Vishnupant Eknath Khandagale And ... vs The State Of Maharashtra And ...
2021 Latest Caselaw 11621 Bom

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                                         (1)

              IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                         BENCH AT AURANGABAD

                          WRIT PETITION NO. 5656 OF 2020


 Vishnupant Eknath Khandagale & ors.                ..PETITIONERS

          VERSUS

 The State of Maharashtra & ors.                    ..RESPONDENTS

                                      ....
 Mr A.B. Kale, Advocate for petitioners;
 Mr D.R. Kale, Govt. Pleader for respondent nos.1 & 2;
 Mr V.H. Dighe, Advocate for respondent no.3;
 Mr N.B. Khandare, Advocate holding for Mr R.R. Karpe, Advocate for
 respondent nos.6, 8 to 27 and 29 to 31


                                      CORAM : RAVINDRA V. GHUGE
                                                     AND
                                              S. G. MEHARE, JJ.

DATE : 24th August, 2021

PER COURT:

1. The grievance of the petitioners is two-fold. Firstly, that by the effect

under Section 73AAA (3) of the Maharashtra Co-operative Societies Act,

1960 (for short "the Act"), as it stood before the introduction of the proviso

on 10.07.2020, the term of the office of the elected members of the

committee and it's office bearers was limited to five years from the date of

election and the term of the office bearers was co-terminus with the term of

the committee. With the introduction of an amendment to sub-section (3)

on 13.06.2018, on the expiry of the term of the committee, the members

were deemed to have vacated their offices as members of the committee.

Hence, respondent nos.8 to 34 were deemed to have vacated their offices

after 05.05.2020 since there was no proviso (introduced on 10.07.2020) to

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grant auto extension until elections are held. Secondly, the introduction of

the proviso on 10.07.2020 below Section 73 AAA (3) defeats the very

purpose of the introduction of the amendment with effect from 13.06.2018

by Maharashtra Act 50 of 2018 and hence, the virus of the said proviso has

been challenged.

2. Shri Kale submits that the petitioners are presently seeking interim

orders in view of the fact that respondent nos.8 to 34 were deemed to have

vacated their offices and were not in their office from 06.05.2020 till

09.07.2020. Yet, they have unofficially continued to occupy their positions

and are squandering away the funds in Crores of Rupees of respondent

no. 6 - sugar factory.

3. Shri Khandare, the learned Advocate representing the committee

members relies on Section 77 A of the Act and contends that the Registrar

has the power to continue these committee members when elections have

been postponed. According to him, a conjoint reading of Section 73 AAA

(3) with Section 77 A (1) (i) would indicate that the committee can

automatically continue till the elections are held or can be continued by the

Registrar.

4. Section 73 AAA of the Act reads as under:-

"73AAA. Constitution of committee

(1) The Committee shall consist of such number of members as may be provided in the by-laws:

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Provided that, the maximum number of members of the committee shall not exceed twenty one:

Provided further that, the provisions of the Banking Regulation Act, 1949, shall apply to all the societies carrying the business of banking.

(2) The Committee may co-opt "expert directors" relating to the objects and activities undertaken by the society:

Provided that, the number of expert directors shall not exceed two, which shall be in addition to the maximum number of members of the committee as specified in the first proviso of sub-section (1):

Provided further that, the committee may nominate one person as a functional director:

Provided also that, in the case of such societies or class of societies, as the State Government may be general or special order notify, where the number of permanent salaried employees of the society is twenty-five or more, the committee shall include, -

(i) where the committee consists of not more than eleven members, one representative of the employees of the society; and

(ii) where the committee consists of more than eleven members and not more than twenty-one members, two representatives of the employees of the society.

Such representatives of the employees shall be selected by the union or unions recognised under the Maharashtra Industrial Relations Act, or the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971, from amongst the employees of the society. Where there is no such recognised union or unions or where there is no union at all or where there is a dispute in relation to such issues including whether a union is recognised or not, then such representatives of the employees shall be elected by the employees of the society from amongst themselves in the prescribed manner. No employee who is under suspension shall be eligible for being selected or elected or for being continued as a member of the committee under this proviso:

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Provided also that, the representative of the employees selected or elected as per the provisions of the third proviso shall have the right to take part in the meetings of the committee, but shall have no right to vote therein.

Provided also that, in respect of society, excluding the Housing Society, having assistance of the Government in the form of share capital, loan, guarantee, grant, the Government land or any other form whether cash or kind, the committee shall also include following two members nominated by the State Government, namely :-

(i) one Government Officer not below the rank of the Assistant Registrar of Co-operative Societies, and

(ii) one person having such requisite experience relating to the work of the society and such qualifications, as may be specified by the Government, by an order published in the Official Gazette:

Provided also that, the functional directors and the members nominated by the State Government under the third proviso of a society shall also be the members of the committee and such members shall be excluded for the purposes of counting the total number of members of the committee specified in the first proviso to sub-section (1):

Provided also that, such expert directors shall not have the right to vote at any election of the society and shall not be eligible to be elected as office bearers of the committee.

(3) The term of the office of the elected members of the committee and its office bearers shall be five years from the date of election and the term of the office bearers shall be co-terminus with the term of the committee and on the expiry of the term of the committee, the members shall be deemed to have vacated their offices as members of the committee.

Provided that, if the election to the Committee of the society could not be held for any reason not attributable to the member of the Committee of such Society, the existing members of the Committee shall be deemed to have continued till new committee is duly constituted.[introduced on 10.07.2020].

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(4) Any casual vacancy in the committee may be filled in from amongst the members belonging to the same category of persons in respect of which a casual vacancy has arisen.

(5) (a) If, at any general election of members of the committee, the committee could not be constituted after declaration of results, then notwithstanding anything contained in this Act or the rules or the by-laws of the society, the returning officer or any other officer or authority conducting such election shall, within seven days of the declaration of two- thirds or more number of members, forward their names together with their permanent addresses to the Registrar, who shall, within fifteen days from the date of receipt thereof by him, publish or cause to be published such names and addresses by affixing a notice on the Notice Board or at any prominent place in his office; and upon such publication the committee of the society shall be deemed to be duly constituted. In determining two- thirds of the number of members, fraction shall be ignored:

Provided that, such publication shall not be deemed,-

(i) to preclude the completion of elections of the remaining members and the publication of their names and the permanent addresses of the elected members likewise as and when they are available; or

(ii) to affect the term of the office of members of the committee under the Act;

(b) the names of the remaining members after they are elected (together with their permanent addresses), may also thereafter be likewise published by the Registrar."

[Relevant provision underlined].

5. Section 77A of the Act reads as follows:-

"Section 77A - Appointment of member of committee, new committee, authorised officers, where there is failure to elect member, to constitute committee or where committee does not enter upon office, etc.

(1) Where the Registrar is satisfied that, - (1-a) a provisional committee has failed to make necessary arrangements for holding election for the

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constitution of the first committee, before the expiry of its term as specified in sub-section (1A) of section 73;

(a) at the first constitution of the committee of any society there is a failure to elect all or any of the members of the committee;

(b) the term of the committee of any society or of any of its members has expired or for any other reason election is held and there is a failure to elect all or any of the members required to fill the vacancies;

(b-1) there is a stalemate in the constitution or committee has ceased to function and vacuum is created in the management;

(c) any committee is prevented from entering upon office;

(d) a new committee has failed to enter upon office on the date on which the term of office of the existing committee expired; or

(e) [* * *]

(f) where more than one group of persons in a society is claiming to be elected as the committee members and proceedings in respect thereof have been filed in the Co-operative Court;

the Registrar may, either suo-motu or on the application of any officer or member of the society, by order appoint -

(i) any member or members of the society to be the member or members of the committee to fill the vacancies:

(ii) a committee, consisting of not more than three members of the society; or one or more authorised officers, who need not be members of the society, to manage the affairs of the society till a new committee enters upon office:

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Provided that, before making such order, the Registrar shall publish a notice on the notice board at the head office of the society, inviting objections and suggestions with respect to the proposed order within a period specified in the notice and consider all objections and suggestions received by him within that period:

Provided further that, it shall not be necessary to publish such notice in any case where Registrar is satisfied that immediate action is required to be taken or that it is not reasonable practical to publish such notice:

Provided also that, if no member or members of the society are willing to work on such committee, it shall be lawful for the Registrar, to appoint one or more authorised officers, not being a member of the society, as he may deem fit, to look after affairs of the society.

(2) The committee or authorised officer so appointed shall, subject to the control of the Registrar and to such instructions as he may, from time to time, give, have power to discharge all or any of the functions of the committee or of any officer of the society and take all such action as may be required to be taken in the interests of the society.

(3) The Committee or authorised officer so appointed shall hold office for a period of six months from the date of assuming the management of the society and shall make necessary arrangements for constituting a new committee within the said period and for enabling the new committee including any new committee referred to in clause (f) of sub-section (1), which is determined by the Court to have been legally elected, to enter upon office.

Provided that, in no circumstances the term of the office of the committee or authorised officer shall exceed six months from the date of their holding office.

(4) The Registrar shall have the power to change the committee or any or all members thereof or any or all the authorised officers appointed under sub-sections (1) at his discretion even before the expiry of the period

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specified in the order made under sub-section (1).

(5) The provisions of sub-section (2) of section 78 shall apply mutatis mutandis for fixation of remuneration to be paid to the members or authorised officers appointed under sub-section (1). [Relevant provision underlined]

6. We find on a plain reading of sub-section (3) of section 73 AAA

reproduced above, that the Act does not permit the committee members to

continue even for a single day beyond the period for which they have been

elected. It is undisputed that the committee's term ended on 05.05.2020

and from 06.05.2020 till 09.07.2020, there was no order issued by the

Registrar or by virtue of any provision under the Act which would enable

the said respondents - committee members to continue in their chairs.

7. The elections were initially postponed vide notification dated

18.03.2020 for a period of three months. Clause (i) and (ii) under Section

73 A (1) (f) empowers the Registrar either suo motu or on the application of

any officer or member of the society to issue an order for appointing a

member or members of the society to be the member or members of the

committee to fill the vacancies. Sub-clause (2) mandates a limitation on

the committee to be of only three members or one of such three members

to be an authorized officer who may not be the member of the society.

Even the Registrar cannot appoint more than three members of the society

to officiate as the members of the committee until the elections are held.

8. In view of the above, we are of the prima facie view that as the

Registrar refused to exercise his powers under Section 77A (1) (f) under

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clause (i) or (ii), there cannot be an automatic extension of the tenure of

the committee since there is no law which prescribes extension of a tenure

of such elected members beyond the period for which they were elected.

9. Shri Khandare strenuously contends that there cannot be a vacuum

in any factory after the tenure of an elected committee has expired.

Principally, Shri Khandare may appear to be right. However, there cannot

be an assumption in law in absence of a specific provision. If the

legislators did not find it appropriate to prescribe continuation of the term of

elected office bearers beyond the tenure for which they have been elected,

there can be no interpretation on the basis of an assumption that a vacuum

can be averted only by interpreting that the committee members would

continue to occupy their positions. This argument of Shri Khandare can be

negated in view of clauses (i) and (ii) of section 77A (1) (f) which have

been introduced in the Act specifically to take care of a situation of an

election not being held before the expiry of the tenure of the committee, for

any reason whatsoever.

10. As such, a harmonious reading of Section 73 AAA (3) with clauses

(i) and (ii) below Section 77 A (1) (f), would indicate that the Registrar is

empowered to deal with the situation of failure to conduct an election and

he is expected to act prior to the expiry of the tenure. Having failed in

doing so, could be the failure of the Registrar since he has not acted

responsibly despite the notification postponing the elections having been

issued on 18.03.2020. Prima facie, such failure would not lead to an

assumption that the members of the committee could continue beyond

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their tenure only because the Registrar has failed in exercising his powers.

11. We are fortified in our view by the judgment delivered in the matter

of Rahul Appasaheb Patare & ors. vs. Divisional Joint Registrar, Co-

operative Societies, Nashik & ors., 2017 (1) Mh.L.J. 147, wherein this

Court concluded that when the term of the directors expires, the office

bearers also cannot continue in office. Similarly, it was held in Ashok

Maharu Thakare vs. The State of Maharashtra, 2002 (3) Mh.L.J. 358

and in Kisan Vikas Ginning Pressing Ltd., Aurangabad vs. State of

Maharashtra & ors., 2001 (2) Mh.L.J. 458, that when the members of the

committee ceased to hold office immediately on the expiry of their term,

there was an absence of a committee and the Registrar was obliged to

take steps for appointment of an Administrator. In this backdrop, we are of

the prima facie view that the order passed by the Registrar on 30.06.2020

when the impugned proviso below Section 73 AAA (3) was not in

existence, of rejecting the application filed by the petitioner seeking

appointment of an Administrator, is the failure of the Registrar in exercising

powers vested in him by law.

12. The learned Govt. Pleader and the learned Counsel representing

the respondent committee seek time to explore as to whether any

arrangement was made by the State Government, considering that the

tenure of the committee expired on 05.05.2020 and in between 06.05.2020

to 09.07.2020, there was neither an extension for the committee nor had

the Registrar appointed any members to perform the functions of the

committee.

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13. At the request of Shri Khandare and Shri Karpe and the learned

Govt. Pleader, stand over to 15th September, 2021.

14. In view of the above, we direct the Registrar, Co-operative

Societies, to personally file an explanation as to why he has not responded

to the notice of this Court.

15. Since a serious allegation is being made that the committee, which,

prima facie, is unauthorised to continue from 06.05.2020, is squandering

away the funds of the factory, that we direct the said committee that they

should refrain from taking policy decisions or such decisions which are

likely to entail unreasonable expenses.

   (S. G. MEHARE, J.)                      (RAVINDRA V. GHUGE, J.)

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