the prescribed period of 15
days of assuming office would result in vacation of the office by the
members of the Managing Committee by operation of law. This has been
held so, even by two Division Benches of this Court as indicated earlier.
Primafacie though, I find it hard to accept that because the members of a
Managing Committee of a Society did not execute the M-20 Bonds within
the prescribed period, until an Administrator is appointed under Section 78
of the MCS Act who would hold elections of the Managing Committee, all
the actions and decisions taken by the Society during the interregnum
through subsequent Managing Committee would be set at naught for all
times to come, on account of lack of competence, which period in a given
case may even be decades. That, in my prima facie view would be an
extreme proposition and would not be in sync with the cooperative
movement. In any case, this issue is an important issue that needs to be
determined in an appropriate case after a proper debate and certain
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parameters may be required to be laid down after construing section 77 of
the MCS Act and I do not deem it appropriate to express any final opinion
on this aspect in the present case where the issue is somewhat diluted as the
Petitioner-Society has agreed to go in for a fresh election of the Managing
Committee. None of the judgments cited before me specifically deal with
the issue of delay and latches read in conjunction with section 77 of the
MCS Act.
55 The contention of Mr. Vashi, learned Counsel on behalf of the
Respondent No. 4, that the impugned order of the Respondent No. 1 -
Divisional Joint Registrar can be challenged in Revision before the
Government under section 154 of the MCS Act and therefore the present
petition ought not to be entertained, cannot be accepted in view of the
decision of the Full Bench of this Court in the case of Shireen Sami Gadiali
vs. Spenta Co-op Hsg Soc. Ltd, 2011 (3) Mah LJ 486, wherein it has been
held that the order passed in exercise of revisional jurisdiction cannot be
subjected to scrutiny in exercise of revisional jurisdiction again under the
provisions of Section 154 of MCS Act. Even otherwise, this contention on
behalf of the Respondent No. 4 ought to have been raised at the very outset
as a preliminary objection and not at the fag end after the matter has
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consumed more than 3-4 afternoon sessions of hearing of arguments by the
learned Senior Counsel on behalf of the Petitioner-Society, learned Senior
Counsel on behalf of Respondent No. 3 and learned A.G.P.
56 In the result, for the reasons mentioned above, I pass the
following order:
O R D E R
i) The Registrar of Cooperative Societies is directed to appoint
not later than 2 weeks from today, an officer under his control and
supervision other than Respondent No. 2 herein, to hold the elections
to the Managing Committee of the Petitioner-Society;
ii) The election shall be held and concluded expeditiously and in
th
any event not later than 15 November 2012;
iii)
In view of the above directions, there would be no necessity for
the Petitioner-Society or the members of the Managing Committee to
show cause before the Respondent No.2-Dy. Registrar against their
removal as members of the Managing Committee or for appointment
of an Arbitrator under section 78 of the MCS Act.
iv) The finding of fact by the Authorities below that 7 out of 9
present Managing Committee members who were appointed pursuant
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to the elections held in December 2006 had not executed the M-20
Bonds as per section 73(1AB) of the MCS Act and rule 58-A of the
MCS Rules in December 2006/January 2007 and therefore had
ceased to be members of that Managing Committee, is maintained;
v) The contention on behalf of the Petitioner-Society that the
impugned order-cum-show cause notice issued by the Respondent
No. 2 – Deputy Registrar is tainted with malafides and amounts to
colourable exercise of power, shall stand rejected.
vi) The issue of delay and latches and the impact of subsequent
elections coupled with the applicability of section 77 of the MCS
Act, is left open.
57 Rule is disposed of in the aforesaid terms. In the facts and
circumstances of the case there shall be no order as to costs.
(A.A. SAYED, J.)
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