Telangana High Court
Deputy Registrar Of Cooperative ... vs Rayala Venkata Seshagiri Rao on 19 April, 2024
Author: Nagesh Bheemapaka
Bench: Nagesh Bheemapaka
HON'BLE SRI JUSTICE NAGESH BHEEMAPAKA
WRIT PETITION No. 5242 AND 5308 OF 2024
COMMON ORDER :
The Order dated 08.02.2024 of the Telangana Cooperative Tribunal at Warangal (for short, 'the Tribunal') in I.A. No. 5 of 2024 in C.T.A.No. 1 of 2024 is under challenge in both these Writ Petitions. Writ Petition No. 5242 of 2024 was filed by the Vice-President and in-charge President of Primary Agricultural Cooperative Society, Gangadevipadu, Tallada Mandal and Writ Petition No. 5308 of 2024 was filed by the Deputy Registrar of Cooperative Societies. Hence, they are taken up together for hearing and disposal with the consent of the learned counsel.
2. For convenience sake, parties arrayed in Writ Petition No. 5242 of 2024 are taken for reference.
3. Through the order impugned, the Tribunal temporarily suspended the proceedings Rc.No. 5/2024-C, dated 23.01.2024 by which, the Deputy Registrar of Cooperative Societies, the 3rd respondent, disqualified and removed the 2nd respondent as Managing Committee Member and President of the Primary Agricultural Cooperative Credit Society Limited, Gangadevipadu of Thallada Mandal (for short 'the Society'). 2
4. Coming to the facts of the case, the 4th respondent - Chief Executive Officer, District Cooperative Central Bank Limited, Khammam (for short, 'the bank') vide letter dated 01.01.2024 informed that the 2nd respondent obtained vehicle loan of Rs.27 lacs from the bank on 24.10.2018 and defaulted in payment, which resulted in initiation of legal action and issuance of certificate under Section 71 of the Telangana Cooperative Societies Act, 1964 (for short, 'Act') dated 20.01.2023. The total overdue amount as on 31.12.2023 is to the tune of Rs.25,93,569/- and pending recovery, it is clear violation of Section 21A(1)(b) and (c) of the Act, therefore, and he is liable for disqualification as a Managing Committee Member. Hence, notice was issued on 09.01.2024, for which, the 2nd respondent is said to have submitted explanation on 18.01.2024 stating that he remitted total loan amount due with interest, ie. Rs.23,22,100/- vide challan 3 dated 18.01.2024 of the DCCS Limited, Khammam duly enclosing thereto no due certificate.
While so, it is stated, by order dated 26.01.2024, the 3rd respondent conferred the powers of the President on petitioner - Vice President, after the order of disqualification of the 2nd respondent was passed on 23.01.2024.
3
5. Learned Additional Advocate General appearing for petitioner in Writ Petition No. 5308 of 2024 as well as Sri P.V. Ramana, learned counsel for petitioner in Writ Petition No. 5242 of 2024 submit that though the 2nd respondent remitted the overdue amount to the bank, it is still violation of Section 21A(1)(b) and (c) and is attracted to take action from the date of overdue as he became overdue for the period of two years and ten months i.e. on 24.04.2020. According to them, disqualification comes into effect from the date on which he incurred disqualification and not from the date of order. To fortify the said contention, reliance is placed on the judgment of this Court in The Pulla Co-op. Rural Bank Ltd. v. B. Ram Mohan Rao 1.
Another aspect which was canvassed is that the 2nd respondent suppressed the factum of maintaining parallel remedy before this Court much before filing the C.T.A. before the Tribunal, to have personal gain. He filed Writ Petition No. 2190 of 2024 to set aside the order dated 23.01.2024, which this Court heard and reserved for orders; meanwhile, he approached the Tribunal by filing C.T.A. No. 1 of 2024 and I.A. No. 5 of 2024, suppressing the fact of filing the Writ Petition. The Tribunal on 01.02.2024 passed the interim order suspending the order dated 23.01.2024. The 2nd respondent thereafter quietly withdrew Writ Petition on 1 1998(6) ALD 661 4 02.02.2024. Though the Deputy Registrar of Cooperative Society filed counter and vacate stay petition, without considering the facts pleaded therein, the Tribunal erroneously allowed I.A.No. 5 of 2024 vide order impugned holding that Section 21-A(1)(c) is not applicable to the case of the 2nd respondent. Both the learned counsel relied on the judgment of the Supreme Court in Kishore Samrite v. State of Uttar Pradesh 2 and contend that no litigant can play 'hide and seek' with the Courts or adopt 'pick and choose'. True facts ought to be disclosed as the Court knows law, but not facts.
Additionally, Sri P.V. Ramana argued that the 2nd respondent filed Appeal for setting aside the disqualification order dated 23.01.2024 and the one dated 26.01.2024 through which, petitioner was inducted into the position of President. In the cause title of the Appeal, one Kowthala Srinivasa Rao was shown as Vice
- Chairman, PACS, in fact, no such person is acting as Vice- Chairman; and knowing fully well that he has nothing do to with the Society and without impleading the petitioner who was in- charge of President, as party, the Appeal was filed. It is submitted that when petitioner filed implead petition before the Tribunal, objection as to the maintainability was taken by the office. 2
(2013) 2 SCC 398 5
6. The 2nd respondent filed the counter-affidavit in Writ Petition No. 5308 of 2024. While admitting borrowal of vehicle loan on 24.10.2018 from the bank, submits that repayment period should end on 24.10.2023 but not on 24.01.2023 as shown in the account statement. It is stated that he was also not spared from Covid-19 and was hospitalised. As per the loan account statement for the period 01.04.2018 to 22.02.2024, loan repayment should end on 23.10.2023. Since the RBI issued moratorium orders extending repayment schedules by three months, payment should end on 24.01.2024 and he made payment on 18.01.2024 i.e. before the end of loan repayment period.
7. Sri S. Ramananda Swamy, learned counsel for the 2nd respondent submits that Section 21-A(b) literally means that one should not be in default as on the date of disqualification and the default that occurred prior to issue of disqualification orders gets completely cured if loan is discharged prior to the date of order of disqualification. According to him, interpreting this Section, this Court in Arepalli Satyanarayana v. Deputy Registrar of Cooperative Societies, Bhimavaram 3 ruled out that disqualification ceases the moment the amount is paid and subsequently, no order to disqualify him can be passed. He further submitted that as on the date of the disqualification order 3 1996(2) ALD 415 6 dated 23.01.2024, no amount is pending recovery, therefore, Section 21-A(1)(c) is not applicable. As regards suppression of facts as alleged by the learned Advocate General and Sri P.V. Ramana, it is submitted that when the counsel for the 2nd respondent brought to the notice of the Tribunal about filing of the earlier Writ Petition, the Tribunal set aside the docket order dated 01.02.2024 and initiated fresh proceedings only after an affidavit was filed before it about withdrawal of Writ Petition duly giving ample opportunity to both sides to produce their documents and the above facts were recorded by the Tribunal in its order dated 08.02.2024. Learned counsel strongly submits that Section 21-A(1)(b) and (c) is applicable only when recovery is pending as on the date of disqualification order, but, in the instant case, the said order was issued on 23.01.2024 after the entire loan amount was paid on 18.01.2024. Finally, he argues that impugned order is an off-shoot of the political vendetta. Deputy Registrar of Cooperative Societies tried to remove the 2nd respondent illegally by issuing orders under Section 32-B by devolving the powers of President on Vice-President on 26.01.2024 which happens to be a national holiday. According to the learned counsel, Section 32-B should be invoked only when the President fails to convene Managing Committee meeting for more than three months or he is away from the head quarters for more than three months and if he 7 is incapacitated for more than three months. In the case on hand, the 2nd respondent never violated the said provision.
8. Heard learned Government Pleader for Cooperation and Sri Qureshi, learned counsel for the 2nd respondent.
9. After hearing learned counsel on either side and perusing the record, the points that fell for considerations are:
1) whether disqualification should be reckoned from the date when disqualification was incurred or from the date when the order of disqualification was passed; and 2) whether the 2nd respondent suppressed the factum of filing the earlier Writ Petition before the Tribunal, if so, whether Writ Petitions are liable to be allowed on that ground?
10. For deciding point No.1, it is better to reproduce hereunder Section 24-A(1)(b)(c):
Section 21-A(1): No person shall be eligible for being chosen as, and for being, a member of the committee, if he -
.......
(b) is in default in the payment of any amount due in cash or kind to the society or any other society or stood as guarantor society /Co-
executants to any member who committed default, for said period as may be prescribed or is a delegate of a society which is defunct or which is in default as aforesaid;
(c) is a person against whom any amount due under a decree, decision, award or order is pending recovery under this Act. 8 Rule 24: Disqualification for membership of committee: (1) No person shall be eligible for being chosen or continuing as a President of a Primary Cooperative Society or as a member of the Committee of any society, if he
a).....
b) is in default to the society or to any other Society for such period as is specified in the bye-laws of the Society concerned, or in any case for a period exceeding three months, or is a defaulter to the Society or to any other Society, or is a delegate of a Society which is defunct or is in default for a period exceeding three months.
Rule 75: Without prejudice to the generality of other Telangana Cooperative Societies Rules, the special rule applicable to the Cooperative Credit Societies covered under Chapter XIII B is as follows:
1.....
2.....
3......
4. Disqualification of Membership of Committee: - The provisions of Rule 24 shall apply to all Cooperative Credit Societies, with the following change: The period of default shall be reckoned as one year instead of three months."
11. A conjoint reading of Section 21-A(1)(c) read with Rules 75 and 24A(1)(b) of the Rules makes it obvious that no person against whom any amount due under a decree, decision award or order is pending recovery under this Act is eligible for being a member of the committee and the period of default shall be reckoned as one year.
9
12. In this regard, the statement of loan account of the 2nd respondent filed by the Deputy Registrar of Cooperative Societies at material pages 80 to 82 of Writ Petition No. 5308 of 2024 discloses that opening balance as on 24.10.2018 was Rs.27,00,000/-, he made payments till 17.03.2021 and thereafter, committed default and only on 18.01.2024 he cleared the due amount. The default period is for more than one year which, no doubt, attracts the provision under Rule 24(1)(b) and 75, therefore, the 2nd respondent is liable for disqualification as per Section 24A(1)(c) of the Act. From which date is the question now to be decided.
13. In Pulla Co-op. Rural Bank Limited's case (supra), this Court following the Division Bench judgments in R. Venkata Ranga Reddy v. N. Muralidhar Rao 4 and Arepalli Satyanarayana's case (supra), held that 'Rule 24(1)(b) provides that no person shall be eligible for being chosen as a President of a Primary Cooperative Society or as a member of the Committee of any Society, if he is in default to the Society or to any other Society for such period as is specified in the bye- laws of the Society concerned, or in any case for a period exceeding three months, or is a default to the Society or to any other Society. There is no factual controversy between the 4 AIR 1983 AP 83 10 parties that under the bye-laws of the Society, the loan should have been repaid on or before 16.10.1996. It is also admitted position that the loan was repaid by other guarantor, namely one Sri Anjaenyulu on 13.10.1986 i.e. after the prescribed period. If this is the undisputed factual matrix of the case by force of the provisions of Rule 24(1) of the Rules and also binding decisions of the Division Benches of this Court in P. Venkata Subba Reddy v. K. Anjaneyulu (supra) and R. Venkata Ranga Reddy v. N. Muralidhar Rao (supra), the first respondent incurred disqualification with effect from 17.10.1996 and he was statutorily liable to be declared as disqualified under Rule 25 of the Rules. Sub-rule (4) of Rule 24 makes it abundantly clear that when the Registrar passes an order of disqualification after giving an opportunity to the member concerned, that would come into effect with effect from the date on which he incurred disqualification as envisaged under the provisions of Rule 24(1) and not from the date of the order. To the same effect are the above two decisions of the Division Benches of this Court. In that view of the matter, with respect, I should state that the opinion expressed by the learned Single Judge in Arepally Satyanarayana v. Deputy Registrar of Cooperative Societies, Bhimavaram (supra) is not a good law, and per incuriam. In fact, the decisions of the Division Benches are not considered in that decision.' 11
14. In view of the above-said legal positon, this Court is of the view that disqualification should be incurred from the date of default ie. from April 2021. The Tribunal also while quoting the above-extracted provision of law, observed that in the light of the legal position, it becomes the responsibility of the 1st respondent to show that period of default committed was for a period exceeding one year; in order to show the same, statement of account was not produced. It further observed that if petitioner therein allegedly committed default since April 2021, why the bank kept quiet till January 2024 without proceeding to avail the remedy i.e. seizure of subject vehicle for such a long period. Further, as per the law under Section 21- A(1)(b) of the Act read with Rules 75 and 24, if the period of default exceeds one year, the membership of the borrower itself shall be disqualified, to this effect, whether the 2nd respondent got knowledge or not, whether the terms and conditions of loan agreement reflected this information to the borrower of loan or not, whether the bank before completing alleged one year default period, issued any notice to the 2nd respondent to this effect or not. It is fathom to note that the Tribunal ought not to have recorded such observations for, the 2nd respondent being the Member and Chairman of the Society at the relevant point of time, is expected to know the repercussions in the event of default and there is no question of explaining him the 12 consequences thereof. Further, the bank initiated legal action by issuing certificate under Section 71 of the Act on 20.01.2023 itself, however, the 2nd respondent did not pay the amount. The bank waited till the loan period is over and thereafter, issued notice on 09.01.2024. Hence, the bona fides of bank cannot be doubted and the mala fides attributed by the 2nd respondent cannot be accepted.
15. As regards the other contention of suppression of facts, the Tribunal recorded that 'learned counsel appeared for the 2nd respondent before the Tribunal himself admitted that his client approached the High Court much before filing the C.T.A. before the Tribunal. Before filing the Appeal, he fairly conceded that for the same relief, both cases were filed and the party did not inform him about Writ Petition No. 2190 of 2024, hence, he did not refer the same in case papers filed before the Tribunal. He further submitted that the party was suggested to approach the Tribunal first locally, that he gave instructions to his learned advocate not to press the said Writ Petition. That his party with all bona fides believed that said Writ Petition was dismissed as not pressed and that was the reason why he did not think it is necessary to inform learned Advocate. Upon admission by the learned advocate that Writ Petition No. 2190 of 2024 was pending by the 13 date the Tribunal passed order dated 01.02.2024, without knowledge of pending proceeding before the High Court. Upon this single ground, this Court is setting aside the docket order dated 01.02.2024'. Once the interim order obtained duly suppressing the facts, was set aside, the Tribunal ought not to have taken up I.A.No.5 of 2024 and passed the order impugned. In view of the admission of counsel appeared on behalf of the 1st respondent itself, the justification of the Tribunal to suspend the order dated 01.02.2024 and again passing the impugned order 08.02.2024 cannot be appreciated.
16. The Supreme Court in Kishore Samrite's case (supra) dealt with the issue 'abuse of process of court' in detail and held that......
32. The cases of abuse of process of court and such allied matters have been arising before the courts consistently. This Court has had many occasions where it dealt with the cases of this kind and it has clearly stated the principles that would govern the obligations of a litigant while approaching the court for redressal of any grievance and the consequences of abuse of process of court. We may recapitulate and state some of the principles. It is difficult to state such principles exhaustively and with such accuracy that would uniformly apply to a variety of cases. These are:
32.1. Courts have, over the centuries, frowned upon litigants who, with intent to deceive and mislead the courts, initiated proceedings without full disclosure of facts and came to the courts with "unclean hands". Courts have held that such 14 litigants are neither entitled to be heard on the merits of the case nor are entitled to any relief.
32.2. The people, who approach the court for relief on an ex parte statement, are under a contract with the court that they would state the whole case fully and fairly to the court and where the litigant has broken such faith, the discretion of the court cannot be exercised in favour of such a litigant.
32.3. The obligation to approach the court with clean hands is an absolute obligation and has repeatedly been reiterated by this Court.
32.4. Quests for personal gains have become so intense that those involved in litigation do not hesitate to take shelter of falsehood and misrepresent and suppress facts in the court proceedings. Materialism, opportunism and malicious intent have overshadowed the old ethos of litigative values for small gains.
32.5. A litigant who attempts to pollute the stream of justice or who touches the pure fountain of justice with tainted hands is not entitled to any relief, interim or final.
32.6. The court must ensure that its process is not abused and in order to prevent abuse of process of court, it would be justified even in insisting on furnishing of security and in cases of serious abuse, the court would be duty-bound to impose heavy costs.
32.7. Wherever a public interest is invoked, the court must examine the petition carefully to ensure that there is genuine public interest involved. The stream of justice should not be allowed to be polluted by unscrupulous litigants.
32.8. The court, especially the Supreme Court, has to maintain the strictest vigilance over the abuse of process of court and ordinarily meddlesome bystanders should not be granted "visa". Many societal pollutants create new problems of unredressed grievances and the court should endure to take cases where the justice of the lis well justifies it. (Refer : Dalip 15 Singh v. State of U.P. [(2010) 2 SCC 114 : (2010) 1 SCC (Civ) 324] , Amar Singh v. Union of India [(2011) 7 SCC 69 : (2011) 3 SCC (Civ) 560] and State of Uttaranchal v. Balwant Singh Chaufal [(2010) 3 SCC 402 : (2010) 2 SCC (Cri) 81 : (2010) 1 SCC (L&S) 807] .)
17. From the law laid down by the Supreme Court in the above judgment and from the observations made by the Tribunal above, it is clear that the 2nd respondent has not approached the Tribunal with clean hands and he obtained the order by misrepresenting the facts.
18. Yet another contention Sri P.V. Ramana, learned counsel for petitioner in Writ Petition No. 5242 of 2024 raised is that in the Appeal before the Tribunal, the name of the 6th respondent herein was shown as Vice-Chairman, and in fact, no such person is acting as Vice-Chairman of the Society.
According to him, petitioner was the affected person as he was conferred with the powers of the President of the Society to discharge duties as such by order dated 26.01.2024, but he was not made as party. Sri A.M. Qureshi, learned Senior Counsel appearing on behalf of the 2nd respondent submits that petitioner has to establish that he has been deprived / denied of a legal right and has sustained injury to any legally protected interest. The learned Senior Counsel relied on the judgment of 16 the Hon'ble Supreme Court in Ravi Yashwant Bhor v. District Collector, Raigad 5, wherein it has been held as under:
" The complainant has to establish that he has been deprived of or denied of a legal right and he has sustained injury to any legally protected interest. In case he has no legal peg for a justiciable claim to hang on, he cannot be heard as a party in a lis. A fanciful or sentimental grievance may not be sufficient to confer a locus standi to sue upon the individual. There must be injuria or a legal grievance which can be appreciated and not a stat pro ratione voluntas reasons i.e. a claim devoid of reasons.
Under the garb of being a necessary party, a person cannot be permitted to make a case as that of general public interest. A person having a remote interest cannot be permitted to become a party in the lis, as the person who wants to become a party in a case, has to establish that he has a proprietary right which has been or is threatened to be violated, for the reason that a legal injury creates a remedial right in the injured person. A person cannot be heard as a party unless he answers the description of aggrieved party (Vide Adi Pherozshah Gandhi v. Advocate General of Maharashtra ((1970) 2 SCC 484), Jasbhai Motibhai Desai v. Roshan Kumar ((1976) 1 SCC 671, Maharaj Singh v. State of U.P. ((1977) 1 SCC 155, Ghulam Qadir v. Special Tribunal ((2002) 1 SCC 33 and Kabushiki Kaisha Toshiba v. Tosiba Appliances ((2008) 10 SCC
766)."
19. The said judgment is not applicable to the case on hand for, petitioner in Writ Petition No. 5242 of 2024 was directed to act as President of Primary Agricultural Cooperative Credit Society Limited, Gangadevipadu of Thallada Mandal in place of the 2nd respondent vide order dated 26.01.2024. Hence, without impleading petitioner as party, the 2nd 5 (2012) 4 SCC 407 17 respondent cannot question the order dated 26.01.2024 before the Tribunal and seek its suspension. The contention of petitioner that without impleading him as party, the Tribunal ought not to have entertained the Appeal, cannot be brushed aside. From the above discussion, viewed from any angle, the order impugned is liable to be set aside.
20. Both the Writ Petitions are therefore, allowed. The order dated 08.02.2024 in I.A.No. 5 of 2024 in C.T.A.No. 1 of 2024 on the file of the Telangana Cooperative Tribunal at Warangal is set aside. No costs.
21. Consequently, the miscellaneous Applications, if any shall stand closed.
--------------------------------------
NAGESH BHEEMAPAKA, J 19th April 2024 ksld