Vithalnagar Co-Operative ... vs The State Of Maharashtra And Ors
2016 Latest Caselaw 682 Bom

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                 IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                        CIVIL APPELLATE JURISDICTION




                                                                                 
                           WRIT PETITION NO. 1557       OF 2015




                                                         
            Vithalnagar Co-operative Housing
            Society                                       ..      Petitioner
                  vs.
            The State of Maharashtra & Ors.               ..      Respondents




                                                        
            Mr. Rahul Narichania - Senior Advocate with Mr. Rohan
            Rajadhyaksha and Mr. Viral Amin i/b. B. Amin & Co. for Petitioner.

            Ms Aparna Vhatkar - AGP for Respondent Nos. 1 to 3.




                                             
            Mr. S. G. Desai - Senior Advocate with Mr. Manohar Shetty and Mr.
                                   
            R. V. Govilkar for Respondent Nos. 4 and 5.
                                  
                                         CORAM : M. S. SONAK, J.

Date of Reserving the Judgment : 26 February 2016 Date of Pronouncing the Judgment : 17 March 2016

JUDGMENT :-

1] Rule. With the consent of and at the request of the learned

counsel for the parties, Rule is made returnable forthwith.

2] The challenge in this petition is to the following orders, which

have concurrently disapproved the action of the petitioner society

seeking to expel the respondent nos. 4 and 5 as its members:

(a) The order dated 7 December 2007 made by the Deputy

Registrar, Co-operative Societies, declining approval under

Section 35 of the Maharashtra Co-operative Societies Act,

1960 (said Act) for expelling the respondent nos. 4 and 5 from

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membership of the petitioner society;

(b) The order dated 3 March 2010 made by the Divisional

Joint Registrar, Cooperative Societies, dismissing the

petitioner's appeal against the Deputy Registrar's order dated

7 December 2007;

(c) The order dated 23 September 2014 made by the

Minister (Co-operative Societies) dismissing the petitioner's

revision petition against the aforesaid order made by the

Deputy Registrar and the Divisional Joint Registrar of Co-

operative Societies.

The aforesaid orders shall hereafter be referred to as 'the

impugned orders' for the sake of convenience.

3] Mr. Rahul Narichania, the learned Senior Advocate appearing

for the petitioner, has made the following submissions in support of

this petition:

(A) That all the three authorities have misconstrued the

provisions contained in Rule 29 of the Maharashtra Co-operative

Societies Rules, 1961 (said Rules) as also the decision of this Court

in the case of Aderabad Co-operative Housing Society Limited

vs. Divisional Joint Registrar & Ors.1 for the purposes of holding

that there was no proper notice to the respondent nos. 4 and 5 in

the matter of their proposed expulsion from the membership of the 1 (2007) 5 Bom. CR 595

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petitioner society. Reliance was placed upon the decision of the

Division Bench of this Court in the case of Bhaskar Laxman Rane

vs. Shri Gurudev Nityanand Co-operative Housing Society Ltd.

& Ors. 2, to submit that the notice issued to the respondent nos. 4

and 5 in the present case complied with the predicates of Rule 29 of

the said Rules as interpreted in this decision of the Division Bench;

(B) That observations made in the impugned order dated 23

September 2014 by the Minister (Co-operative Societies) to the

effect that the respondent nos. 4 and 5 are the owners of the suit

plot and therefore, can sell the same to any person of their choice,

are vitiated by perversity, being totally contrary to the material on

record. In this regard, reliance was placed upon the decision of the

Hon'ble Apex Court in the case of Baby vs. Travancore

Devaswom Board & Ors.3, to submit that orders based on findings

of fact arrived at by non consideration of relevant and material

documents, consideration of which would have led to opposite

conclusion, can always be interfered with under Article 227 of the

Constitution of India.

4] Mr. S. G. Desai, the learned Senior Advocate appearing for

respondent nos. 4 and 5, at the outset submitted that no less than

three authorities, upon appreciation of the material on record as well

2 1998 (4) Bom. C.R. 247 3 (1998) 8 SCC 310

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as the legal position have rightly held that no proper notice as

contemplated by Rule 29 of the said Rules was ever served upon

the respondent nos. 4 and 5 in the present case. He submitted that

service of proper notice in terms of Rule 29 of the said Rule, being a

mandatory predicate even in terms of the decisions upon which

reliance has been placed by the petitioner, the three authorities are

entirely justified in disapproving the proposed expulsion of the

respondent nos. 4 and 5 from the membership of the petitioner

society. Mr. Desai placed reliance upon the decision of the Hon'ble

Supreme Court in the case of Shalini Shyam Shetty & Anr. vs.

Rajendra Shankar Patil4, and State of Haryana & Ors. vs. Manoj

Kumar5, to submit that concurrent findings of fact, based upon the

material on record may not be interfered with in the exercise of

extra ordinary jurisdiction under Article 227 of the Constitution of

India, particularly where the matter relates to private disputes

between the parties and there being no allegations of private

individual acting in collusion with the statutory authorities.

5] Mr. Desai submitted that the proposed action of the petitioner

society is entirely malafide. However, since there are substantive

disputes pending between the parties relating to the very grounds

upon which the expulsion was unsuccessfully attempted by the

4 (2010) 8 SCC 329 5 (2010) 4 SCC 350

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petitioner society, the respondent nos. 4 and 5 will have no

objection if appropriate directions are issued to dispose of the said

disputes, without, in any manner being influenced by the

observations made by the statutory authorities on the aspect of

nature of allotment of the suit plot to the respondent nos. 4 and 5

and the consequent entitlement of the said respondents to deal with

the same.

6] Rival contentions now fall for determination.

7] The petitioner is a tenant ownership cooperative housing

society deemed to be registered under the provisions of the said

Act. By indenture of lease dated 10 December 1965, plot no. 64

admeasuring 485 sq. yards (suit plot) was leased to Harbhagwan

Malhotra, who was duly admitted to the membership of the

petitioner society. At the meeting of the managing committee held

on 8 December 1980 the respondent nos. 4 and 5 were also

admitted as joint members of the petitioner society and the lease in

respect of the suit plot was also resolved to be transmitted in their

names. The indenture of lease dated 27 February 1981 was also

executed, inter alia, in favour of the respondent nos. 4 and 5.

8] By a notice dated 28 March 2006, the petitioner society,

purported to terminate the lease in respect of the suit plot, by

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alleging breaches of terms and conditions subject to which, the

lease was made. The respondent nos. 4 and 5, thereupon, instituted

dispute no. 185 of 2014 (old no. 378 of 2006) in the Co-operative

Court, Mumbai, inter alia, impugning the notice of termination dated

28 March 2006. Till date, said dispute is pending before the Co-

operative court.

9] On 11 December 2006, the respondent nos. 4 and 5 inter alia

are stated to have assigned their leasehold rights to the suit plot in

favour of Gautam Patel and Sonzal Patel (Patels). On 21 June

2007, the said Patels applied for membership of the petitioner

society. The Deputy Registrar of Cooperative Societies by order

dated 15 October 2007 has declared Patels as deemed members of

the petitioner society. The petitioner's revision application against

the same, has since been dismissed by the revisional authority on

10 November 2014. The petitioner society has instituted writ petition

no. 11508 of 2014, which came to be admitted on 9 October 2015.

There is an interim order in terms of prayer clause (c) of the said

petition, in operation.

10] On 1 August 2007, the petitioner society issued show cause

notice to the respondent nos. 4 and 5, requiring them to show cause

as to why the said respondents should not be expelled from the

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membership of the petitioner society under Section 35 of the said

Act read with the said Rules and the bye-laws of the society. The

notice also informed the respondent nos. 4 and 5 that a special

body meeting of the society is fixed on 8 September 2007 and the

said respondents would be allowed to attend the meeting, only in

person and not through their attorneys. There is material on record

which establishes that said notice was received by the respondent

nos. 4 and 5 on 4 August 2007.

11] On 14 August 2007, the petitioner society issued notice to all

its members to attend the special general body meeting fixed on 8

September 2007, inter alia, to discuss and deliberate upon issue of

proposed expulsion of respondent nos. 4 and 5. The text of the

proposed resolution proposed to be adopted at the meeting of 8

September 2007, was specifically transcribed in notice dated 14

August 2007.

12] In the meanwhile, the respondent nos. 4 and 5 through their

constituted attorney submitted their reply to the notice dated 1

August 2007 to the managing committee of the petitioner society

on 27 August 2007. By response dated 6 September 2007, the

petitioner society informed the respondent nos. 4 and 5 that the

cause shown by the said respondents in the matter of their

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proposed expulsion was not satisfactory.

13] On 8 September 2007, at the special general body meeting of

the petitioner society, the resolution for expulsion of respondent nos.

4 and 5 from the membership of the petitioner society was adopted

by the special general body.

14] The petitioner society thereafter made application no. 8 of

2007 before the Deputy Registrar, seeking approval as required

under section 35 of the said Act for expelling the respondent nos. 4

and 5 from membership of the petitioner society. By order dated 7

December 2007, the Deputy Registrar has dismissed the

petitioner's application no. 8 of 2007 and declined approval for

expulsion. The appeal instituted by the petitioner society was

dismissed by the Divisional Joint Registrar on 3 March 2010. The

Minister (Co-operative Societies), has thereafter dismissed the

petitioner's revision petition by order dated 23 September 2014.

Hence, the present petition.

15] Section 35 of the said Act provides that a society may, by

resolution passed by a majority of not less than 3/4th of the

members entitled to vote who are present at the general meeting

held for the purpose expel a member for acts which are detrimental

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to the interest or proper working of the society. The proviso to sub

section 1 of Section 35 provides that no such resolution shall be

valid, unless the member concerned is given an opportunity of

representing his case to the general body, and no such resolution

shall be effective unless it is approved by the Registrar. Sub Section

(2) of Section 35 of the said Act deals with the aspect of

readmission of an expelled member, with which, we are not

concerned with in the present petition.

16] Rule 29 of the said Rules provides the procedure for

expulsion of members and the same reads thus :

"29. Procedure for expulsion of members.

(1) Where any member of a society proposes to bring a resolution for expulsion of any other member, he shall give a

written notice thereof to the Chairman of the society. On receipt of notice or when the committee itself decides to bring

in such resolution, the consideration of such resolution shall be included in the agenda for the next general meeting and a notice thereof shall be given to the member against whom such resolution is proposed to be brought, calling upon him to

be present at the general meeting to be held not earlier than a period of one month from the date of such notice and to show cause against expulsion to the general body of members. After hearing the member, if present, or after taking into consideration any written representation which he might have sent, the general body of members shall proceed to consider the resolution.

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                    (2)          When a resolution passed in accordance with sub-

rule (1) is sent to the Registrar or otherwise brought to his

notice, the Registrar may consider the resolution and after making such enquiries as he may deem fit, give his approval

and communicate the same to the society and the member concerned. The resolution shall be effective from the date of

such approval."

17] There was no serious dispute raised by the learned counsel

for the contesting parties to the legal proposition that since

expulsion of a member entails drastic consequences, the provisions

contained in Section 35 of the said Act as well as Rule 29 of the

said Rules are mandatory and have to be complied with before

there can be any valid and effective expulsion. The dispute really

was whether, the provisions contained in Rule 29 have indeed been

complied with by the petitioner society or not. As noted earlier, three

authorities have concurrently ruled that there was no such

compliance by the petitioner society.

18] The petitioner society relies upon the show cause notice

dated 1 August 2007 issued by the managing committee of the

petitioner society to the petitioner, requiring the respondent nos. 4

and 5 to show cause as to why they should not be expelled from the

membership of the petitioner society. Paragraphs 17 and 18 of the

show cause notice, which can be said to contain the operative

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portion, read thus :

"17. In the circumstances aforesaid you are hereby called

upon to show cause to the Society within one month from the

date of receipt hereof by you, why you should not be expelled from the membership of the Society and why the shares held by you in the Society should not be forfeited and

why expulsion proceedings should not be adopted against you as provided under Section 35 of The Maharashtra Co- operative Societies Act, 1960 read with Rules 28 and 29 of

The Maharashtra Co-operative Societies Rules and bye law 12 of the Society. If you have any explanation to give, you

may send the same in writing to the Society within the aforesaid period. If, however you intend to remain present

and explain to the General Body of Members, you may do so at the Special General Meeting fixed on 8 th Sep. 2007 at 7.30 p.m. at 2nd Floor party hall, Next to Table tennis Hall, Juhu

Gymkhana Club, 13th N. S. Road, J v p d Scheme, Mumbai

400019. Please note that only you would be allowed to attend the said meeting and your Agent / Representative and/or Power of Attorney holder shall not be allowed to

attend the same in any circumstances.

18. If however, in the meantime any explanation is received from you the same will be circulated to the Members

of the Society and placed before the General Meeting for its consideration."

19] The material on record, does indicate that the aforesaid show

cause notice dated 1 August 2007 was received by the respondent

nos. 4 and 5 on 4 August 2007. Therefore, relying upon the decision

of the Division Bench in the case of Bhaskar Rane (supra), Mr.

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Narichania contended that the services of such notice containing the

gist of the proposed action served upon the respondent nos. 4 and 5

more than one month prior to the date fixed for the special general

body fixed on 8 September 2007 constitutes compliance with the

procedure prescribed under Rule 29 of the said Rules. Mr.

Narichania, emphasized that the notice is prescribed by Rule 29 of

the said Rules contemplates notice to the member or members

against whom resolution for expulsion is proposed to be passed at

least one month prior to the date of the meeting.

20] Mr. Narichania submitted that the three authorities have

made reference to notice dated 14 August 2007 which was

addressed to the members of the petitioner society and incorrectly

regarded the said notice as one issued in terms of Rule 29 of the

said Rules. Mr. Narichania submitted that notice dated 14 August

2007, was notice to the members of the society that special general

body meeting to consider the expulsion of the respondent nos. 4 and

5 is scheduled for 8 September 2007. However, the notice in terms

of the provisions contained in Rule 29 issued to the respondent nos.

4 and 5 was the notice dated 1 August 2007, which was admittedly

received by the said respondents on 4 August 2007 and therefore,

there is compliance with the provisions contained in Rule 29 of the

said Rules.

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           21]      In the context of the provisions contained in Rule 29 of the

said Rules, the learned Single Judge of this Court in the case of

Aderabad Co-operative Housing Society Limited (supra), after

consideration of the decision of the Division Bench in the case of

Bhaskar Rane (supra) at paragraphs 36 and 37 has observed thus:

"36. Since a notice of expulsion entails drastic consequences the provisions of Rule 29 are held to be a mandatory and a notice of less than one month under the said

Rule is held liable to be set aside in the case of Bhaskar Rane

(supra) as well as in the case of (Narayan Ramkrishna Embadwar v. Assistant Registrar, Co-operative Societies,

Yavatmal) 1996 Supp Bom. C.R. (N.B.) 721 : 1994 Mh. L.J.

37. A reading of Rule 29 shows that the resolution

incorporated in the agenda of the next general meeting is to be notified to the member proposed to be expelled.

The agenda has not been shown in the Notice dated 27.12.2004, though it sets out the case of the petitioner -

Society against respondent Nos. 3 and 4 for their expulsion on merits. The agenda incorporating the resolution is served upon respondent nos. 3 and 4 only on 30.1.2005. It cannot, therefore, be taken to be strict

compliance of the notice contemplated under section 35 of the MCS Act read with Rules 28 and 29 of the MCS Rules. Accordingly, in the impugned order, respondent No. 1 has correctly concluded that the said notice falls short of the statutory period."

(Emphasis supplied)

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22] In the facts and circumstances of the present case, if the

notice dated 1 August 2007 is perused, it is quite clear that the

notice of the proposed resolution included in the agenda for the next

general meeting with regard to the expulsion of the respondent nos.

4 and 5, is not contained therein. The circumstance that the gist of

the proposed action is contained in the notice, was not regarded as

compliance with the mandatory provisions contained in Rule 29 of

the said Rules in the case of Aderabad Co-operative Housing

Society Limited (supra). In paragraph 37 referred to above, it has

been observed that the agenda has not been shown in the notice

dated 27 December 2004, though it sets out the case of the

petitioner society against the respondent nos. 3 and 4 for their

expulsion on merits. Further, in the said case, the agenda

incorporating the resolution was served upon the respondent nos. 3

and 4 in the said case only on 30 January 2005, when in fact, the

special general body meeting was scheduled to be held on 6

February 2005. The learned Single Judge in the case of Aderabad

Co-operative Housing Society Limited (supra) has taken note of and

considered the decision in the case of Bhaskar Rane (supra) as also

the decision in the case of Narayan and etc. etc.. vs. Assistant

Registrar, Co-operative Societies, Yavatmal & Ors.6, to which

reference shall be made hereafter.

    6 AIR 1994 Bom. 239



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           23]      In the present case as well, the agenda incorporating the

resolution proposed to be passed in the meeting scheduled on 8

September 2007 is contained in the notice dated 14 August 2007.

There is some controversy as to whether the notice dated 14 August

2007 was at all served upon the respondent nos. 4 and 5 in the

present case. However, even if we are to proceed on the basis that

the same was served upon the respondent nos. 4 and 5 on 14

August 2007 itself, there would be no compliance with the

mandatory provisions contained in Rule 29 of the said Rules,

because, such notice is required to be served upon the members

against whom the resolution of expulsion is proposed to be brought

at least one month prior to the date of the special general body

meeting where such resolution is to be considered. Thus construed,

it cannot be said that view taken by the three authorities concurrently

is vitiated by any jurisdictional error or suffers from any serious legal

infirmity.

24] In the case of Narayan (supra), the learned Single Judge of

this Court Hon'ble Mr. Justice Sirpurkar (as His Lordship then was)

has after quoting the provisions contained in Rule 29 at paragraph 3,

observed thus :

"The language of Rule 29 thus is very clear that where the society proposes to expel a member from the membership, not only that the member shall be individually served with a notice, which would contain an

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agenda of the said proposed general body meeting but the said meeting has to be held not earlier than a period

of one month from the date of such notice. In the present case admittedly the notice is dated 4.1.1986. Meeting has

been held on 1.2.1986 i.e. within a period of one month. The language of Rule 29 is mandatory and as such the

meeting in which the resolution of expulsion of these members was passed is itself rendered illegal. The Assistant Registrar, who granted approved of this expulsion

was bound under Section 35 of the Maharashtra Co-operative Societies Act to consider this aspect as the said approval by

the Registrar provided in Section 25(1) of the Act is not an empty formality. The Registrar, who was approached by the

society for the approval of the resolution, has to examine all the legal aspects with open eyes. He cannot depend only upon the submissions made to him by the parties. I have

seen the order of the Assistant Registrar, which is completely

silent on this aspect. It is significant to note that in the appeal memos this point was specifically raised by all the three petitioners. It was pointed out that the mandatory notice firstly

was never served and secondly the meeting itself was an illegal meeting having been held before the period of one month being elapsed after the notice was given. The Divisional Joint Registrar has merely referred to this point but

has not bothered to consider the importance of the matter.

He has merely stated that such point was not raised before the Assistant Registrar. Whether such point was raised before the Assistant Registrar or not, the impact of this legal submission was bound to be considered by the Divisional Registrar particularly because the provision in Rule 29 is a mandatory provision. Similar such controversy came up

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before this court in Writ Petition No. 2601/1990, decided on 20.11.1990 (M.S. Deshpande, J.) wherein this Court has

taken the view that Rule 29 is of a mandatory nature and non-compliance with the same will make the resolution

illegal. The decision being of co-ordinate bench of this court is binding on me. The provision being a mandatory

provision, merely because the question was not raised before the Assistant Registrar, it would not absolve the authority by simply saying that the mandatory provisions

of law were complied with by the society before the expulsion resolutions were passed."

                                    ig                 (Emphasis supplied)
                                  
           25]      In the notice dated 1 August 2007, upon which the petitioner

society placed strong reliance there is neither any reference to the

agenda nor the resolution which was proposed to be passed in the

special general body meeting. The contention that mere gist of the

proposed action might suffice as has been specifically rejected by

the learned Single Judge of this Court in the case of Aderabad Co-

operative Housing Society Limited (supra). In the case of Narayan

(supra) this Court has held that not only the member shall be

individually served with a notice, which would contain agenda of the

said proposed general body meeting but the said meeting has to be

held not earlier than a period of one month from the date of such

notice. The interpretation adopted by the two learned Single Judges

of this Court in the matter of compliance with the provisions

contained in Rule 29 of the said Rules, was therefore, rightly

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followed by the authorities under the said Act and it cannot be said

that the impugned orders are vitiated by any jurisdictional errors, so

as to warrant interference under Article 227 of the Constitution of

India.

26] The decision in case of Bhaskar Rane (supra) is not an

authority for the proposition that the notice as contemplated by Rule

29 of the said Rules need not include the agenda and the resolution

which is proposed to be passed in the special general body meeting.

In fact, such an issue did not arise for determination in the case of

Bhaskar Rane (supra). There is certainly, no jurisdictional error on

the part of the three authorities in following the law laid down by this

Court in cases of Aderabad Co-operative Housing Society Limited

(supra) and Narayan (supra).

27] The show cause notice dated 1 August 2007 issued by the

managing committee of the petitioner society to the respondent

Nos.4 and 5, in the facts and circumstances of the present case,

appears to be a notice to show cause as to why resolution for

proposed expulsion be not placed before the general body. The

managing committee of the petitioner society, upon consideration of

the cause shown, has on 6 September 2007, even replied to

respondent Nos.4 and 5 that the cause shown by them was not

found to be satisfactory. If the notice dated 1 August 2007 was

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intended to be compliance with the procedure contained in Rule 29

of the said Rules, then there was no question of addressing

response dated 6 September 2007 to the respondent Nos.4 and 5,

rejecting the cause shown by them, even before the cause shown by

respondent Nos.4 and 5 was placed before the general body

scheduled to meet on 8 September 2007. In contrast, notice dated

14 August 2007, makes specific reference to the resolution to be

included in the agenda for special general body scheduled for 8

September 2007. The notice dated 14 August 2007, does comply

with the predicates prescribed under Rule 29, in the matter of

inclusion of the agenda and the proposed resolution. However, since

the special general meeting was held on 8 September 2007, i.e.,

earlier than period of one one month from the date of such notice,

obviously, applying law laid down not just in the cases of Aderabad

Co-operative Housing Society Limited (supra) ; Narayan (supra), but

also in case of Bhaskar Rane (supra) upon which reliance was

placed by the petitioner, the three authorities, were quite right in the

view which they have taken. Accordingly, no case is made out to

interfere with the conclusion concurrently recorded by the three

authorities.

28] Although, the conclusion recorded by the three authorities

does not call for interference considering the restrictive parameters

of jurisdiction under Article 227 of the Constitution of India,

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nevertheless, Mr. Narichania is right in his submission that the

Minister (Co-operative Societies) was not justified in observing that

the respondent nos. 4 and 5 are the owners of the suit plot and

therefore, they can sell the suit plot to any person of their choice.

There was neither any occasion nor any reason to make such

observations, after having upheld the orders made by the Deputy

Registrar and the Divisional Joint Registrar, in the matter of non

compliance with the provisions contained in Rule 29 of the said

Rules. Accordingly, the said observations are not approved. There

does not appear to be substantial difference between the grounds

upon which the expulsion of the respondent nos. 4 and 5 was

proposed and the grounds of termination of lease in respect of the

suit plot. The dispute in the context of such termination is pending

before the Co-operative Court vide dispute no. 185 of 2014, as noted

earlier. In these circumstances, it would be appropriate to direct that

the dispute no. 185 of 2014 be decided by the Co-operative Court,

uninfluenced by such observations in the impugned orders.

Directions to this effect are issued accordingly.

29] Accordingly, Rule is made partly absolute. Although, the

challenge to the impugned orders is rejected, the findings in the

impugned order dated 23 September 2014 made by the Minister

(Co-operative Societies) to the effect that the respondent nos. 4 and

5 are owners of the suit plot and therefore, can sell the same to any

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person of their choice, are not approved. Such issue is specifically

kept open to be decided by the Co-operative Court in pending

dispute no. 185 of 2014, without in any manner, being influenced by

such observations.

30] In the facts and circumstances of the present case, there shall

be no order as to costs.

31] All concerned to act on the basis of authenticated copy of this

order.

(M. S. SONAK, J.) Chandka