Bombay High Court
The Shetkari Sahakari Dhan Girni ... vs State Of Maharashtra Through ... on 29 September, 2016
Bench: Prasanna B. Varale
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
: NAGPUR BENCH : NAGPUR.
WRIT PETITION NO. 2815 OF 2015
PETITIONER : The Shetkari Sahakari Dhan Girni Maryadit,
through its President,
Jayant Vasantrao Vairagade,
Aged about 58 years,
Office at Post Dongargaon, Tal. Mohadi,
District Bhandara.
ig - VERSUS -
RESPONDENTS : 1] State of Maharashtra,
Through Secretary, Cooperation and
Textile Department, Mantralaya,
Mumbai.
2] Divisional Joint Registrar,
Cooperative Societies,
Office at Near Bhide School,
Sitabuldi, Nagpur.
3] The District Deputy Registrar,
Cooperative Societies, Bhandara.
4] The Assistant Registrar,
Cooperative Societies, Tal. Mowadi,
Dist. Bhandara.
5] Shri C. A. Bodad, Liquidator,
The Shetkari Sahakari Dhan Girni Maryadit,
Dongagraon, Dist. Bhandara.
6] Assistant Registrar,
Office of Cooperative Societies,
Tah. Mohadi, Dist. Bhandara.
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Mr. P. S. Tidke, Advocate for the petitioner.
Mr. A. D. Sonak, A.G.P. for the respondent nos.1 to 4 and 6.
None for the respondent no.5, though served and reply filed.
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CORAM : PRASANNA B. VARALE, J.
DATE : SEPTEMBER 29, 2016.
ORAL JUDGMENT
Rule. Rule made returnable forthwith. With the consent of
the learned counsel for the parties, the petition is heard finally at the
stage of admission itself.
2] By this petition, the petitioner challenges the order passed
by the respondent no.4 - Assistant Registrar, Cooperative Societies, Tah.
Mowadi, dated 28.04.2015, thereby issuing interim order of winding up
the affairs of the petitioner-society.
3] This Court, by order dated 15.09.2016 has referred to the
controversy involved in the petition i.e. the order impugned in the
petition passed by the respondent no.4 authority is without conducting
any enquiry and in breach of principle of natural justice.
4] It was the submission of the learned counsel for the
petitioner that the petitioner-society was registered in the year 1965
and the same was running smoothly and was taking various steps to
achieve the objects for which the society was formed. The learned
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counsel further submitted that in the year 2013, the bye-laws of the
petitioner-society were amended. The learned counsel further
submitted that it is alleged in the impugned order dated 28.04.2015
passed by the respondent-Assistant Registrar that the petitioner-society
has failed to comply the object, more particularly, purchasing the
machinery for processing the paddy. It was further alleged in the
impugned order that the main activity of the petitioner-society was to
procure the raw grain (paddy) from its members, convert the same in
finished product and subsequently sale the same in the market, but
instead of carrying out its main activity, the petitioner-society was
involved only in ancillary activity such as purchasing the paddy from its
members. Thus, the respondent no.4-authority was of the opinion that
the petitioner-society is required to wind up and accordingly, by way of
an interim order, the respondent- Assistant Registrar, Cooperative
Societies appointed respondent no.5 as a Liquidator.
5] The learned counsel for the petitioner submitted that the
petitioner-society was having voluminous material to show that the
petitioner-society was carrying out the activities to achieve its object
and for that purposes, the machinery was also purchased. The focus of
the learned counsel for the petitioner in his submission was failure of
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the authority concerned to observe the principle of natural justice. The
learned counsel submitted that the order passed by the respondent-
authority is an order of drastic nature putting the wheels of running
society at a stand still position. It was the further submission of the
learned counsel that if an opportunity would have been granted to the
petitioner-society, it could certainly have satisfied the authority
concerned, but as no such an opportunity was granted, the petitioner-
society was faced with the drastic order as bolt in blue and subjected to
a serious prejudice. The learned counsel further submitted that in
near-like similar and identical facts and situation, the Division Bench of
this Court dealing with the provisions of Section 102(1) & (2) of the
Maharashtra Co-operative Societies Act, 1960 and dealing with the
identical interim order of appointment of liquidator, disapproved the
approach of the authority concerned of passing the order without giving
an opportunity of hearing to the petitioner-society.
6] The learned Assistant Government Pleader for the
respondent nos.1 to 4 and 6 made an attempt to support the order
impugned in the petition. The learned AGP further submitted that there
is no requirement of observing the provisions of Section 102(1) i.e.
while passing interim order, an opportunity of hearing should be
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granted to a concerned society. The learned AGP submitted that as per
Section 102(2) of the Act of 1960, after passing the final order, the
petitioner- society has a remedy to prefer an appeal.
7] As stated above, the point for consideration before this
Court is whether the order passed by the authority concerned,
impugned in the petition i.e. interim order appointing Liquidator on the
petitioner-society without giving an opportunity of hearing, is
sustainable ?
8] In my opinion, the learned counsel for the petitioner was
justified in submitting that the issue is squarely covered by the
judgment of the Division Bench of this Court. The learned counsel was
also justified in submitting that in an identical situation, this Court in
the detailed judgment took stock of the situation and passed the order,
thereby setting aside the order of the Assistant Registrar appointing the
Liquidator by way of interim order. It would be useful for our purposes
to refer to the judgment of the Division Bench of this Court reported in
2004(1) Mh.L.J. 232 in the case of Chandrapur Zilla Sahakari Krushi
and Gramin Bahuudeshiya Development Bank Ltd. .vs. State of
Maharashtra. The Division Bench framed the very issue, which reads
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that -
"14. The crucial issue before us, however, is whether the
Registrar can take such a drastic decision, even if
termed as interim, without hearing the Societies ?
The Division Bench then observed thus :
"16. It is therefore, obvious that there is neither pre-
decisional hearing before the interim order is passed nor
such order is allowed to be appealed against. There is
only post-interim decisional hearing before the final
order is passed to vacate or confirm the interim order.
Section 103 further empowers the Registrar to appoint
a Liquidator of the society, even after the interim order
of winding up of the society. It further mandates that
after the interim order is passed, the society shall hand
over to the Liquidator the custody and control of all the
property, effects and actionable claims to which the
Society is entitled and the whole record pertaining to
the business of the Society and thereafter the Society
will have no access to the same. Such is the drastic and
draconian provision empowering the Registrar to issue
an interim order to the Society to be wound up.
(emphasis supplied)
9] In the reported judgment, 2004(1) Mh.L.J. 232, cited supra,
though, an attempt was made before the Division Bench to justify the
interim order by drawing support from the judgment of the Hon'ble
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Apex Court in the case of Liberty Oil Mills .vs. Union of India (AIR 1984
SC 1271), the Division Bench was pleased to observe that the judgment
of the Apex Court only supports the view of the Division Bench. The
Division Bench of this Court further refers to the judgment of the
Division Bench of Gauhati High Court in the case of Deputy Secretary to
the Govt. of Assam, Panchayat and Community Dev. Department .vs.
Moying Ch. Pegu and others, (AIR 1983 Gau.55) and observed that the
learned Judges (Gauhati High Court) have virtually codified the
principles and it would be a beacon light for the Courts considering the
issue like the one which we are called upon to decide. The Division
Bench then further referred to nine contingencies visualised by the
Division Bench of the Guahati High Court. It would not be necessary to
go into those nine contingencies. Suffice to refer to the basic
observation of the Division Bench of Gauhati High Court on the aspect
of principle of natural justice. It was observed that - "natural justice is
undoubtedly a brooding omnipresence because of the strides made by the
Courts in India during the last two decades but the Courts have always
struck a balance between the expansion of the Rule and the empirical
socio-economic needs, public interest and the authority of the legislature".
It was further observed that the case before the Division Bench i.e.
interim order passed by the Registrar appointing Liquidator was one of
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the case covering the illustrative contingencies carved out by the
Division Bench of the Gauhati High Court. The Division Bench of this
Court further observed that "It is, therefore, crystal clear that before
passing an interim order affecting the crystallized and vested rights, pre-
decisional hearing would be necessary as such orders would have
"immediate and grave prejudicial repercussions on the person concerned"
and, therefore, it would be desirable to hear him before the order of
suspension is passed". The Division Bench then in clear and
unambiguous words observed that 'We, therefore, are of the firm opinion
that the principles of natural justice cannot be dispensed with for the
action under Section 102(1)(c) of the Act. The Registrar is duty bound to
grant hearing to the concerned Society against which an interim order of
winding up is proposed or contemplated." (emphasis supplied)
10] The Division Bench of this Court in its reported judgment
cited supra, on assessing the interim order passed by the Registrar
under Section 102(1)(c) of the Act further observed that, "we fail to
understand how the Registrar can act "on his own" unless he puts the
material gathered by him to concerned Society ? There is always an
otherwise in every matter. All the facts situation prescribed in section
102(1)(c) from the very nature do warrant hearing the Society before
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issue of interim order to wind up. In all these eventualities, the Registrar
must act on very good and tangible material before passing the semi-fatal
order of winding up of a Society". The Division Bench further observed
that "we must remember that the Registrar under the Act is the
Administrative Head with large judicial and quasi-judicial powers vested in
him. The powers conferred on him under Section 102 are akin to the
powers of a Court of Law. They have all the semblance and trappings of
judicial powers which he must exercise with great care and
circumspection". The Division Bench then refers to the another
judgment of the Division Bench of this Court in the case of Yeshwant
Bandhkam Majur Sahakari Soc. Ltd. .vs. Assistant Registrar of Co-op.
Societies and another ; (1998 (3) All MR 837). It would be useful to
note that in Yeshwant Bandkam Majur Sahakari Soc.'s case, it was
informed to the Division Bench that the Registrar had passed final order
under Section 102(2) ordering final winding up of the Societies during
the intervening period. As the Division Bench was of the opinion that
the order impugned in the petition needed to be quashed and set aside,
the Division Bench observed that it is needless to say that the
consequences of quashing the interim order would be that the final
orders would also fall as held by the Supreme Court in the judgment of
Haribhau Dagdu Tandale .vs. Industrial Co-operative Association Ltd
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and others ; (JT 1969(9) SC 211).
11] The learned counsel for the petitioner also relied on the
judgment of the learned Single Juge of this Court, reported in 2014 (6)
Mh.L.J. 200 in the case of Jaya w/o Chandrakant Admane and
another .vs. State of Maharashtra and others in support of his submission
that before initiating any proceeding for winding up the society, the
inviting provisions of Sections 83, 84 and 102 of the Act of 1960 and
enquiry or inspection is sine qua non.
12] Thus, it leaves no scope to arrive at a conclusion that the
respondent - Assistant Registrar , Cooperative Societies, Tah. Mohadi,
before passing the order dated 28.04.2015, was required to grant an
opportunity of hearing to the petitioner-society and once this position is
accepted, the only conclusion which can be drawn is, the order passed
by the Assistant Registrar, impugned in the petition is clearly
unsustainable.
13] In the result, the writ petition is allowed.
The order impugned in the petition passed by respondent
no.4 - Assistant Registrar, Cooperative Societies, dated 28.04.2015 is
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quashed and set aside.
Needless to state that if the respondent-authority is of the
opinion to initiate any action against the petitioner-society under the
provisions of the Maharashtra Cooperative Societies Act, 1960, more
particularly under the provisions of Section 102, the authority can
initiate the proceedings by following the principle of natural justice i.e.
by giving an opportunity of hearing to the petitioner society.
Rule is made absolute in the aforesaid terms. No order as
to costs.
JUDGE
Diwale
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C E R T I F I C A T E
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