Bombay High Court
Smt. Shital Yashwant Bondre And ... vs Bhandari Co-Op. Bank Ltd. And Ors on 6 September, 2017
Bench: M.S. Sonak
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 9548 OF 2013
Chandrashekhar S. Bhole .. Petitioner
Versus
Bhandari Co-Op. Bank Ltd.
through Liquidator and ors. .. Respondents
WITH
WRIT PETITION NO.6774 OF 2015
Basagonda Satyappa Kadoli .. Petitioner
Versus
The State of Maharashtra and others .. Respondents
WITH
WRIT PETITION NO.5697 OF 2015
Pankaj Chhotubhai Parmar .. Petitioner
Versus
The State of Maharashtra
Through its Principal Secretary and others .. Respondents
WITH
WRIT PETITION NO.5698 OF 2015
Dharmaraj N. Wagannavar .. Petitioner
Versus
The State of Maharashtra
Through its Principal Secretary and others .. Respondents
WITH
WRIT PETITION NO.5699 OF 2015
Vijay Ranchhodji Rathod .. Petitioner
Versus
The State of Maharashtra
Through its Principal Secretary and others .. Respondents
WITH
WRIT PETITION (STAMP) NO.14928 OF 2015
Mr. Ratilal Pitambar Bhole and another .. Petitioners
Versus
Bhandari Coop.
Bank Ltd. Through Liquidator and others .. Respondents
WITH
WRIT PETITION (STAMP) NO.19257 OF 2015
Mr. Iranna A. Belibhavi .. Petitioner
Versus
1/14
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The State of Maharashtra and others .. Respondents
WITH
WRIT PETITION (STAMP) NO.19258 OF 2015
Mr. Ashok I. Bhavikatti .. Petitioner
Versus
The State of Maharashtra and others .. Respondents
WITH
WRIT PETITION (STAMP) NO.19262 OF 2015
Mr. Basalingappagouda S. Patil .. Petitioner
Versus
The State of Maharashtra and others .. Respondents
WITH
WRIT PETITION (STAMP) NO.19264 OF 2015
Mr. Nandkumar S. Kharkar .. Petitioner
Versus
The State of Maharashtra and others .. Respondents
WITH
WRIT PETITION NO.9801 OF 2016
A.V. Balasubramanian .. Petitioner
Versus
The Liquidator
Veershaiva Co-op. Bank Ltd. .. Respondents
WITH
WRIT PETITION NO.2154 OF 2013
Basavraj I. Araganji .. Petitioner
Versus
The Liquidator
Veershaiva Co-op. Bank Ltd. .. Respondents
WITH
WRIT PETITION NO.9551 OF 2013
Mr. Mahesh G. Kargutkar and ors. .. Petitioners
Versus
The Liquidator
Bhandari Co-op. Bank Ltd. and ors. .. Respondents
WITH
WRIT PETITION NO. 8128 OF 2013
Smt. Shital Y. Bondre and anr. . .. Petitioners
Versus
Bhandari Co-op. Bank Ltd. and ors. .. Respondents
2/14
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Dinesh Sherla 1-wp-6774-15-G
WITH
CIVIL APPLICATION NOS.1738 , 1446, 1450, 1451, 1452,
1739, 1740, 1741, 1742, 1744 AND 1747 OF 2017
Mr. Vikram Chavan and Mr. Rampal Kohli i/b C.K. Legal for the
Applicant in CAW 1742/2017.
Mr. Pravartak Pathak for the Petitioners in WP 8128/2013 and
9551/2013.
Mr. Milind Gawre i/b Mr. Ravindra Lokhande for the Petitioner in WP
9548/2013.
Mr. Karan Thorat for the Applicant in CA No 1738/2017 in WP
6774/2015.
Ms Vaishali Nimbalkar, AGP for the Respondent - State.
CORAM : M. S. SONAK, J.
DATE : 6 SEPTEMBER 2017.
ORAL JUDGMENT :-
1] In all these petitions, the issue raised is whether the
petitioners, who claim to be mere employees of the respondent -
society (Bank) can be proceeded against under the provisions of of
Section 88 of Maharashtra Cooperative Societies Act, 1960 (MCS
Act).
2] The petitioners in unison submit that they are not the persons,
who can be said to have taken any part in the organization or
management of the Bank and further, they are also not the Officers
of the Bank. They submit that they are in fact unconcerned with the
organization or management of the Bank and further, they also do
not answer the definition of "Officer" in terms of Section 2 (20) of
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MCS Act. They rely upon the decision of this Court in case of
Shriram D. Raut vs. Bahu Uddesiya Sahakari Sansthan, Virsi and
ors. - 2003 C.T.J. 427 to urge that a mere employee of the society
can never be regarded as Officer of the society and consequently
proceeded under the provisions of Section 88 of the MCS Act.
3] On the other hand, learned counsel for the respondent-bank as
well as learned AGP submit that these petitions are premature and at
this stage, the enquiry before the Authorised Officer under Section
88 of the MCS Act may not be stalled. They point out that by the
impugned orders, the Authorised Officer and thereafter, the
Divisional Joint Registrar (Revisional Authority) have denied reliefs
to the petitioners, on the ground that apprehension expressed by
them are quite premature. They point out that the Division Bench of
this Court has already issued directions to complete the enquiries
expeditiously, because this is a case where large scale illegalities and
irregularities were noted in the course of preliminary enquiries held
consistent with the provisions of MCS Act and the Rules made
thereunder. They submit that in some matters there are stay orders
granted and in others there are no stay orders granted. They point
out that the Division Bench of this Court in its order dated 14 th June
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2017 in Notice of Motion (L) No. 158 of 2016 in Writ Petition No.
1892 of 2013 had issued clear directions for the enquiry to proceed
and if possible, to complete the enquiry within a period of six
months. By the same order, liberty was also granted to apply for
vacation of interim reliefs in individual cases. They point out that
they have also taken out civil applications seeking vacation of
interim/ad-interim reliefs. They, however, submit that these petitions
may not be entertained at this stage or where entertained, be
disposed of leaving it upon to the petitioners to place on record the
evidence in support of their contentions that they are in no manner
covered under the provisions of Section 88 of the MCS Act.
4] Section 88 of the MCS Act reads thus:
"88. Power of Registrar to assess damages against delinquent
promoters, etc.
(1) Where, in the course of or as a result of an audit under
section 81 or an inquiry under section 83 or an inspection under
section 84 or the winding up of a society, the Registrar is satisfied
on the basis of the report made by the auditor or the person
authorised to make inquiry under section 83 or the person
authorised to inspect the books under section 84 or the
Liquidator under section 105 or otherwise that any person who
has taken any part in the organisation or management of the
society or any deceased, or past or present officer of the society
has, within a period of five years prior to [the date of
commencement of such audit or date of order for inquiry,
inspection or] winding up, misapplied or retained, or become
liable or accountable for, any money or property of the society, or
has been guilty of misfeasance or breach of trust in relation to
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the society, the Registrar or a person authorised by him in that
behalf may frame charges against such person or persons, and
after giving a reasonable opportunity to the person concerned
and in the case of a deceased person to his representative who
inherits his estate, to answer the charge, make an order requiring
him to repay or restore the money or property or any part
thereof, with interest at such rate as the Registrar or the person
authorised under this section may determine, or to contribute
such sum to the assets of the society by way of compensation in
regard to the misapplication, retention, misfeasance or breach of
trust, as he may determine.
Provided that, proceedings under this sub-section, shall be
completed by the authorised person within a period of two years
from the date of issue of order by the Registrar:
Provided further that, the Registrary may, after recording
the reasons therefor, extend the said period for a maximum
period of six months.
(2) The Registrar or the person authorised under sub-
section (1) in making any order under this section, may provide
therein for the payment of the cost or any part thereof, as he
thinks just, and he may direct that such costs or any part thereof
shall be recovered from the person against whom the order has
been issued.
(3) This section shall apply, notwithstanding that the
act is one for which the person concerned may be criminally
responsible."
5] Section 2(20) of MCS Act reads, which defines the expression
"officer" reads thus:
"(20) "officer"means a person elected or appointed by a society to
any office of such society according to its by-laws; and includes
[any office bearer such as a chairperson, vice-chairperson,
president, vice-president, managing director, manager, secretary,
treasurer, member of the committee and any other person, by
whatever name called,] elected or appointed under this Act, the
rules or the by-laws, to give directions in regard to the business
of such society."
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6] From the aforesaid, it is clear that any person who has taken
any part in the organisation or management of the society or any
deceased, or past or present officer of the society within a period of
five years prior to the date of commencement of audit or date of
order for inquiry, inspection or winding up, who may have
misapplied or retained, or become liable or accountable for, any
money or property of the society, or has been guilty of misfeasance
or breach of trust in relation to the society, may be proceeded
against in terms of Section 88 of the MCS Act.
7] In Shriram Raut (supra), this Court, on the basis of evidence
placed on record by the petitioners in the course of proceedings
under Section 91 of the MCS Act, had held that a manager of a
clothes section of the society could not be said to be a person, who
has taken any part in the organization or management of the society
and such person could not be regarded as the officer of the society.
This was after evidence had been led by such person in the
proceedings under Section 91 of the MCS Act and the decision of the
Registrar had been tested in Appellate/Revisional Jurisdiction before
the prescribed authorities under the MCS Act. The ruling is in the
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context of facts as established in the course of proceedings before
the authorities.
8] In the present case, the petitioners raised objection to their
being proceeded against at the very threshold. In fact, the impugned
order records that such objections were not even raised at the
threshold, but were raised at the stage the enquiries were
substantially progressed. However, learned counsel for the
petitioners dispute this position and submit that the enquiries have
not substantially progressed and the observation in the order of the
Authorised Officer to this effect that they have, is not proper.
9] Rather than enter into this controversy, even if we proceed on
the basis that the objections had been raised by the petitioners at the
threshold, it cannot be said that the objections raised are in the
nature of pure issues of law. The objections raised, at the highest,
involve mixed questions of both, fact and law. For example, some of
the petitioners are alleged to be managers or acting managers of the
bank. There are allegations that the petitioners have held
responsible positions in the bank. The preliminary enquiry reports
have made observations with regard to the role and position of some
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of the petitioners. In the absence of proper evidence with regard to
the position, duties and role of each of the petitioners, it cannot, in
the facts and circumstances of the present case, be concluded that
the petitioners are not the persons, who can ever be covered under
the provisions of Section 88 of the MCS Act. At the highest, this is an
arguable issue, to be determined on the basis of the evidence which
the parties produce before the authorities.
10] In a situation of this nature, it is only appropriate that the
parties are granted liberty of producing appropriate evidence before
the Authorised Officer, who is seized with the enquiries under
Section 88 of the MCS Act to demonstrate whether the petitioners
are indeed persons, who are not or who cannot be covered under the
provisions of Section 88 of the MCS Act. At this stage, it will not be
appropriate for this Court to embark upon adjudication of disputed
questions of fact in these writ petitions or to simply admit the writ
petitions and in the meantime stay the enquiry proceedings before
the Authorised Officer. As noted earlier, the Division Bench of this
Court has already directed the expeditious disposal of the enquiry
proceedings by taking conginzance of the large scale allegations of
misfeasance, breach of trust etc., which plague the Bank.
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11] Even if the Authorised Officer rules that the petitioners are
persons covered and therefore, can be proceeded against under
Section 88 of the MCS Act and frames charge against the petitioners,
it is possible that the petitioners are ultimately exonerated. In any
case, the petitioners have remedies of questioning the final orders
both on the issue of coverage as well as on the issue of liability by
instituting Appeal/Revisions under the provisions of MCS Act. At
that stage, the Appellate/Revisional Authorities will have before
them the record, which will include evidence as regards precise
position and nature of duties of each of the petitioners and their role
in the organization or the management of the society. Based upon
such material, the petitioners, can as well, urge the contention that
they are not covered or coverable under the provisions of Section 88
of the MCS Act.
12] Such an issue, however, cannot be decided at this stage itself
on the basis of unilateral assertions on the part of the petitioners.
Unilateral assertions have been specifically disputed by the
respondent bank. In any case, there is no question of deciding such
disputed issues in the exercise of extra ordinary jurisdiction under
Article 227 of the Constitution of India.
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13] As noted earlier the decision in case of Shriram Raut (supra) is
distinguishable at least at this stage. Because, unlike the position in
the present petitions, the petitioner in the said petitions, had placed
relevant evidence before the authorities to demonstrate that he was
not covered under the provisions of Sections 88 or 91 of the MCS
Act. In this case, the petitioners, are yet to produce such material, if
any, before the Authorised Officer and such material is yet to be
examined by the Authorised Officer and thereafter the
Appellant/Revisional Authorities under the MCS Act. These
petitions, in that sense are quite premature and possibly intended to
delay or stall the enquireis under Section 88 of the MCS Act.
14] Learned counsel for the petitioners have also placed reliance
upon the decision of the Hon'ble Supreme Court in Maharashtra
State Cooperative Housing Finance Corporation Limited vs.
Prabhakar Sitaram Bhadange - (2017) 5 SCC 623 in support of
their submissions that they are only employees and not the officers
of the society. Again, as noted earlier, in this case, there is serious
dispute as to the position and nature of the duties of each of the
petitioners. Unless the position of the petitioners is determined on
the basis of evidence, which the petitioners are granted liberty to
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produce before the Autorised Officer, it is premature to hold that the
petitioners are not persons who have taken part in the organization
or management of the society or who are not Officers of the Society.
In any case, the issue before the Hon'ble Supreme Court in case of
Prabhakar Bhadange (supra) was whether the employees of the
Societies can raise dispute under Section 91 of the MCS Act, which is
directly not the issue involved in the present case.
15] In matters of this nature and in the light of directions of the
Division Bench, it will not be appropriate to entertain any piecemeal
challenges. If, ultimately, any adverse orders are made against the
petitioners, the petitioners, undoubtedly, will have liberty to
question those decisions by availing of alternate remedies available
under the MCS Act. In such proceedings, needless to add, the
petitioners will be at liberty to raise the issue of
coverage/jurisdiction, but this time supported by the material which
they may have produced on record in the course of enquiry.
16] Accordingly, all these petitions are dismissed. However, it is
clarified that this dismissal is really not on merits of the matter. The
petitioners are granted liberty to lead evidence before the Authorised
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Officer on all issues, including on the issue as to their coverage
under Section 88 of the MCS Act. The Authorised Officer is directed
to decide all issues, including the issue of coverage in the light of
such evidence without being influenced by any observations in the
impugned orders or for that matter the present order.
17] It is once again made clear that all contentions of all parties in
this regard are kept open for decision by the Authorised Officer in
the proceedings under Section 88 of MCS Act.
18] The petitions are disposed of in the aforesaid terms. Interim
orders, if any, are hereby vacated. There shall however, be no order
as to costs.
19] Learned counsel for the petitioners submit that in several of
these petitions, interim relief was in operation. Accordingly, they
pray for extension of the interim reliefs. The petitioners are directed
to appear before the Authroised Officer on 28 th September 2017 and
produced an authenticated copy of this order. This will give the
petitioners sufficient time to seek redressal against the order now
made.
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20] Since the petitions are now disposed of, the civil applications
do not survive and the same are also disposed of.
(M. S. SONAK, J.)
