Bombay High Court
Creative Cunsumers Co Operative ... vs The District Collector Nashik And Anr on 5 August, 2024
Author: Amit Borkar
Bench: Amit Borkar
2024:BHC-AS:30950-DB
aswp13546-2023 with aswp14558-2023-J-Final-2.doc
AGK
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.13546 OF 2023
Creative Consumers Cooperative
Society Ltd., A society registered
under the MCS Act Registration
No.Bom/Con/481/80,
having office at Shop No.2,
Building No.4, Vhatuk Nagar,
Amboli, Andheri (W),
Mumbai 400 058.
Digitally
signed by
Through its Authorised
ATUL
GANESH
ATUL
GANESH
KULKARNI
KULKARNI Date:
Representative
2024.08.05
14:39:11
+0530
Mr. Rakesh Ramchandra Mehata ... Petitioner
V/s.
1. The District Collector, Nashik
Collector Office, Old CBS
Nashik 422 002.
2. The District Supply Officer
District Supply Officer, Nashik
Office of District Collector
(Supply Department) Nashik
Old Mumbai - Agra Road,
Near Bus Stand,
Tal. & District Nashik 422 002.
3. State of Maharashtra
...Respondents
WITH
WRIT PETITION NO.14558 OF 2023
WITH
INTERIM APPLICATION (ST.) NO.20869 OF 2024
1
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Ramesh Panchan Gada Shah
Age: 60 years, Occ; Business
Address office at Shop No.2, Building
No.4, Vahatuk Nagar,
Amboli, Andheri (W)
Mumbai 400 058. ... Petitioner
V/s.
1. The State of Maharashtra
Through Secretary,
Food, Civil Supplies and Consumer
Protection Department, Mantralaya,
Mumbai - 400 032.
2. The District Collector, Nashik
Collector Office, Old CBS
Nashik 422 002.
3. The District Supply Officer,
District Supply Officer, Nashik
Office of District Collector
(Supply Department) Nashik
Old Mumbai - Agra Road, Near Bus
Stand,
Tal. & District Nashik 422 002.
4. Chagan Bhujbal
At Post Yeola, Taluka Yeola
District Nashik
Also Dr. Dabholkar Marg, Malbar Hill
Mumbai 400 006.
5. Creative Consumers Cooperative
Society Ltd., (Society Registered u/s
MCS, Act)
Registration No.Bom/Con/481/80
having office at Shop No.2,
Building No.4, Vahatuk Nagar,
Amboli, Andheri (W),
Mumbai 400 058. ... Respondents
2
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Mr. Anil Singh, Senior Advocate with Mr. Rohan
Kadam i/by Siddharth R. Karpe and Mr. Ketan Joshi
and Mr. Adarsh Vyas for the petitioner in
WP/13546/2023.
Mr. Ravi Kadam, Senior Advocate with Mr. Rohan
Kadam i/by Mr. Vishwajeet V. Mohite for the
petitioner in WP/14558/2023.
Mr. Anil Singh, Senior Advocate with Mr. Rohan
Kadam i/by Siddharth R. Karpe and Mr. Ketan Joshi
and Mr. Adarsh Vyas for respondent No. 5 in
WP/14558/2023.
Mr. P. P. Kakade, Government Pleader with Mr. O. A.
Chandurkar, Additional Government Pleader and
Ms. G. R. Raghuwanshi, AGP for respondent Nos.1
to 3 in both matters.
CORAM : DEVENDRA KUMAR UPADHYAYA,
CJ &
AMIT BORKAR, J.
RESERVED ON : JULY 24, 2024
PRONOUNCED : AUGUST 5, 2024
ON
JUDGMENT:
(Per Amit Borkar, J.)
1. Rule. By consent of counsel for the parties and at their
request, both the writ petitions were taken up for final
hearing.
2. Both these writ petitions have been set down for hearing
together at the request of counsel as both involve common
question of law and fact. In Writ Petition No.14558 of 2023,
aswp13546-2023 with aswp14558-2023-J-Final-2.doc
which came to be argued as a lead petition, the petitioner
seeks to challenge the decision dated 10 November 2023
cancelling agreement and tender process granting work order
for transportation of ration food grains to fair price shops
under the target-oriented public distribution system. Petitioner
also seek a declaration that agreement dated 28 July 2023
entered into with the petitioner by the respondents is in force
and a further direction to issue work order/delivery orders in
pursuance of agreement dated 28 July 2023.
3. In Writ Petition No.13546 of 2023, the petitioner/society
seeks relief in the form of a direction to Respondent Nos.1
and 2 to issue a work order as per representations dated 18
September 2023 and 16 October 2023.
4. In order to appreciate the factual background, some
facts can be culled out from Writ Petition No.14558 of 2023.
For the sake of convenience, the parties are referred to as
they are arrayed in Writ Petition No.14558 of 2023.
5. The petitioner is the Chairman of Respondent No.5 -
cooperative society, who has filed the writ petition in a
representative capacity on behalf of Respondent No. 5 -
society. Respondent No.1 had published detailed guidelines
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vide Government Resolution dated 15 November 2021
regarding a target-oriented public distribution system for
transportation of ration food grains to fair-price shops. The
resolution provides guidelines for conducting an online tender
process for the allotment of work contracts for transporting
such goods. Accordingly, Respondent No. 5 - society
participated in the tender process and by Government Order
dated 21 May 2023, Respondent No. 5 - society was declared
L-1 bidder for District Nashik. Respondent No.1 vide letter
dated 8 June 2023 informed Respondent No.5 accordingly and
by communication dated 26 June 2023 called upon
Respondent No.5 to comply with certain conditions such as
furnishing bank guarantee, execution of agreement, etc. On
26 June 2023, the petitioner furnished bank guarantee to the
tune of Rs.3,45,40,050/-. Respondent No.3, on 4 July 2023,
informed the petitioner about executing the registered
agreement. Accordingly, on 28 July 2023, Respondent No.2
executed an agreement with the petitioner in his capacity as
Chairman of Respondent No. 5 - society.
6. Respondent No.5 - society, by communication dated 9
August 2023, requested Respondent No.2 to issue the work
order in furtherance of the agreement dated 28 July 2023.
aswp13546-2023 with aswp14558-2023-J-Final-2.doc
Respondent No. 5 - society on 24 August 2023 paid
Rs.6,90,900/- towards stamp duty in pursuance of the order
dated 17 August 2023 issued by the Collector of Stamps in
respect of the agreement dated 28 July 2023. However,
according to the petitioner, no work order was issued.
Therefore, Respondent No.5 was constrained to file Writ
Petition No.13546 of 2023 seeking relief of issuance of the
work order in favour of Respondent No.5 - society.
7. During the pendency of the writ petition, the petitioner
learnt about passing of the order of liquidation in the exercise
of power under Section 102 of the Maharashtra Cooperative
Societies Act, 1960 (MCS Act), which, according to the
petitioner, was never served on the Respondent No. 5 Society.
The petitioner, therefore, on 9 November 2023, preferred
Appeal under Section 152 of the MCS Act bearing Appeal
No.413 of 2023 and the appellate authority, by order dated 9
November 2023, granted a stay to the final order of
liquidation passed by the District Registrar, K-West Ward,
Mumbai till next date of hearing, i.e., 21 December 2023.
However, before such an order was communicated to
Respondent No.1, Respondent No.1, on 10 November 2023,
decided to cancel allotment in favour of Respondent No.5 -
aswp13546-2023 with aswp14558-2023-J-Final-2.doc
society unilaterally and further decided to cancel the entire
tender process in District Nashik. The petitioner, therefore,
filed Writ Petition No.14558 of 2023.
8. Respondent No.1 filed an affidavit-in-reply objecting to
the maintainability of the writ petition on the ground of
petitioner's locus to challenge the impugned decision in a
representative capacity on behalf of Respondent No.5 -
society. According to Respondent No.1, the petitioner cannot
claim to have a separate identity and rights other than those
of Respondent No.5 - society as regards the issue of tender,
which is the subject matter of the writ petition. According to
him, on the date of entering into an agreement with
Respondent No.5 the interim order of liquidation was already
passed on 9 June 2023, hence the agreement dated 28 July
2023 was executed by suppressing the fact of appointment of
liquidator.
9. According to Respondent No.1, the liquidator went to the
site of the society on 14 July 2023; however, the society
refused to hand over books and property, which is evident
from a letter dated 2 August 2023 addressed by the liquidator
to the Deputy Registrar, Cooperative Societies. Therefore,
aswp13546-2023 with aswp14558-2023-J-Final-2.doc
according to Respondent No.1, the fact of appointment of
liquidator by interim order under Section 102(1) of the MCS
Act was within the knowledge of Respondent No.5 on the date
of entering into an agreement dated 28 July 2023, therefore,
the writ petition is liable to be dismissed.
10. Mr. Kadam, learned Senior Advocate on behalf of the
petitioner relying on Sections 102 to 106 of the MCS Act and
Rules 87 and 89 of the Maharashtra Cooperative Societies
Rules, 1961 (MCS Rules), submitted that in the absence of
service of the order of appointment of liquidator on
Respondent No.5 - society in the manner prescribed under
Rule 87 of the MCS Rules and publication in the official
gazette as required under Rule 89(1), the order of liquidation
shall not come into effect in law.
11. Inviting our attention to the order of stay granted by the
appellate authority on 9 November 2023 and the order dated
20 November 2023 recalling the order of interim liquidation,
he submitted that the order of liquidation was not in force on
the date of cancellation of the agreement. Moreover, while
recalling the interim liquidation order, the Deputy Registrar
recorded a finding that the order of interim liquidation was
aswp13546-2023 with aswp14558-2023-J-Final-2.doc
passed without giving an opportunity of hearing to the
petitioner, and that the liquidator did not communicate the
fact of interim liquidation to the society. He submitted that the
order further records a finding that the liquidator had not
taken charge of the affairs of the society. He also invited our
attention to the finding that the deficiencies recorded in the
show-cause notice and interim order of liquidation are
factually incorrect as necessary documents indicating
compliance with the provisions of the MCS Act and MCS Rules
were already submitted to the competent authority.
12. Relying on the judgments in Punjab University v. V.N.
Tripathi & Anr., reported in (2001) 8 SCC 179; Nareshbhai
Bhagubhai & Ors. v. Union of India & Ors., reported in
(2019) 15 SCC 1; and Dulu Devi v. State of Assam & Ors.,
reported in (2016) 1 SCC 622 it is submitted that the order of
liquidation shall not come into effect unless such order was
communicated to the petitioner in the manner prescribed
under Rules 87 and 89 of the MCS Rules.
13. On the other hand, Mr. Sen, learned Senior Advocate
appearing for Respondent No.1 contended that the petition is
liable to be dismissed for suppression of material facts as the
aswp13546-2023 with aswp14558-2023-J-Final-2.doc
petitioner has failed to disclose liquidation proceedings in Writ
Petition No.13546 of 2023. According to him, the Deputy
Registrar passed an interim order of liquidation on 9 June
2023. On 14 July 2023, the liquidator went for an official site
visit to the office of Respondent No.5 to take possession of
movable and immovable assets of Respondent No.5. However,
they refused to hand over the record. Therefore, on 28 July
2023, Respondent No.5 was fully aware of the order of
liquidation and, therefore, Respondent No.1 was within his
right to recall the order of execution of the agreement in
favour of Respondent No.5 - society and cancellation of the
tender process for District Nashik. He submitted that against
the order of recalling the interim order of liquidation, one
society has filed a revision which is pending before the
revisional authority. He, therefore, urged that the writ
petitions are liable to be dismissed.
14. In order to appreciate the controversy, it would, in our
view, be necessary to advert to the Clause that empowers
Respondent No.2 - Collector to terminate the agreement
dated 28 July 2023, which reads as under:
"VIII. Summary Transactions:
aswp13546-2023 with aswp14558-2023-J-Final-2.doc
a) In the event of the contractor having been adjudged
insolvent or going into liquidation or winding up his business or
making arrangements with his creditors or failing to observe any of
the provisions of this contract or any of the terms and conditions
governing the contract, the District Collector, NASHIK has liberty to
terminate the contract forthwith without prejudice to any other
rights or remedies under the contract and law and to get the work
done for the unexpired period of the contract at the risk and cost of
the contractor and to claim from the contractor any resultant loss
sustained or costs incurred by District Collector, NASHIK."
15. The said Clause empowers the Collector in the event the
contractor goes into liquidation or winding up his business to
terminate the contract forthwith. On perusal of the record, the
reason for the termination of the contract appears to be
liquidation of Respondent No.5 - society. It is, therefore,
necessary to adjudicate the issue as to when the order of
interim liquidation of the Cooperative Society becomes
effective. For the said purpose, the statutory scheme
contained in Chapter X of the MCS Act and MCS Rules needs
examination. Relevant provisions of the MCS Act and MCS
Rules are extracted as below:
"102. (1) If the Registrar;--
(a) after an inquiry has been held under section 83 or an
inspection has been made under section 84 [or 89A] or on the
report of the auditor auditing the accounts of the society, or
(b) on receipt of an application made upon a resolution carried by
three-fourths of the members of a society present at a special
general meeting called for the purpose, or
(c) of his own motion, in the case of a society which --
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(i) Has not commenced working, or
(ii) Has ceased working, or
(iii) Possesses shares or members deposits not exceeding
five hundred rupees, or
(iv) has ceased to comply with any conditions as to
registration and management in this Act or the rules or the
bye-laws,
is of the opinion that a society ought to be wound up, he may issue
an interim order directing it to be wound up.
(2) A copy of such order made under sub-section (1) shall be
communicated, in the prescribed manner, to the society calling
upon it to submit its explanation to the Registrar within a month
from the date of the issue of such order, and the Registrar, on
giving an opportunity to the society [and to the creditors of the
society, if any,] of being heard, may issue a final order, vacating or
conforming the interim order.
103. (1) When an interim order is passed under the last preceding
section or a final order is passed under that section, for the
winding up of a society, the Registrar may, in accordance with the
rules appoint a person to be Liquidator of the society, and fix his
remuneration.
(2) On issue of the interim order, the officers of the society shall
hand over to the Liquidator the custody and control of all the
property, effects and actionable claims to which the society is or
appears to be entitled, of all books records and other documents
pertaining to the business of the society and, shall have no access
to any of them.
(3) When a final order is passed confirming the interim order, the
officers of the society shall vacate their offices, and while the
winding up order remains in force the general body of the society
shall not exercise any powers.
(4) The person appointed under this section as Liquidator shall,
subject to the general control of the Registrar, exercise all or any of
the powers mentioned in section 105. The Registrar may remove
such person and appoint another in his place, without assigning
any reason.
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(5) The whole of the assets of the society shall on the appointment
of Liquidator under this Section vest in such Liquidator, and
notwithstanding anything contained in any law for the time being in
force, if any immovable property is held by a Liquidator on behalf
of the society, the title over the land shall be complete as soon as,
the mutation of the name of his office is effected, and no Court
shall question the title on the ground of dispossession, want of
possession or physical delivery of possession.
(6) In the event of the interim order being vacated, the person
appointed as Liquidator shall hand over the property, effects and
actionable claims and books, records and other documents of the
society to the officers who had delivered the same to him. The acts
done, and the proceedings taken by liquidator, shall be binding on
the society, and such proceedings shall, after the interim order has
been cancelled under the preceding section, be continued by the
officers of the society.
104. Appeal against order of winding up.--
[(1) The committee, or any member, of the society, ordered to be
wound up may prefer an appeal against the final order of winding
up within two months from the date of the issue of the order made
under section 102, --
(a) If made by the Registrar, or the Special or Additional or
Joint Registrar on whom the powers of the Registrar are conferred,
to the State Government;
(b) If made by any person other than the Registrar, or the
Special or Additional or Joint Registrar on whom the powers of the
Registrar are conferred, to the Registrar:
Provided that no appeal shall lie against an order issued
under sub-clause (i), (ii) or (iii) of Clause (c) of sub-section (I) of
section 102].
(2) No appeal from a member under this section shall be
entertained unless it is accompanied by such sum as security for
the costs of hearing the Appeal, as may be prescribed.
106. Effect of order of winding up.--
After expiry of the period for Appeal against the order made under
sub-section (1) of section 102 or where the Appeal has been
dismissed, the order for winding up shall be effective and shall
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operate in favour of all the creditors and of all the contributories of
the society, as if it had been made on the joint petition of creditors
and contributories. When a winding up order becomes effective,
the Liquidator shall proceed to realise the assets of the society by
sale or otherwise, and no dispute shall be commenced or, if
pending at the date of the winding up order, shall be proceeded
against the society except by leave of the Registrar and subject to
such terms as the Registrar may impose. The Registrar, may of his
own motion however, entertain or dispose of any dispute by or
against the society.
Rule 87 and 89(1) of the MCS Rules,1961
"87. Mode of communication of an interim order under
Section 102
An interim order under Clause (a) or sub-clause (iv) of
Clause (c) or sub-section (I) of Section 102 shall call upon the
society in respect of which the order is made to submit its
explanation to the Registrar within one month from the date of
issue of such order and shall be communicated by registered post
(with acknowledgement due) to the society by the Registrar.
89. Appointment of Liquidator and the procedure to be
followed and powers to be exercised by him
The following procedure shall be adopted for the appointment of
the Liquidator and for the exercise of his powers, namely:--
(1) The appointment of the Liquidator shall be notified by the
Registrar in the Official Gazette
......................."
16. Upon a thorough examination of the aforementioned
provisions in the context of the issues raised in the instant
writ petitions, it is apparent that the Maharashtra Cooperative
Societies Act envisage two types of orders that may be issued
by the Registrar concerning liquidation of a cooperative
society. Pursuant to the conditions stipulated under subsection
(1) of Section 102, the Registrar is authorized to issue an
aswp13546-2023 with aswp14558-2023-J-Final-2.doc
interim order of liquidation. Sub-section (2) provides that the
Registrar shall communicate this interim liquidation order to
the society in the prescribed manner, requiring the society to
provide its explanation within one month from the date of
issuance of the order. Following this, the Registrar, after
affording an opportunity of hearing to the society and its
creditors, if any, is empowered to issue a final order either
vacating or confirming the interim order. The term "in the
prescribed manner" occurs in Section 102(2) thus Rule 87
necessitates that the interim liquidation order has to be sent
to the society via registered post with acknowledgement due.
Additionally, sub-rule (1) of Rule 89 requires the appointment
of a liquidator to be notified by the Registrar in the official
gazette. Subsection (1) of Section 103 grants the Registrar
the authority to appoint a liquidator and determine his
remuneration. Sub-section (2) of Section 103 imposes a duty
on the officers of the society to transfer to the liquidator, upon
the issuance of the interim order, the custody and control of
all property, actionable claims, books, records, and other
documents related to the society's business. However,
subsection (3) of Section 103 stipulates that the officers of
the society are required to vacate their offices only upon
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issuance of the final liquidation order, confirming the interim
order. Thus, it is evident that the obligation for the officers to
vacate their offices arises only after the final order is issued.
17. Furthermore, Section 106 of the Maharashtra
Cooperative Societies Act (MCS Act) stipulates that the
winding-up order becomes effective and operates in favor of
all creditors and contributors of the society after the
expiration of the appeal period against the order issued under
Section 102(1) or the dismissal of such an appeal. It also
authorizes the liquidator to commence the process of
releasing the society's assets. Section 106 further bars
initiation or continuation of any proceedings against the
society as on the date of the winding-up order, except with
the Registrar's leave, after the expiration of the appeal period
under subsection (1) of Section 102 or the dismissal of such
an appeal.
18. However, it is crucial to notice the inconsistency which
has resulted on account of the amendment of Section 104
through Maharashtra Act 7 of 1997, which extinguished the
right to appeal against an interim liquidation order, without
simultaneously amending Section 106. Although Section 106
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refers to the expiration of the appeal period against an order
issued under subsection (1) of Section 102, the amended
subsection (1) of Section 104 provides for an appeal solely
against the final winding-up order under subsection (2) of
Section 102. The proviso to Section 104 explicitly states that
no appeal shall lie against an order issued under sub-clauses
(i), (ii), or (iii) of clause (c) of subsection (1) of Section 102.
Sub-section (1) of Section 104 restricts appeals against final
winding-up orders under subsection (2) of Section 102 of the
MCS Act. However, Section 106 specifies that the order of the
liquidator's appointment becomes effective only after the
expiration of the appeal period against the order issued under
subsection (1) of Section 102 of the MCS Act.
19. The principles of statutory interpretation are well
established. When the words of a statute are clear and
unambiguous, they should be given their plain and ordinary
meaning without adding or omitting any words. Deviating
from the literal rule by altering the structure or substituting
words in a clear statutory provision under the guise of
interpretation poses significant risks, as such changes may
not align with the legislature's intent. The Courts cannot
replace legislative wisdom with their own views. The Supreme
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Court, in a different context, in the case of Shri Mandir Sita
Ramji v. Lt. Governor of Delhi, (1975) 4 SCC 298, p. 301,
para 6 has observed thus :
"When a procedure is prescribed by the legislature, it is not for the
court to substitute a different one according to its notion of justice.
When the legislature has spoken, the judges cannot afford to be
wiser."
20. There is, however, an exception to this general rule.
When the words used in a statutory provision are vague or
ambiguous, or when their plain and ordinary meaning leads to
confusion, absurdity, or inconsistency with other provisions,
courts may resort to interpretative tools to rectify the
situation by adding, omitting, or substituting words in the
statute. In dealing with an apparently defective provision,
courts prefer to assume a drafting error rather than conclude
that the legislature deliberately introduced an absurd or
irrational provision. Departing from the literal rule is
warranted only in exceptional cases where literal compliance
would result in anomalies that are impossible, absurd, or
impractical, thus defeating the provision's purpose. Purposive
interpretation to avoid absurdity is more commonly applied to
procedural provisions than to substantive ones.
21. Maxwell on Interpretation of Statutes (12th Edn., p.
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228), under the caption "Modification of the Language to Meet
the Intention" in the chapter on "Exceptional Construction,"
states:
"Where the language of a statute, in its ordinary meaning and
grammatical construction, leads to a manifest contradiction of the
apparent purpose of the enactment, or to some inconvenience,
absurdity, hardship, or injustice, a construction may be adopted
which modifies the meaning of the words and even the structure of
the sentence. This may involve departing from grammatical rules,
giving unusual meanings to particular words, or rejecting them
altogether, on the grounds that the legislature could not have
intended what its words signify, and that the modifications made
are mere corrections of careless language and truly reflect the
intended meaning. Where the main object and intention of a
statute are clear, it must not be reduced to a nullity by the
draftsman's unskillfulness or ignorance of the law, except in cases
of necessity or absolute intractability of the language used."
22. The Supreme Court approved and adopted this approach
in Tirath Singh v. Bachittar Singh (AIR 1955 SC 830).
23. In the case of Seaford Court Estates Ltd. v. Asher
reported in (1949) 2 KB 481 (CA), Lord Denning observed as
under:
"If the makers of the Act had themselves come across this ruck in
the texture of it, how would they have straightened it out? He
must then do as they would have done. A Judge must not alter the
material of which it is woven, but he can and should iron out the
creases."
24. In Shamrao V. Parulekar v. District Magistrate,
Thana [(1952) 2 SCC 1 : AIR 1952 SC 324 : 1952 Cri LJ
aswp13546-2023 with aswp14558-2023-J-Final-2.doc
1503], the Supreme Court reiterated Maxwell's principle,
stating:
"If one construction leads to an absurdity while another gives
effect to what common sense shows was obviously intended, the
construction defeating the ends of the Act must be rejected, even
if the same words used in the same section, and even the same
sentence, must be construed differently. Indeed, the law
sometimes requires courts to modify the grammatical and ordinary
sense of the words to avoid absurdity and inconsistency" (AIR p.
327, para 12).
25. In Molar Mal v. Kay Iron Works (P) Ltd. [(2000) 4
SCC 285], the Supreme Court affirmed that while courts
should follow the rule of literal construction, an exception
arises when such literal construction leads to absurdity or
inconsistency. The Court stated:
"That exception comes into play when the application of literal
construction of the words in the statute leads to absurdity,
inconsistency, or when it is shown that the legal context in which
the words are used, or by reading the statute as a whole, requires
a different meaning" (SCC p. 295, para 12).
26. In Mangin v. IRC [1971 AC 739 : (1971) 2 WLR 39 :
(1971) 1 All ER 179 (PC)], the Privy Council held:
"... the object of the construction of a statute being to ascertain the
will of the legislature, it may be presumed that neither injustice
nor absurdity was intended. If a literal interpretation would
produce such a result, and the language admits of an
interpretation avoiding it, then such an interpretation may be
adopted" (AC p. 746 E).
27. A classic example of correcting a legislative drafting
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error is found in Salem Bar (II) [(2005) 6 SCC 344], where
the Supreme Court substituted the words "defendant's
witnesses" for "plaintiff's witnesses" in Order 7 Rule 14(4) of
the Code. The relevant portion of the decision states:
"Order 7 relates to the production of documents by the plaintiff,
whereas Order 8 relates to production by the defendant. Under
Order 8 Rule 1-A(4), a document not produced by the defendant
can be confronted with the plaintiff's witness during cross-
examination. Similarly, the plaintiff can confront the defendant's
witness with a document during cross-examination. By mistake,
instead of 'defendant's witnesses,' the words 'plaintiff's witnesses'
were mentioned in Order 7 Rule 14(4). To avoid confusion, we
direct that till the legislature corrects the mistake, 'plaintiff's
witnesses' shall be read as 'defendant's witnesses' in Order 7 Rule
14(4). We hope the mistake will be expeditiously corrected by the
legislature" (SCC pp. 368-69, para 35).
28. Justice G.P. Singh, in his treatise "Principles of Statutory
Interpretation" (12th Edn., 2010, Lexis Nexis, p. 144),
outlines following four conditions, from the House of Lords'
decision in Stock v. Frank Jones (Tipton) Ltd. [(1978) 1 WLR
231 : (1978) 1 All ER 948 (HL)], that justify departing from
the plain words of a statute:
1. There is a clear and gross balance of anomaly.
2. Parliament, the legislative promoters, and the draftsman
could not have envisaged or accepted the anomaly in the
interest of a supervening legislative objective.
3. The anomaly can be obviated without detriment to the
legislative objective.
4. The statute's language is susceptible to the modification
required to obviate the anomaly.
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29. While it is true that under the guise of judicial
interpretation the court cannot supply casus omissus, it is
equally true that the courts in construing a statute must
always try to give effect to the intention of the legislature. The
Legislature's omission to amend a related provision has
resulted in significant challenges in statutory interpretation.
One of which concern the interpretation of Rule 89 of Order
21 of the Code of Civil Procedure following the amendment of
Article 127 of the Limitation Act, 1963, by Act 104 of 1976.
Rule 89 of Order 21 stipulates that if any person, having an
interest in the property sold in execution of a decree, applies
to set aside the execution sale and deposits, within thirty days
from the date of the sale, five percent of the purchase money
for payment to the purchaser and the amount payable to the
decree-holder for recovery of which the sale was held, "the
court shall make an order setting aside the sale." Prior to its
amendment by Act 104 of 1976, the period of limitation for
applying under Rule 89 to set aside the sale was also thirty
days under Article 127 of the Limitation Act, 1963. The
amendment extended this period from thirty days to sixty
days. However, Parliament did not amend Rule 89 of Order 21
correspondingly to extend the period for making the deposit
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from thirty days to sixty days. The Statement of Objects and
Reasons for the Bill that became Act 104 of 1976 indicated
that the period was extended to sixty days because thirty
days was considered too short a period for making the
deposit, often causing hardship. In light of this purpose, a
two-judge bench of the Supreme Court in Basavanatappa v.
Gangadhar Naryana Dharwadkar reported in (1986) 4 SCC
273 held that the period for making both the application to set
aside the sale and the deposit under Rule 89 was implicitly
extended from thirty to sixty days. However, this view was not
accepted by a three-judge bench in P.K. Unni v. Nirmala
Industries reported in (1990) 2 SCC 378, which reasoned
that the court could not remedy Parliament's omission to
amend Rule 89. Subsequently, a five-judge bench in Dadi
Jagannadham v. Jammulu Ramulu reported in (2001) 7
SCC 71 overruled Nirmala Industries. Although the bench
acknowledged that the court cannot fill gaps left by the
legislature, it emphasized that the court should strive to
harmonize conflicting provisions. Based on this reasoning, the
Supreme Court held that Rule 89 does not prescribe any
limitation period and merely directs that the court must set
aside the sale if the deposit is made within thirty days,
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without preventing the deposit from being made later. Thus, it
held that, if an application to set aside the sale is made within
sixty days and the deposit is also made within sixty days,
although beyond thirty days, the court retains discretion to
set aside the sale.
30. In light of the established principles of statutory
interpretation, we have scrutinized Section 106, which
addresses the effect of a winding-up order. A close reading of
Section 106 of the Maharashtra Cooperative Societies Act,
1960 (MCS Act), in conjunction with other provisions of
Chapter-X, elucidates that the intent behind postponing the
effect of a winding-up order until after the expiration of the
appeal period under subsection (1) of Section 102, or the
dismissal of an appeal, is to ensure that affected parties have
a reasonable opportunity to exercise their right to appeal.
Section 152 of the Act provides for appeals related to orders
enumerated therein within two months from the date of
communication of the decision or order. Section 154 of the Act
provides for remedy of revision against orders passed by the
specified officers within two months from the date of
communication of the decision or order. This period is
intended to prevent hasty enforcement of a liquidation
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decision and to allow affected parties time to challenge the
order if they believe it to be legally unsound. Considering the
significant consequences of liquidation for a cooperative
society, its members, creditors, and contributors, this time
gap is essential. It ensures that the decision to liquidate is
scrutinized by an appellate authority, guaranteeing that the
interim liquidation order is legally sound. This provision seeks
to balance the enforcement of the MCS Act's provisions with
the rights of cooperative societies and their members to seek
redress, ensuring that decisions are made in accordance with
the law.
31. The evident contradiction and absurdity introduced by
the amendment of Section 104 must be rectified by
considering the Legislature's primary objective of providing a
time gap for the expiration of the appeal period. The two-
month period for filing an appeal against an order under
Section 102(1) should be interpreted as a two-month period
for filing revision from the date of communication of the
decision or order. To resolve this inconsistency, expiry of the
two-month period for an appeal arising from an order under
Section 102(1) of the MCS Act should be understood to mean
that the interim liquidation order shall take effect after two
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months from the date of communication of the interim
liquidation order in accordance with the Rules, or the
dismissal of a revision application under Section 154 of the
Act.
32. It is therefore necessary to determine whether
Respondent No. 5 - society, or the petitioner, was served with
or communicated the interim liquidation order as required by
the Rules. As previously indicated, Respondent Nos. 1 to 4
have not provided any material to conclude that the interim
liquidation order was communicated to the society by
registered post (acknowledgement due) as mandated under
Rule 87. Additionally, no material has been brought on record
before the Court by the respondents to indicate that the order
appointing the liquidator was published in the official gazette.
Furthermore, a review of the agreement dated 28 July 2023
shows that it was executed between Respondent No. 1 and
the petitioner in his capacity as Chairman of Respondent No.
5. Therefore, in our view, on the date of the agreement dated
28 July 2023, Respondent No. 5 was not communicated the
interim liquidation order in the prescribed manner under the
Rules. Consequently, in the absence of knowledge of the
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interim liquidation order, it cannot be conclusively held that
the petitioner misrepresented Respondent Nos. 1 and 2 while
entering into the agreement without disclosing the interim
liquidation order.
33. Moreover, in recalling the interim liquidation order, the
Deputy Registrar recorded a categorical finding that the
interim order dated 9 June 2023 was not communicated to
the society, and the liquidator appointed under the interim
order had not assumed the charge. Furthermore, the interim
liquidation order was issued on 9 June 2023, and the
agreement in question was executed on 28 July 2023, which
is within two months of the date of the interim liquidation
order, i.e., before the interim liquidation order became
effective. Therefore, in our opinion, in absence of any
evidence indicating service of the interim liquidation order in
the manner prescribed under Rules 87 and 89 of the MCS
Rules and considering the language of subsection (3) of
Section 103, which requires society officers to vacate their
offices only after a final order confirming the interim order is
issued, the petitioner, in his capacity as Chairman of the
society, was within his rights to enter into the agreement with
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Respondent No. 2 for the transportation of food grains as per
the tender conditions.
34. Therefore, in our considered opinion, Respondent No. 1
acted contrary to the provisions of the liquidation scheme
under the MCS Act by canceling the allotment in favour of the
petitioner and Respondent No. 5 - society.
35. Mr. Sen, learned Senior Advocate on behalf of
Respondent No. 1, also objected to the maintainability of the
petitions filed by the petitioner as Chairman of Respondent
No. 5 - society, on the ground that the tenderer was the
cooperative society, which is a distinct legal entity. We find no
merit in this submission, considering the resolution of express
ratification placed on record by way of an affidavit dated 23
July 2024 by the Managing Committee of Respondent No. 5 -
society, expressly ratifying the petitioner, as Chairman of the
society, to institute and continue with the writ petition.
Moreover, it is necessary to note that the agreement cancelled
by the impugned order was executed by the petitioner in his
capacity as Chairman of Respondent No. 5 - society. The act
of filing petition by the Chairman of the cooperative society
challenging a decision which is against the interest of the
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society cannot be deemed a void act. Such an act of filing
proceedings on behalf of the society in the enforcement of its
rights can, at most, be considered voidable, and such voidable
acts can always be ratified by the society through the passage
of a valid resolution.
36. Accordingly, we find that any alleged irregularity
regarding the Chairman filing the petition on behalf of the
cooperative society is remedied by the ratification resolution
submitted by Respondent No. 5 in its affidavit. We, therefore,
dismiss the objection raised by Respondent No. 1.
37. Mr. Sen, learned Senior Advocate representing
Respondent No. 1, further argued that the petitioner's
operational area was restricted to the District of Mumbai, and
thus Respondent No. 5 - society was not authorized to submit
a tender for work outside its operational area. However, Mr.
Kadam, learned Senior Advocate, drawing our attention to the
application submitted by Respondent No. 5 in 2020,
contended that since the Registrar, exercising power under
Section 13 of the MCS Act, 1960, failed to communicate any
refusal within two months as required by subsection (1) of
Section 13, the amendment in the bye-laws extending
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Respondent No. 5 - society's operational area to the entire
State of Maharashtra is deemed registered under subsection
(1A) of Section 13. No evidence has been presented by the
respondents indicating that the extension of Respondent No. 5
- society's operational area to the entire state of Maharashtra
contravenes any provisions of the Act. Therefore, Respondent
No. 5 - society is entitled to the benefits of the deeming
fiction under subsection (1A) of Section 13.
38. For the aforementioned reasons, we find that the action
of Respondent No. 1 in cancelling the agreement dated 28
July 2023 is unsustainable. Consequently, we pass the
following order:
a) Rule is made absolute in terms of prayer clauses (a) and
(b) in Writ Petition No.14558 of 2023;
b) In view of relief granted in terms of prayer clauses (a)
and (b) in Writ Petition No.14558 of 2023, no relief needs to
be granted in Writ Petition No.13546 of 2023;
39. Rule is made absolute in above terms. No costs.
40. The interim application stands disposed of.
(AMIT BORKAR, J.) (CHIEF JUSTICE)
