Adhyatma Bandhu Gupta And Anr vs Division Joint Registrar, ...
2023 Latest Caselaw 4912 Bom

2023:BHC-AS:14632

                                                                        4-WP-7358-14.DOC




                                                                         Sayali Upasani




                     IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                                   CIVIL APPELLATE JURISDICTION


                                   WRIT PETITION NO.7358 OF 2014


             1.     Adhyatma Bandhu Gupta,

                    Age-66 Years, Chairman,

                    Hatkesh Co-operative Housing

                    Society Ltd, 2nd Floor, 51 Jaihind

                    Co-operative Housing Society Ltd.,

                    N.S. Road No. 1, JVPD Scheme, Vile

                    Parle (W) Mumbai-400 049.



             2.     Gaurishankar Saraf

                    Age-70 Years, Secretary,

                    Hatkesh Co-operative Housing

                    Society Ltd, 2nd Floor, 51 Jaihind

                    Co-operative Housing Society Ltd.,

                    N.S. Road No. 1, JVPD Scheme, Vile

                    Parle (W) Mumbai-400 049.            .... PETITIONERS.




                                                 1/21




                  ::: Uploaded on - 05/06/2023             ::: Downloaded on - 08/06/2023 08:59:04 :::
                                                           4-WP-7358-14.DOC


                VERSUS

1.     Division Joint Registrar,

       Co-Operative Societies,

       Mumbai Division, Mumbai,

       Malhotra House, 6th floor, Opp.

       G.P.O. Fort, Mumbai- 400 001.



2.     The Deputy Registrar, C.S. K/West Ward,

        Grahnirman Bhavan, Room No.69-A,

       Ground Floor,Bandra (E),Mumbai-400 051.


3.     Mr. Natwarlal Agarwal,

       Plot No.58, Hatkesh Co-operative

       Housing Society Ltd, N.S. Road No.7

       JVPD Scheme, Vile Parle (W) Mumbai.


4.     Hatkesh Co-operative Housing Society Ltd

       Vishnu Prasad Bhavan, V.L. Mehta Road,

       JVPD Scheme, Nr. Mithibai College,

       Vile Parle (W) Mumbai-400 056 and

       2nd Floor, 51 Jaihind Co-operative Housing

       Society, N.S. Road No.11, JVPD Scheme,

       Vile Parle (W) Mumbai- 400 049.        ....RESPONDENTS


                                    2/21




     ::: Uploaded on - 05/06/2023            ::: Downloaded on - 08/06/2023 08:59:04 :::
                                                                  4-WP-7358-14.DOC




Mr. Shivanand A. Mishra, for Petitioners.
Mr. C.D. Mali, AGP for State- Respondent Nos. 1 and 2.
Ms. Rujuta Patil and Hasan Mushabber i/b Negandhi Shah
and Himayatullah, or Respondent No. 3.


                                             CORAM:- N. J. JAMADAR, J.

RESERVED ON:- 9th MARCH, 2023 PRONOUNCED ON:- 5th JUNE, 2023

JUDGMENT:-

1) Rule. Rule made returnable forthwith and with the

consent of the learned Counsel for the parties heard finally.

2) The challenge in this Petition is to the judgment and order

dated 9th July, 2014, passed by The Divisional Joint Registrar,

Co-operative Societies, Mumbai, in Revision Application No.61 of

2014, whereby the application preferred by the petitioners came

to be dismissed by affirming an order dated 31 st January, 2014,

passed by the Deputy Registrar Co-operative Societies, removing

the petitioners from the post of Chairman and Secretary of

Hatkesh Co-operative Housing Society Ltd- respondent No. 4

and disqualifying them from being elected and becoming an

officer or member of the committee for a term of five years,

under Section 75 (5) of the Maharashtra Co-operative Societies

4-WP-7358-14.DOC

Act, 1960 ("the Act, 1960"), for having committed default in

holding the Annual General Meeting (AGM) of the respondent

No. 4 - Society for the year 2012-2013.

3) Shorn of unnecessary details, the background facts can be

stated as under:-

(a) Hatkesh Co-operative Housing Society Ltd - respondent

No. 4, is a Society registered under the Act, 1960. The petitioner

No. 1 was elected as the Chairman and petitioner No. 2 the

Secretary, of the said Society. Annual General Body Meeting of

the said Society was to be held on or before 30th September,

2014. In view of the legislative change brought about consequent

to 97th Constitutional Amendment, it was not possible for the

petitioners, to hold the AGM before 30 th September, 2014. Thus,

the committee of respondent No. 4 passed a Resolution on 10 th

August, 2013 to postpone the AGM and make an application to

Deputy Registrar, seeking an extension for a period of 90 days

for holding the said meeting. On 12th August, 2013 an

application was submitted to the Deputy Registrar, seeking

extension of time of three months to hold the AGM along with a

copy of the Resolution.

4-WP-7358-14.DOC

(b) In the meanwhile, the respondent No. 3, a member of the

Finance Committee of the Society, made a complaint to the

Deputy Registrar. The petitioners and the Society were called

upon to furnish an explanation. The petitioners furnished

explanation on 4th December, 2013. However, on 12th December,

2013, a notice was addressed to the petitioners to show cause as

to why action for default in holding Annual General Body

Meeting of the Society, as contemplated under Section 75 of the

Act, 1960, be not taken.

(c) The petitioners gave suitable reply on 27 th December,

2013. It was, inter alia, pointed out that the AGM could not be

convened as, in view of the legislative change, the Auditors of

the Society were required to be changed and the accounts could

not be finalised as the Manager of the Society had left the

employment and the accountant was sick. Draft accounts were

circulated to the Managing Committee in the first week of July.

Moreover, there was no clarity in the legal regime on account of

the legislative change brought about by 97 th Constitutional

Amendment. In any event, the Annual General Body Meeting of

the Society was duly convened and held on 10th November, 2014.

4-WP-7358-14.DOC

4) After considering the explanation, the District Deputy

Registrar was persuaded to pass an order on 31 st January,

2014, holding that the members of the committee had

committed default in holding AGM of the Society, for the year

2012-2013, on or before 30th September, 2013, which was the

statutory requirement. Since the proviso to Section 75 (1) of the

Act, 1960, which empowered the Registrar to extend the time to

hold the meeting, stood deleted by Act No. XVI of 2013, with

effect from 6th February, 2013, the application of the Society for

extension of time did not deserve to be considered. Holding

thus, the District Deputy Registrar ordered the removal of

petitioner Nos. 1 and 2 from office of Chairman and Secretary,

respectively, of the Society and further disqualified them from

being elected or nominated as an Officer or Member of the

committee for a term of five years.

5) Being aggrieved the petitioners preferred Revision

Application No. 61 of 2014 before the Divisional Joint Registrar.

By the impugned order, the Divisional Joint Registrar concurred

with the view of the District Deputy Registrar opining, inter alia,

that petitioners were aware of change brought about by 97th

Constitutional Amendment and, therefore, duty bound to hold

4-WP-7358-14.DOC

the Annual General Body Meeting on or before 30 th September,

2013.

6) Being further aggrieved the petitioners have invoked the

writ jurisdiction of this Court. When the matter was listed

before the Court on 11th August, 2014, this Court directed that

the status quo ante as on the date of expulsion of the

petitioners be maintained.

7) The Deputy Registrar, respondent Nos. 2 and 3 the

original complaint-respondent No. 3 have resisted the Petition

by filing affidavits-in-reply.

8) Respondent No. 2 has endeavored to justify the impugned

order. The respondent No. 3 contends that the impugned order

has already been implemented as in place of the petitioners, the

Society had appointed new Chairman and Secretary and, thus,

the Petition had been rendered infructuous. Respondent No. 3

asserts that the petitioners had committed default in holding

the Annual General Body Meeting of the Society and there was

no cause for not holding the said meeting and, therefore, the

District Deputy Registrar was justified in passing the order

under Section 75 (5) of the Act, 1960. The application submitted

by the petitioners to the Deputy Registrar, seeking extension of

4-WP-7358-14.DOC

time was stated to be wholly misconceived as the District

Deputy Registrar had no power to extend the time in view of

deletion of the first proviso to Section 75 (1) of the Act. 1960.

9) I have heard Mr. Shivanand A. Mishra, the learned

Counsel for the petitioners, Ms. Rujuta Patil, the learned

Counsel for the respondent No. 3 and Mr. Mali, the learned AGP

for respondent Nos. 1 and 2, at some length. I have also perused

the pleadings and material on record.

10) Mr. Mishra submitted that the impugned orders have been

passed by the authorities under the Act, 1960, in breach of

fundamental principles of natural justice. The District Deputy

Registrar as well as the Divisional Joint Registrar completely lost

sight of the fact that the legal regime was uncertain when the

petitioners had sought extension of time. Respondent No. 2

never apprised the committee that the extension, as was then

sought by the committee, could not have been granted. In any

event, according to Mr. Mishra, the authorities committed a

grave error is not at all appreciating the cause ascribed by the

petitioners for not holding the meeting before the scheduled

date. The authorities were enjoined to consider the justifiability

4-WP-7358-14.DOC

of the cause assigned by the petitioners. Failure to do so renders

the impugned order legally unsustainable, urged Mr. Mishra.

11) In the alternative, Mr. Mishra would urge it was the

responsibility of petitioner No. 2 alone, in the capacity of the

Secretary of the Society, to convene the AGM and, thus, the

petitioner No. 1, the then Chairman, could not have been

disqualified as it was not the duty of the Chairman to call AGM.

12) The learned AGP, on the other hand, supported the

impugned orders. It was submitted that the provisions

contained in Section 75 (5) of the Act, 1960, are of mandatory

nature and once there is a default in holding the meeting,

within the prescribed period, the action thereunder is

inevitable.

13) Ms. Patil would urge that the ground of uncertainty of law

now sought to be urged is a subterfuge. Taking the Court

through the documents, Ms. Patil submitted that the material

on record would indicate that the petitioners were fully aware

about the legislative change and, yet, persisted with the course

of seeking extension of time as an excuse for not holding the

Annual General Body Meeting.

4-WP-7358-14.DOC

14) I have carefully considered the submissions canvassed

across the bar. In the context of the challenge, the time line

assumes significance. The committee, or for that matter, the

petitioners were alive to the fact that the Annual General Body

Meeting of the Society was to be conducted by 14 th August, 2013.

Asserting that it was not possible to hold the meeting by the

said date, it seems, on 10th August, 2013, the committee of

respondent No. 4 - Society passed the Resolution to postpone

the 66th AGM on account of delay in auditing the accounts. The

committee further resolved to authorise the Secretary to make

an application to the District Deputy Registrar to seek extension

of 90 days for holding the meeting. Accordingly, an application

was duly made on 12th August, 2013.

15) It seems that the respondent No. 3 addressed a complaint

dated 12th October, 2013, containing multiple grievances

including the failure to hold the AGM on or before 30 th

September, 2013. An explanation was sought by the District

Deputy Registrar. After considering the explanation dated 4 th

December, 2013, the Deputy Registrar issued a notice calling

upon the petitioners to show cause as to why action for default

in holding the AGM, as contemplated under Section 75 (5) of the

4-WP-7358-14.DOC

Act, 1960 be not taken. Post reply, the District Deputy Registrar

passed the order dated 31st January, 2014.

16) In the backdrop of the aforesaid rather uncontroverted

facts, the legality and validity of the impugned orders deserve to

be tested. At the outset, it is pertinent to note that as of the date

of the passing of the Resolution dated 10 th August, 2013 and

submitting application for extension of time, the first proviso to

Section 75 (1), as it then stood, empowered the Registrar to

extend the time for holding the meeting by a period not

exceeding three months. The first proviso to Sub Section (1) of

Section 75 then read as under:-

" Provided that, the Registrar may, by general or special order. Extend the period for holding such meeting for a further period not exceeding three months, however, in the case of the specified societies and urban Co-operative banks such extension shall be granted only after recording the reasons in writing and after obtaining the previous approval of the Government for granting such extension."

17) It would be imperative to note that in view of the

provisions contained in Section 42 of the Maharashtra Act No.

XVI of 2013, the aforesaid first proviso to Section 75 (1) came to

be deleted, with effect from 14th February, 2013. The

Maharashtra Co-operative Societies Amendment Act, 2013, was

4-WP-7358-14.DOC

notified on 13th August, 2013. However, by virtue of Section 1 (2)

of the said Act No. XVI of 2013, the provisions of the said Act

were deemed to have come into force on 14th February, 2013.

18) In the aforesaid view of the matter, the submissions on

behalf of the petitioners that they had sought an extension of

time to hold AGM while the governing law was in a state of flux,

can not be brushed aside completely. Undoubtedly, the first

proviso to Section 75 (1) which empowered the Registrar to

extend the time by three months, came to be deleted with effect

from 14th February, 2013. Yet, the fact that the Society had

sought extension of time to hold the AGM indicates, in the least,

a bona fide pursuit of the then available remedy.

19) Nonetheless, I am inclined to test the validity of the

impugned orders on a more substantive ground. Section 75 (5),

which provides the consequences of default in holding the AGM

in conformity with the provisions contained in Sub Section (1) of

Section 75 reads as under:-

"...(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 officer 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

4-WP-7358-14.DOC

with any of the aforesaid sub-sections disqualified for being elected and for being elected and for being any officer or member of the committee for such period [not exceeding five years], as he may specify in such an order and, if the officer is a servant of the society, impose a penalty on him to [pay] an amount not exceeding [five 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...."

20) A plain reading of the aforesaid section would indicate that

in the event of default in holding the meeting within the period

prescribed under Sub Section (1), or in complying with Sub-

Section (2), (2A) (3) or (4) of the said Section, the Registrar may

by order declare any Officer or member of the committee whose

duty it was to call such a meeting or comply with Sub Section

(2), (2A) (3) or (4) to be disqualified for being elected or for being

any officer or member of the committee for such period not

exceeding five years, and also impose a penalty not exceeding

five thousand rupees if the officer happened to be the servant

of the society.

21) Evidently, the Registrar has to first arrive at a finding that

a default has been committed in compliance with the mandatory

provisions contained in Section 75 and, thereafter, pass an

order of disqualification of the officer or member of the

4-WP-7358-14.DOC

committee, who was in default or impose the penalty, as the

case may be. The said power is, however, not unregulated or

uncannalised. The expression, "who without any reasonable

excuse failed to comply with any of the aforesaid Sub Sections"

is of critical significance. It envisages an opportunity to the

person, who is allegedly in default, to show cause.

Simultaneously, if a cause is shown, there is a corresponding

duty on the Registrar to ascertain as to whether the cause so

assigned constituted a reasonable excuse. Default per se does

not entail disqualification. Registrar is statutorily enjoined to

arrive at a finding that there was no reasonable excuse. In a

given case, if the officers or members of the committee are in a

position to demonstrate that there was reasonable excuse for

not holding the AGM, the Registrar would be justified in not

visiting such officer or member with the consequence of

disqualification or penalty.

22) The aforesaid nature of the power under Section 75 (5) of

the Act, 1960, was adverted to by this Court in the case of Dilip

Bhagwantrao Ingole and Others Vs. Commissioner of Co-

operation and Registrar of Co-Operative Societies Maharashtra

State, Pune and Others1. The learned Single Judge of this 1 2009 (2) Mh.LJ 471

4-WP-7358-14.DOC

Court, on an analysis of the provisions contained in Sub Section

(4) and (5) of Section 75, enunciated the principles of natural

justice with which the aforesaid provisions are informed. The

relevant observations read as under:-

"....6. In view of the provisions of Section 75(4) it is clear that balance sheet, profit and loss account, audit memorandum submitted by the auditor with the managing committee report shall be placed for adoption before the annual general meeting. In view of the provisions of Section 75(5) if there is a failure in calling the annual general meeting or any compliance with the provisions of Sections (2), (3) and (4) of Section 75, the Registrar may by order declare a Member of the Committee whose duty it was to comply with the said provisions, who without any reasonable excuse failed to comply with the same, disqualified for being elected or for being a member of the committee for such period not exceeding three years. This is an administrative action which may be taken by the Registrar and as per this administrative action the concerned members of the committee may be declared disqualified for being elected or for being a member of the committee for a period not exceeding three years due to failure to comply with Section 75(4). However, the section also makes it clear that for taking the action the Registrar must come to the conclusion that the concerned members of the committee had failed to comply with the provisions without any reasonable excuse and to find out whether there was any reasonable excuse for non compliance of that direction, the Registrar is expected to give reasonable opportunity to the person concerned of showing cause against the action proposed to be taken with regard to him. It means opportunity has to be given to the concerned member of the society to explain as to why he could not follow the relevant provisions and if the Registrar comes to the conclusion that the concerned member had reasonable excuse or justifiable reasons for not

4-WP-7358-14.DOC

complying the provisions, he may not take any action under Section (5) if after giving an opportunity he finds that there was no reasonable excuse, he may take action as per the provisions of sub section (5). Therefore it is necessary to give reasonable opportunity to the person to explain the reasons for non compliance, without which action cannot be taken....."

(emphasis supplied)

23) Another learned Single Judge of this Court in the case of

Gaurav K. Desai Vs. The State of Maharashtra and Others in

Writ Petition No.11699 of 2014, expounded the nature of exercise

of power by the Registrar under Section 75 as under:-

"...8. The scheme of Section 75 needs to read not in isolation. All the sub-clauses are connected and interlinked. There are certain connected obligation of the authorities also (Registrar) in case no meeting convened or able to take decisions. No such steps were taken even by the authorities within the prescribed period. also (Registrar) Sub-section(5) of Section 75 itself provides that irrespective of earlier provisions of Sub-sections (1), (2), (2A), (3) and (4) in case of default, before imposing any penalty, reasonable opportunity needs to be given to the concerned parties. This section itself provides that the authority must give all the opportunities and ask for an explanation for the failure to comply with the provisions if any. This section itself provides the concept of natural justice - "who without any reasonable excuse" fail to comply with the mandate of the provisions. It is also a mandate of Sub-section (5) of Section 75 that the authorities should give an opportunity to explain"reasonable excuse" even if any officer/servant fails to comply with the provisions. This itself follows that if a reasonable excuse and/or reasonable case is made out, the authority irrespective of earlier provisions of Section 75, may pass an appropriate order and/or may reduce

4-WP-7358-14.DOC

penalty/punishment so proposed, and/or may impose "nil"punishment or "nil" penalty. The principles of natural justice, therefore,which are otherwise inherent in any such provisions of law, specifically when it comes to taking any action or deciding civil rights of the parties,must be followed. In the present case, Sub-section (5) of Section 75 is very clear about the principles of natural justice to be followed in the strict sense.

..........

11. Reasonable cause and/or sufficient reason needs to be considered in the facts and circumstances of the case but in situation like this where the third person/parties are involved and when the petitioners/officers at the relevant time took steps within the prescribed period but unable to fulfill the same within the statutory period for the ground so referred, that itself cannot be the reason for the punishment of this nature. I am inclined to observe that if "sufficient cause" is made out,it is not the mandate of the provisions that the authority should impose the maximum punishment in every such default. The discretion and the power need to use/utilize in accordance with law. Reasonable and fair approach is required, if sufficient cause is made out and/or where there was no intentional delay and/or intended inaction to breach provisions,which are brought into with effect from 15.2.2013 and no prior steps/ intimation/ circular issued to the society in advance, about such mandate...."

24) A fair reading of the provisions contained in Section 75 (5)

of the Act, 1960, thus justifies an inference that the opportunity

of hearing before an officer or member of committee is visited

with disqualification or penalty, as case may be, is implicit at

two stages. First, the Registrar must provide an opportunity to

the person affected to show as to whether there was a

4-WP-7358-14.DOC

reasonable cause for not holding AGM. Second, the Registrar

must also weigh the justifiability of the reason ascribed by such

person and record a finding. The reason ascribed by the affected

person may bear upon the action, which the Registrar may be

persuaded to take. Convinced with the reasonability of the

excuse, the Registrar may not pass any order of disqualification

or penalty or the Registrar may be persuaded to determine the

measure of the remedial action. It is imperative to note that the

legislature has used the expression, "for such period not

exceeding five years". Thus, disqualification need not

necessarily be for full five years. Having regard to the nature of

the default as well as the reasons ascribed for the same, the

Registrar may disqualify the person in default for a lesser

period.

25) On the aforesaid touchstone, reverting to the facts of the

case, the order passed by the District Deputy Registrar

removing the petitioners from the committee and declaring them

to have incurred the disqualification for a term of five years,

singularly lacks consideration on the aspect of the reasonability

of the excuse offered by the petitioners. In fact, the District

Deputy Registrar has not at all considered the justifiability of

4-WP-7358-14.DOC

the cause ascribed by the petitioners. On the contrary, the

District Deputy Registrar has proceeded on the premise that the

application of the petitioners for extension of time to hold the

AGM was not required to be considered as the first proviso to

Section 75 (1) stood deleted. No other reason was ascribed by

the District Deputy Registrar.

26) The situation which thus obtains is that the District

Deputy Registrar did not delve into the justifiability of the cause

and arrive at a finding that there was no reasonable excuse. The

fact that the committee had passed the Resolution to seek

extension of time on account of impossibility of holding the

meeting due to delay in finalising the accounts for the absence

of Manager and sickness of the accountant as well as the

change in the auditors, was not at all considered by the District

Deputy Registrar. Had the District Deputy Registrar considered

the reasons assigned by the petitioners and, thereafter, came to

a conclusion that those were not sufficient reasons for not

holding the meeting, different considerations could have come into

play. In the absence thereof, an inference become inescapable that

the order passed by the District Deputy Registrar suffers from a

4-WP-7358-14.DOC

manifest error in not considering the reasonability of the

excuse.

27) The Divisional Joint Registrar also did not advert to the

said aspect of the matter and simply proceeded to concur with

the view of the District Deputy Registrar based on the premise

of the legislative change brought about by 97th Constitutional

Amendment. In my view, in the peculiar facts of the case, the

contention of the petitioners that they had an incomplete

impression of the legal regime, which then prevailed, could not

have been thrown overboard.

28) In any event, the Registrar was informed that the AGM

was duly convened and held on 10th November, 2013.

Undoubtedly, there was delay. However, the authorities could

have considered the said factor had they examined the

justifiability of the reason assigned by the petitioners for not

holding the AGM. Non-consideration of this vital aspect, in my

view, constitutes a jurisdictional error in passing the order of

disqualification for a term of five years.

29) Ordinarily, in a situation of this nature, this Court would

have considered it appropriate to remit the matter back to the

authorities under the Act, 1960. However, having regard to the

4-WP-7358-14.DOC

time lag of more than 9 years, since the passing of the order of

disqualification by District Deputy Registrar, no fruitful purpose

would be served in remitting the matter back to the District

Deputy Registrar. In the totality of the circumstances, it may be

expedient in the interest of justice to allow the Petition.

30)        Hence, the following order.

                                     -:ORDER:-

      i)    The Petition stands allowed.

   ii)        The impugned order passed by the Divisional Joint

Registrar and the order dated 31 st January, 2014, passed by

the District Deputy Registrar, Co-operative Societies, stand

quashed and set aside.

iii) Rule made absolute in the aforesaid terms.

  iv)       No costs.




                                                 [N. J. JAMADAR, J.]