Bombay High Court
Gondia Dist. Central Coop. Bank ... vs State Of Mah. Th. Secty., Coop. ... on 17 November, 2021
Bench: A.S. Chandurkar, G. A. Sanap
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH, NAGPUR.
LETTERS PATENT APPEAL NO.155 OF 2011.
IN
WRIT PETITION NO. 4302 OF 2008
Gondia District Central
Co-operative Bank Ltd.,
Gondia through the
Chairman/General Manager ..... APPELLANT
...V E R S U S...
1. The State of Maharashtra,
Through the Secretary,
Cooperation Department, Mantralaya,
Mumbai- 400 032.
2. The Commissioner for Cooperation
and Registrar, Cooperative Societies,
Pune
3. Divisional Joint Registrar,
Cooperative Societies,
Nagpur
4. Smt. Rukminidevi Shankarlal Agrawal,
Aged Major, resident of
Shankar Bhavan, Infront of Police
Station, Main Road, Gondia,
Tah. & Distt. Gondia. (Dead)
Through legal Heirs
4A] Palak Maheshkumar Agrawal
4B] Preeti Paresh Doshi
4C] Harsh Rajkumar Agrawal.
4D] Vrushab Rajkumar Agrawal.
4E] Shivani Suresh Agrawal.
4F] Laksh Suresh Agrawal.
4G] Ankita Parag Agrawal.
4H] Reshma Praful Agrawal.
4I] Swati Vishal Agrawal
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Common Address : Adv. Shankar
Borkuta Bhavan, In front of
Police Station, Main Road,
Gondia, Distt. & Tah. Gondia.
5. Gopaldas Shankarlal Agrawal,
Aged Major, resident of
Shankar Bhavan, Infront of Police
Station, Main Road, Gondia,
Tah. & Distt. Gondia.
6. Maheshkumar Shankarlal Agrawal,
Aged Major, resident of
Shankar Bhavan, Infront of Police
Station, Main Road, Gondia,
Tah. & Distt. Gondia.
7. Sureshkumar Shankarlal Agrawal,
Aged Major, resident of
Shankar Bhavan, Infront of Police
Station, Main Road, Gondia,
Tah. & Distt. Gondia.
8. Rajkumar Shankarlal Agrawal,
Aged Major, resident of
Shankar Bhavan, Infront of Police
Station, Main Road, Gondia,
Tah. & Distt. Gondia.
9. Mrs. Umadevi Gopaldas Agrawal,
Aged Major, resident of
Shankar Bhavan, Infront of Police
Station, Main Road, Gondia,
Tah. & Distt. Gondia.
10. Mrs. Kummudevi Maheshkumar Agrawal,
Aged Major, resident of
Shankar Bhavan, Infront of Police
Station, Main Road, Gondia,
Tah. & Distt. Gondia.
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11. Mrs. Nitudevi Sureshkumar Agrawal,
Aged Major, resident of
Shankar Bhavan, Infront of Police
Station, Main Road, Gondia,
Tah. & Distt. Gondia.
12. Mrs. Sunitadevi Rajkumar Agrawal,
Aged Major, resident of
Shankar Bhavan, Infront of Police
Station, Main Road, Gondia,
Tah. & Distt. Gondia.
13. Vishal Gopaldas Agrawal,
Aged Major, resident of
Shankar Bhavan, Infront of Police
Station, Main Road, Gondia,
Tah. & Distt. Gondia.
14. Praful Gopaldas Agrawal,
Aged Major, resident of
Shankar Bhavan, Infront of Police
Station, Main Road, Gondia,
Tah. & Distt. Gondia.
15. Parag Maheshkumar Agrawal,
Aged Major, resident of
Shankar Bhavan, Infront of Police
Station, Main Road, Gondia,
Tah. & Distt. Gondia. ...RESPONDENTS
--------------------------------------------------------------------------------------------------
Shri M. V. Samarth, Sr. Advocate a/w. Shri V. P. Ingle, Advocate for
appellant
Shri A. S. Fulzele, AGP for respondent Nos. 1 to 3
Shri A. S. Jaiswal, Sr. Advocate a/w. Shri Rohit Joshi, Advocate for
respondent Nos. 4 to 15
--------------------------------------------------------------------------------------------------
CORAM : A. S. CHANDURKAR AND G. A. SANAP, JJ.
DATE ON WHICH ARGUMENTS WERE HEARD : 25.10.2021
DATE ON WHICH JUDGMENT IS PRONOUNCE : 17.11.2021
ORAL J U D G M E N T (Per : G. A. Sanap, J.)
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The learned Single Judge by order dated 09.06.2009
decided the Writ Petition No. 4302 of 2008, filed by the appellant
and Writ Petition No. 3088 of 2008, filed by the respondent Nos. 4
to 15, against the order dated 10.09.2007 passed by the Divisional
Joint Registrar Co-operative Societies, Nagpur. The Divisional
Joint Registrar Co-operative Societies, Nagpur had allowed the
application made by the respondent Nos. 4 to 15 and directed the
appellant-Bank to grant membership to the respondent Nos. 4 to
15 being the nominees of late Shri Shankarlal Agrawal. The
learned Single Judge by the impugned order dismissed the writ
petition filed by the appellant-Bank and allowed the writ petition
filed by the respondent Nos. 4 to 15 and directed the appellant-
Bank to transfer the shares and grant membership to the
respondent Nos. 4 to 15, subject to provisions of Section 30 of the
Maharashtra Co-operative Societies Act, 1960 (hereinafter
referred to as "MCS Act') and Rule 25 of the Maharashtra Co-
operative Societies Rules, 1961 (hereinafter referred to as "MCS
Rules'). The appellant-Bank has challenged the Judgment of the
learned single Judge in this Letters Patent Appeal.
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2] The facts leading to this appeal are as follows:
Deceased - Shankarlal Agrawal was share holder/
member of the appellant-Bank and was holding 20 shares. He
expired on 03.09.2005. Before his death, by letter dated
04.11.2003, he had nominated respondent Nos.4 to 15 and
informed the appellant-Bank to transfer his shares in the name of
the respondent Nos. 4 to 15 after his death. The respondent Nos.
4 to 15, after his death made an application to the Chairman of the
appellant-Bank for transfer of the shares to their names, in view of
the family arrangement arrived at between them. It was the case
of the respondent Nos. 4 to 15 that the appellant-Bank did not
take cognizance of their application, made under Section 30 of the
MCS Act, for transfer of shares. The appellant-Bank rejected the
said application without mentioning the valid reasons. The
respondent Nos. 4 to 15 on rejection of their application, by the
Bank, made an application before the Divisional Joint Registrar
Co-operative Societies, Nagpur and prayed for transfer of the
shares held by Shankarlal Agrawal to their names. The said
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application was allowed vide order dated 10.09.2007 by the
Divisional Joint Registrar Co-operative Societies, Nagpur.
3] The appellant-Bank opposed the said application by
raising multiple grounds. According to the appellant, the
application was not maintainable under Section 30 of the MCS
Act. The appellant-Bank had an imperative right to take decision
in the matter. Accordingly, the appellant-Bank took a decision to
return Rs.500/- being the price of the share to the respondent
Nos.4 to 15. It is further contended that the appellant-Bank was
required to take this decision in view of the directions of Reserve
Bank of India. According to the appellant-Bank, the Reserve Bank
of India had directed the Co-operative Societies to discourage the
individual membership of the Central Financing Agencies like
District Central Co-operative Banks. The Banks were directed to
reduce the membership by redeeming shares of the existing
individual member wherever possible and not to admit new
individual membership in the Bank. The decision was taken in
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this case consistent with this policy, on 31.03.2007, to refund the
value of the shares to the respondent Nos. 4 to 15.
4] The Divisional Joint Registrar Co-operative Societies,
Nagpur allowed the application made by the respondent Nos. 4 to
15. However, there was no specific direction for transfer of
shares. The respondent Nos.4 to 15 felt aggrieved by the said
order. The appellant-Bank also felt aggrieved by the order of
partly granting the application. Therefore, the above writ
petitions were filed by both the parties. The learned Single Judge
dismissed the writ petition filed by the appellant-Bank and
allowed the writ petition filed by the respondent Nos.4 to 15 and
directed the appellant-Bank to transfer shares held by the
deceased member in the name of the respondent Nos. 4 to 15 by
following the provisions of Section 30 of the MCS Act and Rule 25
of the MCS Rules or any other rule applicable and after following
procedure laid down therein. The appellant-Bank being aggrieved
by this Judgment preferred this Letters Patent Appeal.
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5] We have heard the learned Senior Advocate appearing
for the appellant-Bank as well as the learned Senior Advocate
appearing for the respondents. We have gone through the record
and proceedings.
6] The learned Senior Advocate Shri M. V. Samarth for
the appellant submitted that the decision taken by the appellant-
Bank to reject the application made by the respondent Nos. 4 to
15 for transfer of shares was on the ground of policy of Reserve
Bank of India. The learned Advocate took us through the
provisions of Section 23 of the MCS Act and Rule 19 of the MCS
Rules and submitted that the Registrar, ought to have rejected the
application, in as much as, it was not made under Section 23 of
the MCS Act in compliance with Rule 19 of the MCS Rules. In the
submission of the learned Senior Advocate, in this case Section 30
of the MCS Act could not have been invoked to grant the
application of the respondent Nos. 4 to 15 without aid of Section
23 of the MCS Act. The learned Senior Advocate submitted that
this position is implicit in view of the first proviso to Section 30 of
the MCS Act. The learned Senior Advocate submitted that the
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Registrar invoked the provisions of Section 79 of the MCS Act
without jurisdiction, in as much as, Section 79 of the MCS Act
totally deals with a issue not related to either grant of membership
or a transfer of the membership of the Society. The learned Senior
Advocate submitted that the remedy provided against the order of
rejection of the application for grant of membership or for transfer
of a membership, is the appeal under Section 23(2) or Revision
under Section 154 of the MCS Act. The learned Senior Advocate
submitted that the learned Single Judge has not taken all these
aspects into consideration and came to the wrong conclusion. In
order to support his submission, the learned Senior Advocate has
placed reliance on following three judgments.
i] President, Nagarpalika Prathamik Shala Shikshak Servants Co-
operative Credit Society Ltd., Buldana .v/s. Ramchandra Damodar
Umalkar and Oths., reported in 1967 Mh.L.J.473
ii] Mohanlal Bhagwan Pandey .v/s. Apurva Co-op. HSG. Soc. LTD.,
Bombay and Oth., reported in 2009 (5) Mh.L.J. 330
iii] Rajaram Bapu Patil Sahakari Sakhar Karkhana Ltd. & Anr. .v/s.
Commissioner of Sugar & Ors., reported in 2006 (5) Bom.C.R.537
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7] The learned Senior Advocate Shri. A. S. Jaiswal for
respondent Nos. 4 to 15, supported the Judgment and order
passed by the learned Single Judge. The learned Senior Advocate
submitted that on the basis of the administrative instructions and
the policy/guidelines provided in the letter dated 28.09.1960, the
substantive rights of the party cannot be taken away. The learned
Senior Advocate submitted that the amendment in the bye-laws
consistent with the policy/guidelines of the Reserve Bank of India,
could not take away the substantive rights of the respondents
under Section 30 of the MCS Act. The learned Senior Advocate
submitted that in this case Section 30 of the MCS Act would be
applicable and not Section 23 of the MCS Act. The learned Senior
Advocate took us through the provisions of Sections 23 and 30 of
the MCS Act and pointed out that both these sections operate in
two different situations and sphere. The learned Senior Advocate
in short submitted that when it comes to decide the issue of
transfer of a share of the deceased member, recourse has to be
taken to the provisions of Section 30 of the MCS Act and not to
Section 23 of the MCS Act which primarily deals with the
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admission of the member at the initial stage. The learned senior
Advocate further submitted that the provisions of Section 30(1) of
the MCS Act are mandatory and therefore, the proviso to this sub
section has to be read harmoniously to sub-serve the object of the
law makers spelt out under Section 30(1) of the MCS Act. The
learned senior Advocate submitted that bye-law No. 9(B) provides
a remedy to legal heir for a transfer of shares and for the said
purpose the legal heir has to go before the Registrar. The learned
senior Advocate submitted that the learned Single Judge has
properly appreciated the material placed on record and has come
to a right conclusion. The learned senior Advocate submitted that
in the background of the facts and mandatory provisions of
Section 30 of the MCS Act, the preposition of law laid down in the
Judgments relied upon by the learned Senior Advocate for the
appellant would not apply to the facts of this case.
8] Before proceeding to deal with the settled legal
position which can be culled out from the judgments relied upon
by the learned Senior Advocate for the appellants and some other
decisions, it would be necessary to deal with the submissions on
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the touch stone of the applicable provisions of law in the given
situation to the proved facts. Admittedly, deceased Shankarlal
Agrawal held 20 shares of the appellant-Bank. He expired on
03.09.2005. The respondent Nos. 4 to 15, being his legal heirs,
applied for transfer of those 20 shares in their name in the
proportion mentioned by them against their names in the
application. The appellant-Bank relying upon the instructions
mentioned in the letter dated 05.07.2000 refused to transfer the
shares in the name of the respondent Nos. 4 to 15 by passing the
resolution to that effect. The respondent Nos. 4 to 15, being
aggrieved, made an application to the Joint Registrar for transfer
of shares held by deceased Shankarlal Agrawal in their names.
The Divisional Joint Registrar partly allowed their prayers. Since
the learned Senior Advocate for the appellant relying upon the
letter dated 05.07.2000 tried to convenience us that this letter
would stand in the way of the Joint Registrar, it would be
necessary to reproduce the letter dated 28.09.1960. This letter
was addressed by the Registrar Cooperative Societies, Maharashtra
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State, Poona to the Chairman of the All Central Co-operative
Banks in Maharashtra State. The relevant portion reads thus:
"You are already aware that according to the
recommendations of the Rural Credit Survey Report and
as advised by the Reserve Bank of India many times,
individual membership of the Central Financing
Agencies is to be discouraged and they are expected to
work as federal bodies for their affiliated cooperative
only. It is therefore, necessary to see that not only the
existing membership of the Central Financing Agencies
is reduced to a minimum but also no fresh individuals
are admitted to the membership of the Banks.
Necessary instructions in this behalf have already been
given to the Banks form time to time but it is observed
that instead of taking action in reducing their individual
membership of the Central Financing Agencies according
to the accepted sound principle new members in a large
number are still being enrolled by some of the Central
Cooperative Banks which is definitely neither desirable
nor fitting in with the principles laid down by the
Department. All the Central Cooperative Banks are,
therefore, requested to pay immediate attention to this
important matter right earnestly and take necessary
steps to implement the above suggestion by reducing the
individuals membership and making a firm policy not to
admit any new individual members to the membership
of the Bank."
9] The question is whether the instructions/ guidelines
of the Reserve Bank of India would stand in the way of the
respondent Nos. 4 to 15 for getting the shares transferred to their
names. The perusal of the letter would show that the Reserve
Bank of India issued the instructions with a view to reduce the
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individual membership to minimum. Further perusal of the
instructions would show that the Reserve Bank of India was
constrained to issue the instructions to put a break on the Co-
operative Banks because the Co-operative Banks were admitting
new individual members contrary to the fundamental objective of
the Co-operative Bank. In view of this policy decision, the Co-
operative Banks were required, as far as possible, to reduce the
existing membership and not to admit the new members. The
mechanism provided in the instructions could be utilized by the
Bank concerned to persuade the individual members to accept the
price of the shares on giving up the membership. Further perusal
of the instructions would show that the same are not intended to
take away the rights of the heirs, for transfer, provided under
Section 30 of the MCS Act. It is further pertinent to note that the
Reserve Bank of India even would not have right to issue
instructions to prohibit the transfer of shares to the heirs of the
deceased members. It is pertinent to mention that the transfer of
shares by the members in both the situations namely during
lifetime or after the death of the member has to be done pursuant
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to the legislative act and not by administrative instructions. We
are, therefore, of the opinion that despite the instructions issued
by the Reserve Bank of India, the heir of the deceased member of
the society would be entitled for transfer of a share in his or her
name on proof of nomination or heirship. In our opinion, the
shares cannot be compulsorily redeemed against the wish of the
member as provided by the law.
10] The learned Senior Advocate has placed reliance on
the relevant model bye-laws regarding individual membership of a
Central Financing Agencies to derive support to his submissions.
In order to appreciate the submission in proper perspective it
would be necessary to reproduce the same. It reads thus:
"Model bye-laws regarding individuals membership of
Central Financing Agencies.
Under the heading 'Capital'
3(A): The Bank may by a special Resolution of its
Board or Directors in that behalf and with the previous
sanction of the Registrar pay off shares issued to individual
members at a sum representing the value of the shares as
ascertained in accordance with the provisions in the Bombay
Cooperative Societies Act 1925 and Rule thereunder.
Under the heading the powers and duties of the
Board.
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"31 (22):- to call in and redeem shares in the Bank
held by individual members with previous sanction of the
Registrar in accordance with the provisions of the Byelaw
No.3(A).
Bye law No.31(1): To deal with applications for
membership and to allot shares subject to the provisions
contained in byelaw No. under the heading "membership."
Under the heading "membership"
Bye law No. 9(B): Notwithstanding any thing contained
in this byelaws or any other byelaws no fresh shares should
be issued to the existing individual members and no
individuals would be admitted to the membership of the
Bank without express previous permission of the Registrar
therefore."
11] Minute perusal of the bye-laws would show that
same do not provide that upon death of a member, his shares
should be compulsorily redeemed in favour of the heirs. The bye-
laws only provide a restrictions on admission of new members. In
our opinion, therefore, neither the policy of the Reserve Bank of
India nor the bye-laws relied upon would stand in the way of the
respondents to apply for a transfer and entitlement for the transfer
within the four corners of the law.
12] In order to appreciate the submissions advanced by
the learned Senior Advocates on the point of application of either
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Section 23 or Section 30 of the MCS Act, it would be necessary to
make a mention of an important aspect. It is pertinent to note
that the deceased during his lifetime had nominated the
respondent Nos. 4 to 15 for transfer of his shares after his death.
Similarly, during his lifetime neither deceased on his own
intended to redeem his shares nor the appellant-Bank insisted him
to redeem the shares. Perusal of Sections 23 and 30 of the MCS
Act, in this context assumes importance. Section 23 of the MCS
Act read with Rule 19 of the MCS Rules primarily deals with the
acceptance of the initial open membership. The deceased was
admitted as a member by invoking the provisions of Section 23 of
the MCS Act. The perusal of Section 23 of the MCS Act would
strikingly make it clear that it deals with acceptance of the fresh
membership at the inception. Section 23 of the MCS Act provides
the complete mechanism to redress grievance of the refusal to
accept the membership. The aggrieved person can take recourse to
the remedy of appeal. Section 24 of the MCS Act deals with the
nominal and associate member. Section 25 deals with the aspect
of cessation of membership. Section 26 provides the rights and
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duties of members. It is seen that Section 30 of the MCS Act is the
last section in the scheme, which provides for the transfer of
interest on death of member. In order to have a first hand
account of the section we propose to reproduce same. It reads
thus:
"30. Transfer of interest on death of member
(1) On the death of a member of a society, the society
shall transfer the share of interest of the deceased member to
a person or persons nominated in accordance with the rules,
or, if no person has been so nominated to such person as my
appear to the committee to be their or legal representative of
the deceased member.
Provided that such nominee, heir or representative, as
the case may be, is duly admitted as a member of the
society:
Provided further that, nothing in this sub-section or
in section 22 shall prevent a minor or a person of unsound
mind from acquiring by inheritance or otherwise, any share
or interest of a deceased member in a society.
(2) Notwithstanding anything contained in sub-section
(1), any such nominee, heir or legal representative, as the
case may be, may require the society to pay to him the value
or the share or interest of the deceased members, ascertained
in accordance with the rules.
(3) A society may pay all other moneys due to the
deceased member from the society to such nominee, heir or
legal representative, as the case may be.
(4) All transfers and payments duly made by a society in
accordance with the provisions of this section shall be valid
and effectual against any demand made upon the society by
any other person."
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13] Perusal of Section 30(1) of the MCS Act would show
that it provides a mandate to the society for transfer of the share
or interest of the deceased member to a person or persons
nominated by the deceased member or, if no person has been
nominated to such person as may appear to the committee to be
the heir or legal representative of the deceased member. The first
proviso is that, such nominee, heir or legal representative, as the
case may be, is duly admitted as a member of the society. In our
opinion, this proviso needs to be read in harmony with sub-section
(1). If so read, it would show that it speaks about the admission
of the legal heirs or a nominee on transfer of a share. This proviso
could not be said to have intended to first admit the nominee, heir
or legal representative and then effect the transfer. In our
opinion, conjoint reading of Section 30 (1) of the MCS Act and
proviso would show that first the transfer must take place and
then the process of admission must follow. In this context it would
be necessary to mention that the society has no option/choice in
the matter of a transfer. The choice/option is with the nominee,
heirs or legal representative as provided under Section 30 (2) of
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the MCS Act. The nominee, heir or legal representative, may
require the society to pay value of the shares or the interest of the
deceased member. Section 30(4) of the MCS Act provides that all
transfers and payments can be valid and effectual against any
demand made upon the society by any other person. So perusal of
Section 30 of the MCS Act would clearly indicate that the society
has no option but to comply the mandate of Section 30 (1) on the
death of the deceased member to transfer the share as per the
wish of the deceased member or in favour of the heir or legal
representative. The nominee/legal heirs have a choice not to
insist for transfer and to get away by accepting the share price or
interest. It is, therefore, pertinent to mention that if the
submissions of the learned Senior Advocate for the appellant are
accepted then the legal heirs of the deceased member would be
required to undergo the rigmarole from Section 23 of the MCS Act
for becoming the member. In our opinion, it is not intended by
the legislature. If this was the intention of the legislature, then
Section 30 would not have been the part of the MCS Act. Rule 25
of the MCS Rules will have to be read in conjunction with Section
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30 and not in conjunction with Section 23 of the MCS Act. Rule
25 of the MCS Rules lays down the procedure for the transfer of
the shares of the deceased member either in favour of nominee or
in favour of heir or legal representatives. Whereas, Rule 19 of the
MCS Rules deals with the procedure at the stage of admission of
the member in terms of Section 23 of the MCS Act. The separate
procedure to deal with two different situations clearly indicates
the intention of the legislature to provide different remedies in
different situations. It, therefore, goes without saying that the
society is bound to transfer the shares of the deceased member to
the respondent Nos. 4 to 15. It is needless to mention that for the
purpose of effecting transfer the provisions of Rules 22, 23 and 25
of the MCS Rules would be required to be considered.
14] Before proceeding to consider the judgments relied
upon by the learned Senior Advocate for the appellant it would be
advantageous to consider the law laid down by the Hon'ble
Supreme Court of India in the case of Indrani Wahi .v/s. Registrar
of Co-operative Societies and oths., reported in, (2016) 6 SCC 440
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and the learned Single Judge in the case of Virendra Bhanji Rathod
and Oths .v/s. Anand Vihar Co-operative Housing Society Ltd.,
Mumbai and oths., reported in 2004 (1) Mh.L.J.656. The similar
question fell for consideration in the aforesaid two decisions. The
Hon'ble Supreme Court was dealing with the transfer of the shares
of deceased member of the Co-operative Society under Sections
79 and 80 of the West Bengal Co-operative Societies Act, 1983
and the procedure provided for the said purpose under Rule 127
& 128 of West Bengal Co-operative Societies Rules, 1987. It is
necessary to state that Sections 79 and 80 of the West Bengal Co-
operative Societies Act, 1983 are in pari materia with Section 30
of the MCS Act. Similarly, the provisions of Rule 127 and 128 of
the West Bengal Co-operative Societies Rules, 1987 are in pari
materia with Rule 25 of the MCS Rules. While answering the
identical question, the Hon'ble Supreme Court has held that the
transfer of shares or interest based on a nomination under
Section 79 in favour of the nominee is with reference to the co-
operative society concerned and the same is binding on the said
society. The Co-operative Society has no option whatsoever except
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to transfer the membership in the name of the nominee in
consonance with Sections 79 and 80 of the West Bengal Co-
operative Societies Act, 1983 read with Rules 127 and 128 of the
West Bengal Co-operative Societies Rules, 1987.
15] In the case of Virendra Bhanji Rathod and Oths .v/s.
Anand Vihar Co-operative Housing Society Ltd., Mumbai and oths.
(cited supra), the learned Single Judge has held that the Section
23 of the MCS Act speaks of open membership and Section 30 of
the MCS Act provides for the transfer of the share of the deceased
member. It is held that if under Section 30 a person is entitled to
be enrolled as a member having acquired such a right by way of
inheritance then unless such right can be curtailed under any
provision of law or under the bye-laws of the society for the valid
or lawful reasons no society would be entitled to refuse such right
to the heir/legal representative. It is held that merely because of
the death of the member the right of heir/legal representative to
claim membership for the value of share or the interest in terms of
Section 30 of the MCS Act is not taken away. In our opinion, the
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above two decisions settled the law on this subject. It would be
squarely applicable to the facts of this case.
16] It would be necessary to consider the decisions relied
upon by the learned Senior Advocate for the appellant in the case
of President, Nagarpalika Prathamik Shala Shikshak Servants Co-
operative Credit Society Ltd., Buldana .v/s. Ramchandra Damodar
Umalkar and Oths. (cited supra). In this case the Division Bench
of this Court has considered the rights of a person to become a
member under Section 23 of the MCS Act and the remedy in case
the membership is refused. It is held that if the majority of
members of a society do not feel that admission of the person to
the membership of the society would be in the interest of the
society, such person should not be forced on the society as
member. In our opinion, this decision would be of no help to the
case of the appellant in as much as the dispute needs to be
resolved in this case is governed by Section 30 and not by Section
23 of the MCS Act. The law laid down by the Hon'ble Supreme
Court and the Single Judge of the Bombay High Court in Indrani
Wahi .v/s. Registrar of Co-operative Societies and oths. (cited
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supra) and Virendra Bhanji Rathod and Oths .v/s. Anand Vihar
Co-operative Housing Society Ltd., Mumbai and oths. (cited
supra) would be applicable. In view of this position, the
submissions advanced by the learned Senior Advocate for the
appellant based on Section 23 of the MCS Act and Rule 19 of the
MCS Rules cannot be sustained.
17] The learned Senior Advocate for the appellant
submitted that the Joint Registrar has wrongly taken recourse to
the provisions of Section 79 of the MCS Act and as such
committed the jurisdictional error while granting the application
made by the respondent Nos. 4 to 15. To substantiate this
submission strong reliance has been placed on the decision in the
case of Mohanlal Bhagwan Pandey .v/s. Apurva Co-op. HSG. Soc.
LTD., Bombay and Oth. (cited supra) and Rajaram Bapu Patil
Sahakari Sakhar Karkhana Ltd. & Anr. .v/s. Commissioner of
Sugar & Ors.(cited supra). Before proceeding to consider the
applicability of the law laid down in the decisions, it would be
necessary to state that the learned Single Judge based on the
interpretation of provision of Section 79(2) of the MCS Act has
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rejected this submission. It would be appropriate at this stage to
reproduce Section 79 of the MCS Act. It reads thus:
"Section 79 Society's obligation to file returns and statements
and Registrar's power to enforce performance of such
obligations:
(1) The registrar may direct any society or class of societies,
to keep proper books of accounts [in such form, including
electronic or any other form, as may be prescribed] with
respect to all sums of money received and expended by the
society, and the matters in respect of which the receipt and
expenditure take place all sales and purchases of goods by
the society, and the assets and liabilities of the society, and to
furnish such statements and returns and to produce such
records as he may require from time to time; and the officer
or officers of the society shall be bound to comply with his
order within the period specified therein.
(1A) Every society shall file returns within six months of the
close of every financial year to which such accounts relate, to
the Registrar or to the person authorised by him. The returns
shall contain the following matters, namely:-
(a) annual report of its activities;
(b) its audited statement of accounts;
(c) plans for disposal of surplus funds as approved by
the general body of the society;
(d) list of amendments to the by-laws of the society, if
any;
(e) declaration regarding date of holding of its
general body meeting and conduct of elections when
due;
(f) any other information required by the Registrar in
pursuance of any of the provisions of this Act.
(1B) Every society shall also file a return regarding the name
of the auditor or auditing firm from a panel approved by a
State Government in this behalf, appointed in the general
body meeting together with his written consent, within a
period of one month from the date of annual general body
meeting.
(2) Where any society is required to take any action
[including filing of returns] under this Act, the rules or the
bye-laws, or to comply with an order made under the
[forgoing sub-sections], and such action is not taken.-
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(a) within the time provided in this Act, the rules or the bye
laws, or the order as the case may be, or
(b) where no time is so provided, within such time, having
regard to the nature and extent of the action to be taken, as
the Registrar may specify by notice in writing
the Registrar may himself, or through a person authorised by
him, take such action, at the expense of the society; and such
expense shall be recoverable from the society as if it were an
arrear of land revenue.
(3) Where the Registrar takes action under sub-section (2),
the Registrar may call upon the officer or officers of the
society whom he considers to be responsible for not
complying with the provisions of this Act, the rules or the
bye-laws, or the order made under sub-section (1) and after
giving such officer or officers an opportunity of being heard,
may require him or them to pay to the society the expenses
paid or payable by it to the State Government as a result of
their failure to take action and to pay to the assets of the
society such sum not exceeding [one hundred rupees] as the
Registrar may think fit for each day until the Registrar's
directions are carried out.
(4) The Registrar or the authorised person on his behalf shall
scrutinise the returns and information so received and take
further necessary action, if required."
18] Section 79 (1) vest the Registrar with the powers to
direct the society to keep proper books of account etc. Sub
Section (1) has no relevance in our case. Sub Section (2) has
relevance. Sub Section (2) inter alia vest the Registrar with the
power to direct the society to take any action under this Act, the
rules or the bye-laws, or to comply with an order made under Sub
Section (1). Sub Section (2) cannot be correlated only with the
compliance of the directions under Sub section (1). However, it
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has to be held as a general provision empowering the Registrar to
require a society to take any action under this Act, the Rules or the
bye-laws. It is not out of place to mention that the action
mandated to be taken by the society under Section 30 (1) of the
MCS Act would squarely fall within the jurisdiction of the
Registrar in terms of Section 79(2). If Sections 30 and 79 (2) are
read together it would show that the submission advanced on the
basis of the policy/guidelines of the Reserve Bank of India lays
down in the letter dated 28.09.1960 would be of no significance.
Before proceeding to consider the prepositions in the relied
judgments it would be necessary to state that since Section 23 of
the MCS Act was not applicable in this case, the respondents could
not have been called upon to take recourse to the remedy of
appeal on refusal of transfer of shares as provided under Section
79(2). Similarly, the recourse could not have been taken by the
respondent Nos. 4 to 15 to the remedy of Revision as provided
under Section 154 of the MCS Act, in as much as, the order
assailed before the Registrar was not passed by any officer
subordinate to the Registrar. The order of refusal of transfer of
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shares was passed by the appellant- Bank. Therefore, there was
no question of taking recourse to the remedy of Revision as
provided under Section 154 of the MCS Act.
19] In the case of Mohanlal Bhagwan Pandey .v/s. Apurva
Co-op. HSG. Soc. LTD., Bombay and Oth. (cited supra), the
learned Single Judge of this Court considered only the provision of
Section 79(1) and Section 23 (1A) . The powers of the Registrar
provided under Section 79(2) were not specifically considered in
this case. The observations made in this judgment are in the
context of the subject covered under Section 79(1). In the case at
hand the learned Single Judge while allowing the appeal filed by
the respondent Nos. 4 to 15 has considered the specific powers of
the Registrar under Section 79 (2) of the MCS Act. In the case of
Rajaram Bapu Patil Sahakari Sakhar Karkhana Ltd. & Anr. .v/s.
Commissioner of Sugar & Ors.(cited supra) , the powers of the
Registrar under Section 79 of the MCS Act were considered in the
backdrop of excessive use of the said power by the Registrar. The
Division Bench found that in the facts and circumstances, the
action/directions of the Deputy Registrar of the Co-operative
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Societies was uncalled for and was in excess of his powers under
Section 79 of the MCS Act. The Division Bench has nowhere stated
that the Registrar has no power under Section 79 of the MCS Act
to take an action to call upon the society to discharge its obligation
under the MCS Act. In the case before Division Bench, the
Deputy Registrar of the Co-operative Societies had directed the
Co-operative Societies to increase the share capital by Rs.10 lacs
and further directed that the said share capital be used for giving
membership to the concerned applicants/farmers only. The
question before the Division Bench was whether this action was in
excess of the powers of the Deputy Registrar or not ?. The
Division Bench found that it was in excess of the powers under
Section 79 of the MCS Act. The Division Bench has not held that
the Registrar has no power under Section 79, as provided. In our
opinion, therefore, the preposition of the law in two Judgments
relied upon by the learned Senior Advocate for the appellant
would not be applicable to the facts of this case.
20] In view of the analysis of the facts and the applicable
provisions of the law and also the law laid down on the subject in
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the decisions, we are of the opinion that there is no substance in
the appeal. The learned single Judge, in our opinion, has not
committed any error while dismissing the writ petition filed by the
appellant and allowing the writ petition filed by the respondent
Nos.4 to 15.
21] In view of the above, we do not find the submissions
made by the learned Senior Advocate for the appellant sustainable
either on facts or in law. The submissions advanced by the
learned Senior Advocate for the respondent Nos. 4 to 15 finds
support from the facts as well as law and as such deserves
acceptance. The appeal is devoid of any substance and therefore,
same deserves to be dismissed. Hence, the following order.
ORDER
i] The Letters Patent Appeal is dismissed.
ii] Parties to bear their own costs.
JUDGE JUDGE
Namrata
