Santosh Hari Gavas And Anr vs State Of Maharashtra Through ...
2021 Latest Caselaw 15152 Bom

                                                                        wp-11658-2019.doc




             IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                    CIVIL APPELLATE JURISDICTION

                          WRIT PETITION NO.11658 OF 2019

Santosh Hari Gavas and Another                                  ...Petitioners
           vs.
State of Maharashtra and Others                                 ...Respondents

Mr. Niranjan Mogre, for the Petitioners
Mr. Hitesh Mutha, (Legal Aid Counsel) for Respondent No. 3.
Mr. P.P. Pujari, AGP, for the State.

                                            CORAM :        N.J. JAMADAR, J.

                   JUDGMENT RESERVED ON :                  27th AUGUST, 2021
                   JUDGMENT PRONOUNCED ON :                21st OCTOBER, 2021
                                 ---------------

JUDGMENT : (Per N.J.Jamadar, J.)

1. Rule. Rule made returnable forthwith and, with the consent

of the counsels for the parties, heard fnally.

2. This petition under Article 227 of the Constitution of India

takes exception to the judgment and order passed by the

Divisional Joint Registrar, Cooperative Societies, Mumbai

Division, Mumbai dated 16th August, 2018 in Revision Application

No. 117 of 2018 whereby the revision application preferred by the

petitioners herein came to be dismissed confrming the order

dated 27th March, 2018 passed by the Dy. Registrar, Cooperative

Societies, Mumbai Western Suburbs, Mhada, Mumbai

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disqualifying the petitioners from being elected and being any

offcer or member of the committee under section 75(5) of the

Maharashtra Cooperative Societies Act, 1960 (the Act, 1960) for

the default in convening a general body meeting of Navratna CHS

Limited (the society) of which the petitioner Nos. 1 and 2 were the

President and Secretary, respectively.

3. The petition arises in the backdrop of the following facts:-

a] Navratna CHS Limited is a Society registered under the Act,

1960. The petitioner Nos. 1 and 2 were elected as the President

and Secretary of the society for the term 2015-2019.

b] The Annual General Body Meeting (AGBM) of the society for

the year 2017 was convened on 24 th September, 2017 vide notice

dated 9th September, 2017. The agenda for the meeting included,

inter alia, approval to the audited balance sheet and audit report

for the fnancial year 2016-2017 and appointment of an auditor for

the fnancial year 2017-2018.

c] The petitioners claim that, a day before the scheduled date

of meeting, a communication was received from the members of

the society, seeking postponement of the said AGBM as religious

and cultural programmes were being held on account of Navratri

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festival from 20th September, 2017 to 30th September, 2017.

Nonetheless a meeting was held on 24 th September, 2017.

However, only 13 members attended the said meeting. Thus,

having regard to the dismal attendance and the communication

received from the members, dated 23rd September, 2017, it was

decided to adjourn the meeting.

d] On 23rd October, 2017 the respondent No. 3 Subhash Mane

and other members of the society addressed a letter to the Dy.

Registrar, Cooperative Societies for initiation of action against the

offce bearers of the society for default in holding the AGM within

the statutory period. A show cause notice was issued to the offce

bearers of the society under section 75(5) of the Act, 1960, on 4 th

January, 2018. After considering the explanation furnished by

the petitioners/ offce bearers, the Dy. Registrar, by an order

dated 6th March, 2018 appointed an authorized offcer to hold the

AGM for the year 2016-2017 and, by a separate order dated 27 th

March, 2018 held that the petitioners committed default in

holding the meeting in conformity with the provisions of the Act,

1960 and, thus, incurred disqualifcation under section 75(5) of

the Act, 1960.

Vishal Parekar, P.A.                                                    3/19
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e]       Being aggrieved, the petitioners preferred a revision before

the Divisional Joint Registrar. By the impugned order, the

Divisional Joint Registrar dismissed the revision concurring with

the view of the Dy. Registrar. Being further aggrieved, the

petitioners have invoked the writ jurisdiction.

4. I have heard Mr. Mogre, learned counsel for the petitioners,

Mr. Poojari, learned AGP for the State and Mr. Mutha, learned

counsel appointed to espouse the cause of respondent No.3. With

the assistance of the learned counsels for the parties, I have

carefully perused the material on record.

5. The core question which crops up for consideration in this

petition is whether the petitioners have incurred the

disqualifcation under section 75(5) of the Act, 1960 for default in

convening and holding AGBM of the society. For exploring an

answer, it may be imperative to note, at the outset, the relevant

provisions of section 75 of the Act, 1960. Sec.75 reads as under:

75. Annual General Body Meeting.--

(1) Every society shall, within a period of [four months after the close of the fnancial year, get its books of accounts audited and within six months after the close of fnancial year, to transact its business as may be provided in this Act, call the annual general body meeting of its members]:

[Provided that, where such meeting is not called by the society, the Registrar or any offcer authorised by him may call such meeting in the member prescribed and that

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meeting shall be deemed to be a general body meeting duly called by the society] and the Registrar may order that the expenditure incurred in calling such a meeting shall be paid out of the funds of the society or by such person or persons who in the opinion of the Registrar, were responsible for the refusal or failure to convene the general meeting.

(2) .............

(2A) ..........

(3) ......

(4) At every annual general meeting the audited balance sheet, the audited proft and loss account, audit report of the proceeding fnancial year submitted by the auditor appointed under section 81, rectifcation report of earlier audit and the committee's report shall be placed for adoption and such other business will be transacted as may be laid down in the bye-laws and of which due notice has been given.

(5) If default is made, in calling a [general body meeting within the period] prescribed under sub-section (1) or in complying [with sub-section (2), (2A) (3) or (4), the Registrar may by order declare any offcer or member of the committee whose duty it was to call such a meeting or comply [with sub-section (2), (2A) (3) or (4) and who without reasonable excuse failed to comply with any of the aforesaid sub-sections disqualifed for being elected and for being elected and for being any offcer or member of the committee for such period [not exceeding fve years], as he may specify in such an order and, if the offcer is a servant of the society, impose a penalty on him to [pay] an amount not exceeding [fve thousand rupees]. Before making an order under this sub-section, the Registrar shall give, or cause to be given, a reasonable opportunity to the person concerned of showing cause against the action proposed to be taken in regard to him.

6. The phraseology of section 75 peremptorily prescribes the

time for getting the books of accounts audited and calling the

AGBM of the society. Sub section (1) mandates that the society is

enjoined to get its books of accounts audited within a period of

four months after the close of the fnancial year and call the

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AGBM of its members within six months after the close of the

fnancial year. The proviso to sub section (1) vests the Registrar

with the authority to call AGBM in the event of failure on the part

of the society to call such meeting.

7. Section 2, 2A and 3 enumerate the documents which must

be placed before the society in its AGM. The appointment of an

auditor for auditing the accounts of the society is to be approved

by the AGBM. Section (4) specifcally provides that the audited

balance sheet, audited proft and loss account, audited report for

the fnancial year submitted by the auditor appointed under

section 81, the rectifcation report of the earlier audit and the

committee's report shall be placed for adoption in every AGBM.

Additionally, such other business, as is permissible under the bye-

laws, may be transacted in the AGM.

8. The legislative intent in prescribing the time limit for getting

the books of accounts audited and calling the AGBM of the society,

wherein the audited balance sheet and other statutory report are

to be mandatorily placed before the AGBM is to ensure

transparent, prudent and effcient management of the affairs of

the society.

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9. From this stand point, holding of the AGM within the

statutorily prescribed period assumes critical signifcance. Non

compliance thereof is visited with the consequence of

disqualifcation for being an offcer and member of the committee

of the society for a period not exceeding fve years. Such stringent

penalty underscores the legislative intent.

10. The issue raised in this petition thus deserves to be

considered in the light of the aforesaid statutory prescription and

legislative intent.

11. Mr. Mogre, learned counsel for the petitioner would urge

that the Dy. Registrar as well as the Divisional Joint Registrar

committed a manifest error in holding that the petitioners

incurred disqualifcation under section 75(5) of the Act, for

failure to call and hold AGBM within 30 days of 24 th September,

2017, the day the scheduled AGM could not be held. Laying

emphasis on Rule 60 of Maharashtra Cooperative Societies Rules.

1961, Mr.Mogre would urge that under the said Rule, there is no

obligation on the offce bearers to convene a postponed meeting

within 30 days. This erroneous view of the authorities vitiated the

impugned orders, urged Mr. Mogre.

Vishal Parekar, P.A.                                                            7/19
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12. In order to bolster up this submission, Mr. Mogre placed a

strong reliance on a Division Bench judgment of this Court in the

case of Jagannath Badhu Badgujar vs. The District Deputy

Registrar, Co-Op. Societies, Dhulia and Another 1 and another

judgment of the learned single judge in the case of Lourdes

Chandrahas Shetty and Another vs Vishal Konkan Co-Operative

Housing Society Ltd. And Others2

13. As against this, Mr. Mutha learned counsel for respondent

No. 3 submitted that the petitioners are not only guilty of

deliberate default in calling AGBM but also of fabricating the

record to show that there was a requisition for postponement of

the meeting, dated 23rd September, 2017 and on 24th September,

2017 meeting was, in fact, held. Inviting the attention of the Court

to a letter dated 28th September, 2017 addressed by the Secretary

and Treasurer of the society to the Registrar of Cooperative

Societies, forwarding therewith audited fnancial accounts and

audit report for the year ending 31st March, 2017, it was submitted

that the petitioners falsely claimed the accounts and audit report

were approved in the meeting dated 24 th September, 2017 in

which the petitioners claimed that no business was transacted. In

the face of this ambivalent stand of the petitioners, according to 1 1966 C.T.D. (H) 7.

2 2005(4) Bom. C.R. 41.

Vishal Parekar, P.A.                                                   8/19
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Mr. Mutha, the petitioners do not deserve any relief in exercise of

extraordinary writ jurisdiction.

14. Mr. Poojari, learned AGP, for respondent No.1-State

supported the impugned orders.

15. In the order dated 27th March, 2018 the Dy. Registrar has

observed that it was necessary to convene AGM within 30 days of

the date, on which the meeting stood adjourned. Since, AGBM was

not convened within the said period of 30 days, the petitioners

incurred disqualifcation. The Divisional Joint Registrar has also

adverted to the said fact though not expressly. In this backdrop,

the thrust of the challenge on behalf of the petitioners, revolves

around on the legal requirement of convening the adjourned

meeting within 30 days.

16. In order to properly appreciate the aforesaid challenge, it

may be imperative to note sub Rule (8) to (10) of the Rule 60 of

Rules, 1961. They read as under:

60. General meetings: -

....... .....

............

(8) If all the business in the agenda cannot be transacted on the date on which the general meeting is held, the meeting may be postponed to any other suitable date not later than thirty days from the date of the meeting as may be decided by the members present at the meeting.

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(9) The remaining subject or subjects on the agenda shall be taken up for consideration at the postponed meeting.

(10) If the general meeting cannot be held for want of quorum, if shall be adjourned to a later hour on the same day as may have been specifed in the notice calling the meeting or to a subsequent date not earlier than seven days and at such adjourned meeting the business on the agenda of the original meeting shall be transacted whether there is a quorum or not.

17. Mr. Mogre, learned counsel for the petitioners, comparing

and contrasting the text of sub rule (8) and (10), submitted that

sub rule (8) would come into play where some business is

transacted in the general meeting on the scheduled date and

postponement is warranted. In that event, the meeting may be

postponed to any other suitable date not later than 30 days.

However, if the general meeting cannot be held for want of

quorum as per sub rule (10) such meeting can be held on the same

day in terms of the notice calling the meeting or it can be

adjourned to subsequent date not earlier than 7 days.

18. In the case at hand, according to Mr. Mogre, sub rule (8) of

Rule 60 had no application at all and thus the authorities fell in

error in holding that failure to call the meeting within 30 days of

the scheduled date of meeting amounted to default within the

meaning of section 75(1) and entailed the disqualifcation under

sub section (5) thereof.

Vishal Parekar, P.A.                                                             10/19
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19. Mr. Mogre placed a very strong reliance on the Division

Bench judgment in the case of Jagannath (supra). In the said

case, the Division Bench was confronted with a question as to

whether default in fxing the date in holding the adjourned

general meeting and in convening such meeting would attract the

provision of sub section (5) of section 75 of the Act, 1960. After

adverting, to section 75 and the provisions contained in Rule 60,

the Division Bench answered the question as under:

"5] .............It may be noted that sub-rule (10) of rule 60 does not merely say that if the general meeting cannot be held for want of quorum it shall be adjourned. It states that in such a case it shall be adjourned to a later hour on the same day as may have been specifed in the notice calling the meeting or to a subsequent date not earlier than 7 days. This sub-rule (10), therefore, clearly implies that the date on which the adjourned meeting is to be held must be specifed at the time when the meeting is adjourned for want of quorum. There is not provision either in the sub-rule or in any other rule or bye-law stating as to who is to fx the date of the adjourned meeting. The conduct of the general meeting is, however, in the hands of the person who presides over the meeting. Consequently, it seems to us that in the absence of any provision to the contrary, it would be the duty of the presiding authority to fx the date of the adjourned meeting at the time when the meeting is adjourned for want of quorum. The petitioner had presided over the general meeting which was held on 29th September, 1963. It was therefore, his duty to fx the date on which the adjourned meeting was to be held at the time when he adjourned the meeting. The default on his part, therefore, consists in not fxing the date of the adjourned meeting and in not convening such a meeting within a reasonable time after the meeting was adjourned on 29th September, 1963. Action for such a default cannot, however, be taken under sub-s(4) of S. 75 of the Act for the reasons which I have given above."

Vishal Parekar, P.A.                                                                  11/19
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20. The aforesaid pronouncement was followed by the learned

single Judge in the case of Lourdes Shetty (supra). In the later

case, the petitioners therein had convened the AGM on 4 th August,

2001, in conformity with the statutory prescription. However, on

that day only one subject could be discussed and subsequent

meeting could not be proceeded with, because of the disturbance

created and, thereafter, the meeting had to be called off. When the

petitioners therein were sought to be disqualifed for default in

convening the adjourned meeting, the learned single Judge, after

opining that the sub rule (8) of Rule 60 had no application to the

facts of the said case, held that the petitioners could not have been

disqualifed. The observations in paragraph Nos. 20 and 21 are

material and hence extracted below:

20. However, the other contention of the petitioners is required to be accepted. There was admittedly no default committed by the petitioners in holding the annual general meeting within the stipulated period on 4-8-2001. There is no grievance in that regard by the members of the respondents as already held by me. The fndings of the Divisional Joint Registrar that there was no suffcient 15 days notice are uncalled for. Because that was not a dispute before him and no such submission was made before me by any of the advocates in that regard, i.e. regarding want of proper and adequate 15 days notice. Therefore, what is clear is that, so far as holding of annual general meeting on 4-8-2001 is concerned, the petitioners have not committed any default. The meeting could not be completed on that day because of the disturbance and, in that regard also no contradictory submission was made by any of the advocates for the respondents. Rule 60(8) which was relied upon by the counsel for the respondents is again reproduced as under :-

"Rule 60(8):-- If all the business in the agenda cannot be transacted on the date on which the general meeting is held, the

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meeting may be postponed to any other suitable date not later than 30 days from the date of meeting as may be decided by the members present at the meeting."

A perusal of the aforesaid Rule shows that the Rule is very clear and, if as per that Rule if all the business in the agenda cannot be transacted on the date of annual general meeting, meeting may be postponed to any other suitable date not later than 30 days from the date of meeting as may be decided by the members present in the meeting.

21. The wording of Sub-rule (8) of Rule 60 clearly shows that the said Rule does not apply to the facts of the present case. Firstly because the meeting held on 4-8- 2001 came to be adjourned because of disturbance and, secondly Sub-rule (8) of Rule 60 requires that next suitable date of the meeting has to be fxed as decided by the members present at the meeting. If the members present were not in a mood to allow the business to be completed smoothly, then there was nobody to fx the date and, secondly, Sub-rule (8) does not give any power to the petitioners i.e. the chairman and secretary to fx the date of their choice. The date has to be fxed as decided by the members present. It is true that the Division Bench's judgment of Chief Justice Chainani and Justice Gokhale has referred to Sub-rule (10) of Rule 60, as rightly argued by the counsel for the respondents, it applies to general meeting which could not be held for want of quorum. In this case that question does not arise. Therefore, ultimately what becomes clear is, as held by the Division Bench, there is no statutory provision either in the Act or in the Rule fxing the time limit within which the adjourned meeting is to be held. The petitioners had held annual general meeting within the statutory period and had to comply to Sub-section (1) of Section 75. They had written letters to the Registrar seeking their intervention for holding the adjourned annual general meeting. There was no response from the registrar. Thereafter the meeting was held and successfully completed and, therefore, in this view of the matter, all the impugned orders are required to be set aside.

(emphasis supplied)

21. On a careful perusal of the judgments in the aforesaid cases,

it becomes evident that the pronouncements were rendered in the

peculiar facts of those cases. In the case of Jagganath (supra), the

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question arose in the context of failure to convene and fx the

date for next AGM as meeting could not be held for want of

quorum. The issue therein was covered by sub rule(10). Evidently,

sub rule (10) does not prescribed the limit of 30 days. In that view

of the matter, it was held that the failure to fx the date when the

general body meeting is adjourned for want of quorum, would not

entail action under section 75(5).

22. In the case of Lourdes Shetty (supra), on the other hand, the

AGM was in fact held, within the statutory period . However, the

entire business could not be transacted as there was commotion

after one subject was discussed. In that context, sub rule (8) of

Rule 60 was sought to be resorted to, to contend that it was

necessary to convene the postponed meeting within 30 days.

Negativing the contention, this Court held that sub rule (8) of

Rule 60 was not attracted in such a case as the meeting was

required to be postponed due to disturbance and, secondly, the

date of the postponed meeting was to be decided by the members

present at the general meeting and, therefore, the offce bearers

could not have been held to have incurred the disqualifcation.

23. None of the aforesaid situations, is presented by the facts of

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the instant case. It is the claim of the petitioners that, the AGBM

of the society was called on 24 th September, 2017 vide notice 9th

September, 2017. On 23rd September, 2017, a requisition was

received from the members of the society to adjourn the meeting

as Navratri festival was being celebrated in the society.

Petitioners, however, claimed that meeting was, in fact, held on

24th September, 2017. This claim of petitioners warrants critical

evaluation.

24. From the perusal of the copy of the minute book (Exhibit

to the petition) dated 24th September, 2017, it becomes evident

that the petitioners claimed that in the said meeting, it was

decided to adjourn the meeting without transacting any business.

From the intrinsic evidence of the said resolution, two things

become clear. On the one hand, the names of all the members, who

allegedly attended the said meeting do not fnd mention therein.

On the other hand, even the total number of members, who

allegedly attended the meeting, is left blank. To add to this, the

resolution proceeds on the line that on account of the very low

presence of the members and the communication dated 23 rd

September, 2017, it was decided to adjourn the meeting. The

resolution, however, does not in terms record that the AGM was

required to be postponed for want of quorum.

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25. The situation which thus obtains is that no business was

transacted in the meeting allegedly held on 24 th September, 2017.

Sub rule (8) of Rule 60 has, thus, no application at all. Conversely,

the situation is governed by sub rule (10) which regulates the

conduct of the meeting where the meeting can not be held for

want of quorum. It would be contextually relevant to note the

notice of the meeting dated 9th September, 2017 (Exhibit A to the

petition). The notice specifcally provided that if the general

meeting cannot be held for want of quorum, it would stand

adjourned to half an hour on the same day and, in that event,

there would be no requirement of quorum. Consequently, in the

facts of the case at hand, if the meeting could not be held for want

of quorum in conformity with sub rule (10), it was incumbent

upon the petitioners to hold meeting on same day, in accordance

with the stipulation in the notice dated 9th September, 2017.

26. In the aforesaid backdrop, the submission of Mr. Mogre that

the authorities were not justifed in resorting to sub rule (8) of

Rule 60, appears well grounded in facts. However, the said

submission and the authorities relied upon by Mr. Mogre do not

advance the cause of the petitioners.

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27. At this stage, the intrinsic evidence of the resolution coupled

with inconsistent stand of the petitioners, as refected in the

communication dated 28th September, 2017 submitting therewith

the audited accounts with audit report, assumes signifcance.

Though an effort was made to demonstrate before the Court that

no business could be transacted in the meeting held on 24 th

September, 2017, yet to wriggle out of the situation which might

have arisen on account of non-compliance with the statutory

provisions, representation was made to the authorities under the

Act that the audit accounts and audit report for the year 2016-

2017 were approved. In view of the specifc provisions, adverted

to above, for placing audited accounts and audit report before the

AGM of the society, those documents could have been submitted

before the authorities, only after the approval of the society in its

AGM. This incongruity in the stand of the petitioners, cannot be

said to be immaterial or inconsequential.

28. Moreover, it is pertinent to note that no effort was made by

the petitioners to hold the AGM till the show cause notice was

issued by the Dy. Registrar on 4 th January, 2018. The reply dated

21st February, 2018 also sheds light on the stand of the

petitioners. In the said reply, the petitioners contended that since

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the meeting could not be held on 24th September, 2017 for low

attendance and the requisition dated 23rd September, 2017, an

authorized offcer be appointed to hold the meeting in accordance

with the provisions contained in section 75(1) of the Act, 1960.

Implicit in the said response is an admission that the meeting

could not be held within the stipulated period.

29. In the totality of the circumstances, through the authorities

have held that there was default in not convening the meeting

within 30 days of the adjourned meeting, yet, the fact remains

that there was default in convening and holding the meeting

within the period prescribed under section 75(1) of the Act, 1960.

The material on record does not indicate that the meeting could

not be held for want of quorum. Even otherwise, in terms of the

notice of the meeting dated 9th September, 2017 it was obligatory

to hold the AGM on the very day after half an hour, and for which

there would have been no requirement of quorum.

30. Lastly, the reason assigned for not holding the meeting on

24th September, 2017 (Navratri festival from 20th September, 2017

to 30th September, 2017) does not allure credence as it was

neither an unannounced development nor an emergent

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situation. The approach of the Court is expected to be such as

would advance the object of the statutory provision. The AGBM of

the society is of immense signifcance in the management of the

affairs of the society. Calling and holding the AGM is the essential

function of the President and Secretary of the society. If the offce

bearers of the society fail to convene and hold the AGM, within the

statutory period, for a reason which cannot be said to be beyond

their control, to condone such lapse would run counter to the

object of the statutory provisions. Viewed through this prism, in

the facts of the case at hand, the authorities cannot be said to

have committed an error in holding that, the petitioners incurred

the disqualifcation.

31. For the foregoing reasons, in exercise of the extraordinary

writ jurisdiction, no interference is warranted in the impugned

order.

Hence, the following order.

                                 ORDER

a]       The petition stands dismissed.

b]       Rule discharged.



                                              (N.J. JAMADAR, J.)


Vishal Parekar, P.A.                                                 19/19