Bombay High Court
Gokuldas S/O Shriramji Raut And ... vs State Of Maharashtra, Through Its ... on 25 September, 2023
Bench: A.S. Chandurkar, Vrushali V. Joshi
2023:BHC-NAG:13981-DB
WP-3061-2023 1 Judgment
IN THE HIGH COURT OF JUDICATURE AT BOMBAY,
NAGPUR BENCH, NAGPUR.
WRIT PETITION NO. 3061 OF 2023
1. Gokuldas s/o Shriramji Raut,
aged about 59 years, Occ. Retired,
R/o at Post - Bhaipur, Post - Pala,
Tq. Morshi, District - Amravati.
2. Ramdasji s/o Sheshraoji Kadu,
aged about 59 years, Occ. Retired,
R/o Surya Colony, Warud,
Tq. Warud, District - Amravati - 444906.
3. Sambhaji s/o Shriramji Rewale,
aged about 59 years, Occ. Retired,
R/o No. 1131, Gajanan Township No.5,
Kathora Road, Amravati,
Tq. & District - Amravati - 444701.
PETITIONERS
.....VERSUS.....
1. State of Maharashtra,
through its Secretary, Ministry of Co-operation,
Mantralaya, Mumbai - 32.
2. State Co-operative Election Authority,
Maharashtra State, Old Central Building,
Ground Floor, 5, B.J. Road, Pune - 411001.
3. Divisional Joint Registrar,
Co-operative Societies, Amravati Region, Amravati.
4. The Amravati Zilla Parishad Shikshak Sahakari Bank Ltd.,
Regn. No. ATI/BNK/116, through its Chief Executive Officer,
Congress Nagar Road, Near Railway Bridge,
Amravati - 444601.
5. Prabhakar s/o Uttamrao Zod,
aged about 48 years, Occ. Service,
R/o 53, Gulmohar Colony, Devmali Post,
Narayanpur, Tq. Achalpur,
District - Amravati - 444806.
WP-3061-2023 2 Judgment
6. Sanjay s/o Tulshiram Nage,
aged about 48 years, Occ. Service,
R/o Gajanan Colony, Near Prabodhan School,
Sainagar, Daryapur, Tq. Daryapur, District - Amravati.
7. Mangesh s/o Arunrao Kherde,
aged about 50 years, Occ. Service,
R/o 1, "Asha", Suraj Colony, Tower Line Road,
V.M.V. Premises, Amravati - 444604.
8. Manoj s/o Ramchandrarao Chourpagar,
aged about 53 years, Occ. Service,
R/o "Leelai", Uttam Nagar, Benoda,
Amravati - 444606.
9. Gaurav s/o Damodarpant Kale,
aged about 36 years, Occ. Service,
R/o at Post - Ambada, Tq. Morshi,
District - Amravati - 444910.
RESPONDENTS
Shri R.L. Khapre, Senior Advocate with Shri S.N. Gattani, Advocate for
the petitioners.
Ms S.S. Jachak, Assistant Government Pleader for respondent nos. 1 and
3.
Shri S.S. Ghate, Advocate for respondent no.2.
Shri A.M. Ghare, Advocate for respondent no.4.
Shri M.V. Samarth, Senior Advocate with Shri V.P. Ingle and Shri P.S.
Tidke, Advocate for respondent nos. 5 to 9.
CORAM : A. S. CHANDURKAR AND MRS. VRUSHALI V. JOSHI, JJ.
ARGUMENTS WERE HEARD ON : AUGUST 4, 2023
JUDGMENT IS PRONOUNCED ON : SEPTEMBER 25, 2023
JUDGMENT : (PER : A.S. CHANDURKAR, J.)
Rule. Rule made returnable forthwith and heard the learned
Counsel for the parties.
WP-3061-2023 3 Judgment
2] The challenge raised in the present Writ Petition is to the
communication dated 27/4/2023 that has been issued by the Divisional
Joint Registrar, Co-operative Societies, Amravati to the Manager,
Amravati Zilla Parishad Shikshak Sahakari Bank Limited - respondent
no.4 (for short "Co-operative Bank") wherein reference has been made to
the provisions of Section 144-5A of the Maharashtra Co-operative
Societies Act, 1960 (for short "Act of 1960") and it has been stated
therein that since the petitioners have retired from service, they are not
eligible to continue as general members of the Society. The Manager has
been asked to take necessary steps in accordance with the said provisions
as well as bye-laws of the Bank and report compliance of the same. In the
light of this impugned communication, the petitioners who are elected as
Directors of the Co-operative Bank have sought a declaration that the
communication dated 10/2/2023 issued by the Secretary, State
Co-operative Election Authority - respondent no.2 (for short "SCEA") is
not applicable to the category of Societies that are registered as Bank
under the Act of 1960.
3] The facts relevant for considering the challenge as raised are
that the petitioners were employed with Amravati Zilla Parishad. By
virtue of their employment with the Zilla Parishad, they were eligible to
contest elections of the Co-operative Bank. The petitioners were elected
as Directors of the Co-operative Bank pursuant to the elections that were
WP-3061-2023 4 Judgment
held on 3/7/2022. On attaining the age of superannuation, the
petitioners retired on 28/2/2023, 31/3/2022 and 31/3/2023
respectively. In the light of the communication dated 27/4/2023 referred
to hereinabove that was issued by the Divisional Joint Registrar, the
petitioners are sought to be now treated as nominal members with a
restriction on their right to vote. It is for this reason that a declaration
with regard to non-applicability of the communication dated 10/2/2023
issued by the SCEA has been sought.
4] Shri R.L. Khapre, learned Senior Advocate for the
petitioners invited attention to the bye-laws framed by the Bank and
especially Clause 10 thereof. It was submitted that as per Clause 10A,
Zilla Parishad teachers and employees who were discharging duties
within the area of operation of the Bank at Amravati, Akola, Washim and
Yavatmal having rendered service for the prescribed period were entitled
to be general members of the Co-operative Bank. As per Clause 10A(3),
after attaining the age of superannuation or having voluntarily retired
from service, a member who had resigned from the membership was
eligible to again seek membership of the Society. Based on the said
provisions of the bye-laws, it was submitted that there was no prohibition
for a member who had retired from service to continue as a member of
the Society. It was clear that even on attaining the age of superannuation
or seeking voluntary retirement, a member could resign from membership and
WP-3061-2023 5 Judgment
thereafter he could be eligible to again become a member. The District
Deputy Registrar without considering the approved bye-laws of the Co-
operative Bank proceeded to issue the communication dated 27/4/2023.
Thus, according to the learned Senior Advocate, even though the
petitioners were eligible to continue as ordinary members of the
Co-operative Bank despite having superannuated from service with the
Zilla Parishad, a direction was issued by the Divisional Joint Registrar to
treat them as nominal members without any right to vote. The Divisional
Joint Registrar had considered the model bye-laws where in fact the
Society was governed by its own approved bye-laws. Reference was made
to the provisions of Section 2(10) of the Act of 1960 to urge that a
Co-operative Bank such as the fourth respondent had been separately
treated in the Act of 1960 and it could not be equated with a consumers
Society as defined by Section 2(9) of the Act of 1960. Since the
petitioners had not resigned from the membership of the Co-operative
Bank after their superannuation and continued to hold shares of the
Co-operative Bank, they could not be deprived of their rights by treating
them as nominal members. The order passed by the SCEA on 10/2/2023
could not be made applicable to the Co-operative Bank in these facts. The
learned Senior Advocate also referred to Rules 4, 8 and 10 of the
Maharashtra Co-operative Societies Rules, 1961 (for short "Rules of
1961") to submit that a Co-operative Bank had been classified as a
WP-3061-2023 6 Judgment
distinct Society and it could not be equated with a salary earners
co-operative Society. The interpretation undertaken by the SCEA was such
that it deprived the petitioners from the rights that were conferred on
them under the bye-laws of the Co-operative Bank. Since the members of
the Co-operative Bank were affected as a whole, they ought to have been
heard prior to taking such decision. No such hearing was granted and the
petitioners have been deprived of their rights without following the due
process of law. In support of the said submissions, the learned Senior
Advocate placed reliance on the decisions in i) Smt. Damyanti Naranga
Vs. The Union of India And Others [1971(1) SCC 678]; ii) Brahampal
Alias Sammay And Another Vs. National Insurance Company [(2021) 6
SCC 512]; iii) Bombay Anand Bhavan Restaurant Vs. Deputy Director,
Employees' State Insurance Corporation And Another [(2009) 9 SCC 61];
iv) H.L. Trehan and others Vs. Union of India and others [AIR 1989 SC
568]; v) Khandelwal Trading Company and another Vs. State of
Maharashtra and another [2004(4) Mh.L.J. 863]; vi) Jagatchandra N.
Vora and another Vs. The Province of Bombay and others [AIR 1950
Bombay 144]; vii) Anant Sadashiv Vs. Ratnagiri Jilha (District) Local
Board [AIR 1953 Bombay 71]; viii) Margret Almedia And Others Vs.
Bombay Catholic Cooperative Housing Society Limited And Others
[(2012) 5 SCC 642]; and ix) Goa Central Co-operative Consumers Vs.
M/s. Bhagwant Narayan Tendulkar and others [AIR 1999 SC 846].
WP-3061-2023 7 Judgment
5] Referring to the judgment of the learned Single Judge in
Laxman Dattatray Jadhav & Ors. Vs. Taluka Co-operative Election Officer
and the Assistant Registrar Co-operative Societies & Ors. [Writ Petition
No. 11351/2022 decided on 22/11/2022] at the Aurangabad Bench, it
was submitted that the facts therein clearly indicated that the dispute
pertained to a salary earners credit co-operative Society. It was in that
context that the learned Single Judge proceeded to hold that after
retirement, a retired employee ceased to earn salary and would therefore
not be an active member of such salary earners Society. The order passed
by the Election Officer and Assistant Registrar, Co-operative Societies,
Parbhani directing deletion of the names of such retired employees from
the voters list was upheld. It was urged that the ratio of this decision was
not applicable to the facts of the present case. It was further submitted
that the ratio of the judgment of the Division Bench in Nashik Zilla
Sarkari & Parishad Karmachari Sahakari Bank Niyamit Ltd. & Ors. Vs. The
State of Maharashtra & Ors. [Writ Petition No. 6199/2023 decided on
21/6/2023] was also not applicable to the facts of the present case. It
was pointed out that the Division Bench specifically observed that the
question with regard to continuation of retired employees as members of
the Society under the bye-laws framed was not being determined by it.
On this count, it was submitted that the ratio of the decision in Nashik
Zilla Sarkari & Parishad Karmachari Sahakari Bank Niyamit Ltd. & Ors. (supra)
WP-3061-2023 8 Judgment
was not applicable to the facts of the present case inasmuch as the
petitioners were relying upon bye-law 10A(3) to urge that they were
entitled to continue as members of the Co-operative Bank despite their
retirement from service. Referring to the stand taken by the Divisional
Joint Registrar that by communication dated 8/5/2023 the Co-operative
Bank had been called for hearing, it was submitted that such
post-decisional hearing was of no consequence as the said Authority had
made up its mind on 27/4/2023 itself. It was thus submitted that the
challenge as raised by the petitioners ought to be accepted.
6] Shri S.S. Ghate, learned Counsel appearing for the SCEA
opposed the aforesaid submissions and justified the order dated
10/2/2023 issued by it. According to the learned Counsel, in view of the
judgment of the Division Bench in Nashik Zilla Sahakari & Parishad
Karmachari Sahakari Bank Niyamit Ltd. & Ors. (supra) , the Authority of
the SCEA to issue such directions had been recognized and the order
dated 10/2/2023 did not call for any interference. It was urged that
insofar as constitution of the Managing Committee was concerned, the
affairs of the Co-operative Bank were governed by the provisions of the
Act of 1960. Insofar as its banking activities were concerned, the same
were governed by the provisions of the Banking Regulation Act, 1949 (for
short "Act of 1949"). The learned Counsel also referred to the powers of
the SCEA as indicated in Rule 3(v) of the Maharashtra Specified
WP-3061-2023 9 Judgment
Co-operative Societies Rules, 2014. The impugned communication having
been issued under the said provisions, there was no reason to interfere
with the same.
7] Shir M.V. Samarth, learned Senior Advocate for respondent
nos. 5 to 9 on whose complaint the Divisional Joint Registrar issued the
impugned communication dated 27/4/2023 also opposed the Writ
Petition. It was submitted that the Co-operative Bank having been
registered as a salary earners co-operative Society, the order dated
10/2/2023 issued by SCEA was binding on it. In view of Clause 18 of the
bye-laws, the petitioners after their retirement from the Zilla Parishad
could only continue as nominal members and there was a prohibition for
contesting elections and also for exercising voting rights. Reliance was
placed on the judgment in Greater Bombay Coop. Bank Ltd. Vs. United
Yarn Tex (P) Ltd. And Others [(2007) 6 SCC 236] to urge that a banking
company as defined by Section 5(c) of the Act of 1949 did not include a
Co-operative Bank. For this reason, the fourth respondent could not claim
that the order dated 10/2/2023 was not applicable to it. Reference was
also made to the annual report of the Co-operative Bank for the year
2022-23 to indicate that it continued to be a co-operative society under
the Act of 1960. Since the validity of the order dated 10/2/2023 issued
by the SCEA had been upheld by the learned Single Judge in Laxman
Dattatray Jadhav & Ors. (supra) as well as by the Division Bench in
WP-3061-2023 10 Judgment
Nashik Zilla Sarkari & Parishad Karmachari Sahakari Bank Niyamit Ltd. &
Ors. (supra), the challenge raised by the petitioners was not liable to be
upheld. The provisions of Section 144-5A of the Act of 1960 were
applicable to the Co-operative Bank which was a salary earners credit
co-operative Society and the impugned communication dated 27/4/2023
rightly directed that the petitioners could only continue as nominal
members. The Writ Petition was thus liable to be dismissed.
8] Shri A.M. Ghare, learned Counsel appearing for the
Co-operative Bank invited attention to the Certificate of Registration
dated 18/8/1975 and submitted that it had been sub-classified under
Section 12(1) of the Act of 1960 read with Rule 10(1) of the Rules of
1961 as "other banks". It was also granted license by the Reserve Bank of
India on 23/11/1987 to carry on banking business under Section 22(1)
read with Section 56(o) of the Act of 1949. The learned Counsel also
referred to Chapter XI-1A of the Act of 1960 to indicate that a salary
earners co-operative Society had a distinct identity from other
co-operative Societies and the fourth respondent could not be equated
with the same. It was further submitted that the Division Bench in Nashik
Zilla Sarkari & Parishad Karmachari Sahakari Bank Niyamit Ltd. & Ors.
(supra) had specifically observed in paragraph 25 of its judgment that the
question as to whether the bye-laws of the Bank therein were in tune with
the provisions of Section 144-5A of the Act of 1960 had not been gone
WP-3061-2023 11 Judgment
into. Attention was also invited to Section 22(1A) of the Act of 1960 and
it was urged that Section 144-5A cannot be made applicable to the Co-
operative Bank in the present case. There was no Notification issued by
the State Government under Section 22(1A) of the Act of 1960.
Moreover, unless a member resigned after attaining the age of
superannuation or voluntarily, his membership would not come to an end.
It was further pointed out that the Co-operative Bank had total
membership of 10181 out of which 1064 members would have the status
of retired employees. If such interpretation as put by the Divisional Joint
Registrar was adopted, the Co-operative Bank would be put to serious
financial loss. It was thus submitted that the relief sought by the
petitioners ought to be granted.
9] We have heard the learned Counsel for the parties at length
and with their assistance, we have perused the documents placed on
record.
10] By the communication dated 27/4/2023, the Divisional
Joint Registrar, Co-operative Societies, Amravati has directed the
Co-operative Bank to take necessary action in accordance with Clauses
10-A and 18(3) of the bye-laws. By referring to the provisions of Sections
144-5A and 27(8) of the Act of 1960, it is indicated that since the
petitioners have retired from their service with the Zilla Parishad, they are
not entitled to continue as ordinary members of the Co-operative Bank.
WP-3061-2023 12 Judgment
On the contrary, by virtue of such retirement, they would be entitled to be
treated as nominal members. This direction has been issued in view of a
grievance raised by respondent nos. 5 to 9 dated 19/4/2023. It is not in
dispute that the said action has been taken without granting any
opportunity of explanation or hearing to the petitioners. By virtue of the
said communication, the rights of the petitioners as ordinary members of
the Co-operative Bank are under a cloud and it is the case of the
petitioners that in view of this communication, their rights as ordinary
members are being jeopardised.
11] In this regard, it would be necessary at the outset to
consider whether the Divisional Joint Registrar ought to have heard the
petitioners before issuing the impugned communication dated 27/4/2023
and while taking cognizance of the complaint made by respondent nos. 5
to 9 on 19/4/2023. It is to be noted that the bye-laws of the Co-operative
Bank have been duly registered and approved in accordance with the
provisions of the Act of 1960 and the Rules of 1961. This is as required by
Section 2(5) read with Section 9(1) of the Act of 1960. The petitioners
are the ordinary members of the Co-operative Bank and being duly
qualified, they are entitled to the benefit of Section 23 of the Act of 1960.
By virtue thereof, they are also entitled to the right of voting under
Section 27(1). If the petitioners are treated as nominal members, the
provisions of Section 27(8) would be attracted and they would not have
WP-3061-2023 13 Judgment
any right of voting. Clause 9 of the bye-laws of the Co-operative Bank
indicates that there are three categories of members namely ordinary
members, active members and nominal members. Clause 10 of the bye-
laws indicates the manner in which an employee of the Zilla Parishad
engaged in the profession of teaching can become an ordinary member.
Clause 10-A3 thereof indicates that after attaining the age of
superannuation or after obtaining voluntary retirement from service, if a
member resigns from his membership, he can again become a member.
Since this Clause finds place in Clause 10 that deals with rights of an
ordinary member, it will have to be considered that after superannuating
from service and resigning from membership, such person can again
become an ordinary member of the Society. It can thus be seen that by
virtue of Clause 10 of the bye-laws, an ordinary member has been clothed
with various rights including the right to again become an ordinary
member after having resigned from membership due to superannuation.
It is not in dispute that the membership of the petitioners has not been
extinguished in terms of Clause 23 of the bye-laws. The petitioners thus
continue as ordinary members of the Co-operative Bank and the
contingency indicated by Clause 10-A3 has not yet occurred.
12] The Hon'ble Supreme Court in Zoroastrian Cooperative
Housing Society Ltd. And Another Vs. District Registrar, Cooperative
Societies (Urban) And Others [(2005) 5 SCC 632] while examining the
WP-3061-2023 14 Judgment
provisions of the Gujarat Co-operative Societies Act, 1961 has held in
clear terms that on becoming a member of a co-operative society, such
member is entitled to rights conferred by the Statute, Rules and the bye-
laws of the Society. If these rights and privileges are to be taken away, the
same would have to be done in accordance with law. It has also been held
that the Authorities under the Statute cannot direct the co-operative
society to act in a manner contrary to its own bye-laws. Further, an
approved bye-law cannot be ignored by an authority under the statute
itself.
From the aforesaid, it is clear that by virtue of being
ordinary members of the Co-operative Bank, the petitioners have
acquired rights as conferred by the Act of 1960, Rules of 1961 and its bye-
laws. Thus, if anything contrary to the same is to be done, the petitioners
ought to have been heard in the matter before seeking to place them in a
position not in consonance with the bye-laws. The impugned
communication dated 27/4/2023 therefore could not have been issued
without hearing the petitioners and especially when in the complaint
made by respondent nos. 5 to 9, it was specifically the grievance of the said
respondents that the petitioners having retired from service, they were not
qualified to continue as ordinary members. Since the status of the petitioners as
ordinary members was sought to be changed to nominal members which would
result in depriving them of their right to vote, the petitioners ought
WP-3061-2023 15 Judgment
to have been heard in the matter. On this count, we find that the
impugned communication dated 27/4/2023 which in effect directs the
Co-operative Bank to act in accordance with what has been stated therein
prejudicially affects the petitioners and the same is therefore liable to be
quashed since the petitioners have not been heard in the matter. Though
the said communication has been issued to the Co-operative Bank,
nevertheless it is a case of fait accompli for the petitioners.
13] The petitioners have also sought a declaration that the
communication dated 10/2/2023 issued by the SCEA be declared as not
applicable to the Co-operative Bank. We find that it is not necessary at
this stage to consider this prayer since we propose to direct the Divisional
Joint Registrar to first hear the petitioners as well as the Co-operative
Bank before issuing any direction in the light of the complaint dated
19/4/2023 that has been moved by respondent nos. 5 to 9. Instead, the
petitioners as well as the Co-operative Bank can be permitted to raise this
issue before the Divisional Joint Registrar who can then consider the same
in accordance with law. For this reason, we have not examined the
applicability of the ratio of the decisions in Laxman Dattatray Jadhav &
Ors. (supra) and Nashik Zilla Sarkari & Parishad Karmachari Sahakari
Bank Niyamit Ltd. & Ors. (supra) to the facts of the present case. We may
however note that the Division Bench in Nashik Zilla Sarkari & Parishad
Karmachari Sahakari Bank Niyamit Ltd. & Ors. (supra) in paragraph 25
WP-3061-2023 16 Judgment
has observed that it had not gone into the issue with regard to
applicability of the bye-laws of the society therein to the petitioners in the
context of the provisions of Section 144-5A of the Act of 1960. We
therefore keep this issue open for being raised before the Divisional Joint
Registrar, if so advised. For the very same reason, we have not made
specific reference to the decisions relied upon by the learned Senior
Advocate for the petitioners as well as the learned Senior Advocate for
respondent nos. 5 to 9. Suffice it to observe that the decision in Greater
Bombay Co-operative Bank (supra) stands overruled by the decision in
Pandurang Ganpati Chaugule Versus Vishwasrao Patil Murgud Sahakari
Bank Limited [(2020) 9 SCC 215] as pointed out by the learned Senior
Advocate for the petitioners.
14] In the light of the aforesaid discussion, the following order
would serve the ends of justice :
ORDER
The communication dated 27/4/2023 issued by the
Divisional Joint Registrar on the complaint dated 19/4/2023 as made by
respondent nos. 5 to 9 is set aside. The Divisional Joint Registrar shall
re-consider the complaint dated 19/4/2023 as made by respondent nos. 5
to 9 after giving due opportunity of hearing to the petitioners as well as
the Co-operative Bank. It would be open for the parties to raise all
WP-3061-2023 17 Judgment
permissible grounds for consideration before the Divisional Joint Registrar
who shall consider the same in accordance with law. The points raised in
that regard are kept expressly open.
15] Rule is made absolute in the aforesaid terms with no order
as to costs. Pending civil application is also disposed of.
(MRS. VRUSHALI V. JOSHI, J.) (A.S. CHANDURKAR, J.)
Sumit
Signed by: Mr. Sumit Agrawal
Designation: PA To Honourable Judge
Date: 25/09/2023 11:47:55
