Pawan Kumar Jain & Ors. vs Govt. Of Nct Of Delhi & Ors.
2010 Latest Caselaw 5248 Del

*           IN THE HIGH COURT OF DELHI AT NEW DELHI


                                                        Reserved on : 15.11 2010
%                                                 Date of decision : 19.11.2010


                    WP (C) Nos. 7637 & 7638 of 2010

PAWAN KUMAR JAIN & ORS. ...                       ...       ...       ...       ..PETITIONERS

                        Through : Mr. Sudhir Nandrajog, Sr. Adv. with
                                  Mr. Rakesh Kumar Garg &
                                  Mr. Anil Amrit, Advocates.

                                    -VERSUS-

GOVT. OF NCT OF DELHI & ORS.                    ...       ...       ...     RESPONDENTS

                        Through : None for R - 1.
                                  Mr. Arun Gupta, Adv. for R - 2.
                                  Mr. Jayant Bhushan, Sr. Adv. with
                                  Mr. Amit Gupta, Adv. for Rs - 3 to 8 in
                                  WP (C) No. 7637/2010 & for Rs - 3 & 4
                                  in WP (C) No. 7638/2010.
                                  Rs - 9 & 10 in WP (C) No. 7637/2010 &
                                  Rs - 5 & 6 in WP (C) No. 7638/2010 are
                                  formal parties.

CORAM :
HON'BLE MR. JUSTICE SANJAY KISHAN KAUL
HON‟BLE MR. JUSTICE VALMIKI J. MEHTA

1.        Whether the Reporters of local papers
          may be allowed to see the judgment?                           No

2.        To be referred to Reporter or not?                            No

3.        Whether the judgment should be
          reported in the Digest?                                       No


SANJAY KISHAN KAUL, J.

1. The subject matter of the present writ petition is the

elections which have been held of respondent No. 2 Bank _____________________________________________________________________________________________

on 31.01.2010, which were challenged by respondents No.

3 to 8 in WP (C) No. 7637/2010 and respondents No. 3 in

WP (C) No. 7638/2010 by filing a reference under Section

70 of the Delhi Co-operative Societies Act, 2003

(hereinafter to be referred to as, „the said Act‟). The Award

was made by the Arbitrator on 23.10.2010 setting aside

the election of the petitioners herein with a suggestion that

the Registrar, Co-operative Societies may appoint an

Administrator to take charge of the Co-operative Bank with

immediate effect and to order fresh elections to be held in

due course of time. This Award has been challenged by

the petitioners in appeal before the Delhi Co-operative

Tribunal. In terms of the impugned order dated

03.11.2010 while time has been given to file reply and the

case has been fixed for arguments on 03.01.2011, on the

application for interim relief filed by the petitioners, interim

stay has been declined. This order is sought to be

challenged by the petitioners as the consequence thereof

would be that the petitioners cannot function as the

elected members; there may be possibility of appointment

of Administrator and also holding of fresh elections, which

may make the appeal itself infructuous. The operative

portion of the impugned order of the Tribunal reads as

under :-

"Learned counsel for respondents / caveators have intelligently pointed out that in the application u/S 117 of DCS Act, 2003, the applicant has stated, "No loss will be caused to anyone if the _____________________________________________________________________________________________

operation of impugned award is stayed". In the application, it is not stated that the applicant would suffer irreparable loss if the stay is not granted.

On the merits of the application, both the counsels have raised many points and have even read the documents and contents of the appeal. In my opinion, if the operation of the award is stayed at this stage, it would give perpetuity to the term for which the appellants are elected and it would be against the spirit of the co-operative movement. The infirmities in the award can be appreciated when the respondents file their replies. At this stage, we are not inclined to stay the operation of the impugned order."

(emphasis supplied)

2. We heard the writ petitions finally at the request of learned

counsel for the parties since the only issue to be

determined was as to what should be the interim

arrangement pending hearing of the appeal finally by the

Delhi Co-operative Tribunal for which the date has been

fixed as 03.01.2011. If the aforesaid impugned order is

perused, the first out of the two operative paragraphs does

not seem to make much cogency. If the applicant states

that no loss would be caused to anyone if the operation of

the impugned order is stayed, it can hardly be said that

this is different from stating that the applicant will suffer

irreparable loss and injury if the stay is not granted. The

Tribunal appears to be only indulging in semantics while

penning down this portion of the order. The other

operative paragraph records that many points have been

urged and documents read. There is not even a brief

mention of the same or analysis of the respective

_____________________________________________________________________________________________

arguments. In that sense, the order is completely

unsustainable. However, it is stated that staying of

operation of the order would amount to the applicants /

appellants, who are the petitioners herein, getting

perpetuity to the term for which they are elected.

Simultaneously, it has been observed that infirmities in the

Award can be appreciated when the respondents file their

replies.

3. We must record at the inception itself that both the

counsels for the parties stated that the impugned order

makes no cogency and is hardly sustainable, but the

submission of learned senior counsel for the private

respondents was that this Court could go into the Award

dated 23.10.2010 to determine as to what should be the

interim arrangement.

4. In order to appreciate the contentions and keeping in mind

the objective of this order to find an interim arrangement

for about a month and a half, we consider it appropriate to

examine the Award dated 23.10.2010 itself.

5. The case of the private respondents, who challenged the

elections, is that the CEO of the Bank has hatched a

conspiracy with the petitioners to delay the audit of the

Bank inordinately aimed at gaining disqualification for the

Board of Directors consisting of the private respondents

herein at the relevant time. This resulted in the

_____________________________________________________________________________________________

candidature of a large number of candidates including the

claimants being rejected.

6. The second plea was that the list of defaulters as prepared

by the CEO was patently defective because a large number

of defaulters including the petitioners herein failed to find a

mention, thus, facilitating their participation in the election

both as voters and candidates. Partiality was also alleged

against the Returning Officer.

7. A couple of instances have been given to show that some

persons, who were defaulters, had not been declared so

altering the result of the election. This plea has found

favour with the Arbitrator.

8. It was not disputed before us by learned senior counsel for

the private respondents that merely because some voters

are included in the list, who ought not to have been so

included, the election process is not vitiated unless it has a

material bearing on the elections. It is also not disputed

that there are only couple of examples and the election

result could not have been effected by the same. Thus,

really nothing turns on this plea.

9. The Arbitrator has also taken note of the fact that

petitioner No. 1, the present Chairman of the Bank, was

alleged to be in default of Rs.1,449/- and that a notice of

default was served on him. Interestingly, another aspect

noted is that the removal of the previous CEO of the Bank,

Shri S.P. Bansal had been cancelled by the Registrar, Co-

_____________________________________________________________________________________________

operative Societies and Shri Bansal had been re-instated.

Despite this fact, Shri Anil Kumar Jain continued to work as

CEO. This aspect is important because it is the private

respondents, who were on the Board at the relevant stage

of time to which these allegations relate. As to how the

present CEO could be alleged to have conspired with

petitioner No. 1 herein to scuttle recovery proceedings

against him raises a number of doubts.

10. The Arbitrator has concluded that the Returning Officer

was duty-bound to have excluded persons, who were

defaulters and, thus, came to the conclusion that there was

collusion between the CEO and the Returning Officer to

favour petitioner No. 1.

11. It has not been disputed that no objections were filed

against the candidature, but that is sought to be explained

away in the Award by forming an opinion that the same

cannot be a ground for the Returning Officer to close his

eyes and not to scrutinize the nomination papers filed

before him.

12. In our considered view, once the appeal was being

examined and fixed for a near date of early January, 2011,

i.e., 03.01.2011, it would be in the fitness of things that the

elected body after a process of election should continue to

manage the affairs of the Co-operative Bank, but ensuring

that no prejudice would be caused to the private

respondents. The appeal cannot be made infructuous

_____________________________________________________________________________________________

when a direction has been passed by the Arbitrator to hold

fresh elections. Learned senior counsel for the

respondents could not even seriously dispute the latter

part, but submitted that all that was required to be done

was that the elections may not be held till the appeal is

decided, but the petitioners should not be permitted to

perpetuate an illegality arising from their election through

an improper process.

13. We have already noticed that insofar as the election

process being vitiated on account of some ineligible voters

being excluded is concerned, the number cited was so

small that they did not have any impact on the result and,

thus, any conclusion based on the same in the Award

prima facie cannot be sustained. The only real question is

as to whether the petitioners were defaulters and if they

were so, could they have been permitted to participate in

the election process. In this behalf, the allegations against

the Chairman of the Bank is of non-payment of Rs.1,449/-.

Of course, the extent of the amount does not make a

difference, but we are only pointing it out to show that

there are no allegations of any falsification of accounts or

other commercial misdemeanor and, in fact, it could not

have been such as the petitioners were not in control of

the management of the Bank. It is the private

respondents, who were in control of the management of

the Bank and the petitioners succeeded in the elections.

_____________________________________________________________________________________________

14. Prima facie, thus, the pleas raised in the appeal by the

petitioners needed examination and had some merit and

the balance of convenience was in favour of continuation of

that arrangement of the elected representatives running

the Bank subject to certain terms and conditions, which

could have been imposed by the Tribunal. There would be

an irreparable loss and injury if a fresh election was held

and even if an Administrator was appointed despite having

succeeded in the elections and shown a prima facie case to

challenge the Award, the petitioners would be out of the

management of the Bank.

15. We are, thus, of the considered view that the impugned

order is liable to be set aside with the following directions:

(i) The petitioners would continue in the

management of the Co-operative Bank and there

is no need for the appointment of the

Administrator or holding of fresh elections pending

consideration of the appeal.

(ii) The petitioners will not enter into any fresh

contracts or incur any liability other than in usual

course of business during the pendency of the

appeal.

(iii) The Tribunal having fixed the date of 03.01.2011

would proceed to hear the appeal finally even if

the private respondents fail to avail of the

opportunity to file replies. We may note that the

_____________________________________________________________________________________________

proceedings before the Tribunal being in the

nature of the appeal, there is hardly any reason

for a reply to be filed.

16. The writ petitions are accordingly allowed leaving the

parties to bear their own costs.

17. Needless to say, any observations made by us in this Order

are only prima facie in nature for purposes of consideration

of the interim order pending consideration of the appeal

and would not in any manner affect the final outcome

before the Tribunal.

SANJAY KISHAN KAUL, J.

November 19, 2010                                       VALMIKI J. MEHTA, J.
madan

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