Telangana High Court

Deputy Registrar Of Cooperative ... vs Rayala Venkata Seshagiri Rao on 19 April, 2024

Author: Nagesh Bheemapaka

Bench: Nagesh Bheemapaka

          HON'BLE SRI JUSTICE NAGESH BHEEMAPAKA

          WRIT PETITION No. 5242 AND 5308 OF 2024

     COMMON ORDER :

The Order dated 08.02.2024 of the Telangana

Cooperative Tribunal at Warangal (for short, 'the Tribunal') in I.A.

No. 5 of 2024 in C.T.A.No. 1 of 2024 is under challenge in both

these Writ Petitions. Writ Petition No. 5242 of 2024 was filed by

the Vice-President and in-charge President of Primary Agricultural

Cooperative Society, Gangadevipadu, Tallada Mandal and Writ

Petition No. 5308 of 2024 was filed by the Deputy Registrar of

Cooperative Societies. Hence, they are taken up together for

hearing and disposal with the consent of the learned counsel.

2. For convenience sake, parties arrayed in Writ

Petition No. 5242 of 2024 are taken for reference.

3. Through the order impugned, the Tribunal

temporarily suspended the proceedings Rc.No. 5/2024-C, dated

23.01.2024 by which, the Deputy Registrar of Cooperative

Societies, the 3rd respondent, disqualified and removed the 2nd

respondent as Managing Committee Member and President of the

Primary Agricultural Cooperative Credit Society Limited,

Gangadevipadu of Thallada Mandal (for short 'the Society').

4. Coming to the facts of the case, the 4th respondent -

Chief Executive Officer, District Cooperative

Central Bank Limited, Khammam (for short, 'the bank') vide letter

dated 01.01.2024 informed that the 2nd respondent obtained

vehicle loan of Rs.27 lacs from the bank on 24.10.2018 and

defaulted in payment, which resulted in initiation of legal action

and issuance of certificate under Section 71 of the Telangana

Cooperative Societies Act, 1964 (for short, 'Act') dated 20.01.2023.

The total overdue amount as on 31.12.2023 is to the tune of

Rs.25,93,569/- and pending recovery, it is clear violation of

Section 21A(1)(b) and (c) of the Act, therefore, and he is liable for

disqualification as a Managing Committee Member. Hence, notice

was issued on 09.01.2024, for which, the 2nd respondent is said to

have submitted explanation on 18.01.2024 stating that he

remitted total loan amount due with interest, ie. Rs.23,22,100/-

vide challan 3 dated 18.01.2024 of the DCCS Limited, Khammam

duly enclosing thereto no due certificate.

While so, it is stated, by order dated 26.01.2024,

the 3rd respondent conferred the powers of the President on

petitioner - Vice President, after the order of disqualification of the

2nd respondent was passed on 23.01.2024.

5. Learned Additional Advocate General appearing for

petitioner in Writ Petition No. 5308 of 2024 as well as Sri P.V.

Ramana, learned counsel for petitioner in Writ Petition No. 5242 of

2024 submit that though the 2nd respondent remitted the overdue

amount to the bank, it is still violation of Section 21A(1)(b) and (c)

and is attracted to take action from the date of overdue as he

became overdue for the period of two years and ten months i.e. on

24.04.2020. According to them, disqualification comes into effect

from the date on which he incurred disqualification and not from

the date of order. To fortify the said contention, reliance is placed

on the judgment of this Court in The Pulla Co-op. Rural Bank

Ltd. v. B. Ram Mohan Rao 1.

Another aspect which was canvassed is that the 2nd

respondent suppressed the factum of maintaining parallel remedy

before this Court much before filing the C.T.A. before the Tribunal,

to have personal gain. He filed Writ Petition No. 2190 of 2024 to

set aside the order dated 23.01.2024, which this Court heard and

reserved for orders; meanwhile, he approached the Tribunal by

filing C.T.A. No. 1 of 2024 and I.A. No. 5 of 2024, suppressing the

fact of filing the Writ Petition. The Tribunal on 01.02.2024 passed

the interim order suspending the order dated 23.01.2024. The 2nd

respondent thereafter quietly withdrew Writ Petition on

1998(6) ALD 661

02.02.2024. Though the Deputy Registrar of Cooperative Society

filed counter and vacate stay petition, without considering the

facts pleaded therein, the Tribunal erroneously allowed I.A.No. 5 of

2024 vide order impugned holding that Section 21-A(1)(c) is not

applicable to the case of the 2nd respondent. Both the learned

counsel relied on the judgment of the Supreme Court in Kishore

Samrite v. State of Uttar Pradesh 2 and contend that no litigant

can play 'hide and seek' with the Courts or adopt 'pick and

choose'. True facts ought to be disclosed as the Court knows law,

but not facts.

Additionally, Sri P.V. Ramana argued that the 2nd

respondent filed Appeal for setting aside the disqualification order

dated 23.01.2024 and the one dated 26.01.2024 through which,

petitioner was inducted into the position of President. In the cause

title of the Appeal, one Kowthala Srinivasa Rao was shown as Vice

- Chairman, PACS, in fact, no such person is acting as Vice-

Chairman; and knowing fully well that he has nothing do to with

the Society and without impleading the petitioner who was in-

charge of President, as party, the Appeal was filed. It is submitted

that when petitioner filed implead petition before the Tribunal,

objection as to the maintainability was taken by the office.

(2013) 2 SCC 398

6. The 2nd respondent filed the counter-affidavit in

Writ Petition No. 5308 of 2024. While admitting borrowal of vehicle

loan on 24.10.2018 from the bank, submits that repayment period

should end on 24.10.2023 but not on 24.01.2023 as shown in the

account statement. It is stated that he was also not spared from

Covid-19 and was hospitalised. As per the loan account statement

for the period 01.04.2018 to 22.02.2024, loan repayment should

end on 23.10.2023. Since the RBI issued moratorium orders

extending repayment schedules by three months, payment should

end on 24.01.2024 and he made payment on 18.01.2024 i.e.

before the end of loan repayment period.

7. Sri S. Ramananda Swamy, learned counsel for the

2nd respondent submits that Section 21-A(b) literally means that

one should not be in default as on the date of disqualification and

the default that occurred prior to issue of disqualification orders

gets completely cured if loan is discharged prior to the date of

order of disqualification. According to him, interpreting this

Section, this Court in Arepalli Satyanarayana v. Deputy

Registrar of Cooperative Societies, Bhimavaram 3 ruled out

that disqualification ceases the moment the amount is paid and

subsequently, no order to disqualify him can be passed. He

further submitted that as on the date of the disqualification order

1996(2) ALD 415

dated 23.01.2024, no amount is pending recovery, therefore,

Section 21-A(1)(c) is not applicable. As regards suppression of

facts as alleged by the learned Advocate General and Sri P.V.

Ramana, it is submitted that when the counsel for the 2nd

respondent brought to the notice of the Tribunal about filing of the

earlier Writ Petition, the Tribunal set aside the docket order dated

01.02.2024 and initiated fresh proceedings only after an affidavit

was filed before it about withdrawal of Writ Petition duly giving

ample opportunity to both sides to produce their documents and

the above facts were recorded by the Tribunal in its order dated

08.02.2024. Learned counsel strongly submits that Section

21-A(1)(b) and (c) is applicable only when recovery is pending as

on the date of disqualification order, but, in the instant case, the

said order was issued on 23.01.2024 after the entire loan amount

was paid on 18.01.2024. Finally, he argues that impugned order is

an off-shoot of the political vendetta. Deputy Registrar of

Cooperative Societies tried to remove the 2nd respondent illegally

by issuing orders under Section 32-B by devolving the powers of

President on Vice-President on 26.01.2024 which happens to be a

national holiday. According to the learned counsel, Section 32-B

should be invoked only when the President fails to convene

Managing Committee meeting for more than three months or he is

away from the head quarters for more than three months and if he

is incapacitated for more than three months. In the case on hand,

the 2nd respondent never violated the said provision.

8. Heard learned Government Pleader for Cooperation

and Sri Qureshi, learned counsel for the 2nd respondent.

9. After hearing learned counsel on either side and

perusing the record, the points that fell for considerations are:

1) whether disqualification should be reckoned from the date when

disqualification was incurred or from the date when the order of

disqualification was passed; and 2) whether the 2nd respondent

suppressed the factum of filing the earlier Writ Petition before the

Tribunal, if so, whether Writ Petitions are liable to be allowed on

that ground?

10. For deciding point No.1, it is better to reproduce

hereunder Section 24-A(1)(b)(c):

Section 21-A(1): No person shall be eligible for being chosen as, and for being, a member of the committee, if he -

.......

(b) is in default in the payment of any amount due in cash or kind to the society or any other society or stood as guarantor society /Co-

executants to any member who committed default, for said period as may be prescribed or is a delegate of a society which is defunct or which is in default as aforesaid;

Rule 24: Disqualification for membership of committee: (1) No person shall be eligible for being chosen or continuing as a President of a Primary Cooperative Society or as a member of the Committee of any society, if he

a).....

b) is in default to the society or to any other Society for such period as is specified in the bye-laws of the Society concerned, or in any case for a period exceeding three months, or is a defaulter to the Society or to any other Society, or is a delegate of a Society which is defunct or is in default for a period exceeding three months.

Rule 75: Without prejudice to the generality of other Telangana Cooperative Societies Rules, the special rule applicable to the Cooperative Credit Societies covered under Chapter XIII B is as follows:

1.....

2.....

3......

4. Disqualification of Membership of Committee: - The provisions of Rule 24 shall apply to all Cooperative Credit Societies, with the following change: The period of default shall be reckoned as one year instead of three months."

11. A conjoint reading of Section 21-A(1)(c) read with

Rules 75 and 24A(1)(b) of the Rules makes it obvious that no

person against whom any amount due under a decree, decision

award or order is pending recovery under this Act is eligible for

being a member of the committee and the period of default shall

be reckoned as one year.

12. In this regard, the statement of loan account of the

2nd respondent filed by the Deputy Registrar of Cooperative

Societies at material pages 80 to 82 of Writ Petition No. 5308 of

2024 discloses that opening balance as on 24.10.2018 was

Rs.27,00,000/-, he made payments till 17.03.2021 and

thereafter, committed default and only on 18.01.2024 he cleared

the due amount. The default period is for more than one year

which, no doubt, attracts the provision under Rule 24(1)(b) and

75, therefore, the 2nd respondent is liable for disqualification as

per Section 24A(1)(c) of the Act. From which date is the

question now to be decided.

13. In Pulla Co-op. Rural Bank Limited's case

(supra), this Court following the Division Bench judgments in R.

Venkata Ranga Reddy v. N. Muralidhar Rao 4 and Arepalli

Satyanarayana's case (supra), held that 'Rule 24(1)(b)

provides that no person shall be eligible for being chosen as a

President of a Primary Cooperative Society or as a member of

the Committee of any Society, if he is in default to the Society or

to any other Society for such period as is specified in the bye-

laws of the Society concerned, or in any case for a period

exceeding three months, or is a default to the Society or to any

other Society. There is no factual controversy between the

AIR 1983 AP 83

parties that under the bye-laws of the Society, the loan should

have been repaid on or before 16.10.1996. It is also admitted

position that the loan was repaid by other guarantor, namely

one Sri Anjaenyulu on 13.10.1986 i.e. after the prescribed

period. If this is the undisputed factual matrix of the case by

force of the provisions of Rule 24(1) of the Rules and also

binding decisions of the Division Benches of this Court in P.

Venkata Subba Reddy v. K. Anjaneyulu (supra) and R.

Venkata Ranga Reddy v. N. Muralidhar Rao (supra), the first

respondent incurred disqualification with effect from

17.10.1996 and he was statutorily liable to be declared as

disqualified under Rule 25 of the Rules. Sub-rule (4) of Rule 24

makes it abundantly clear that when the Registrar passes an

order of disqualification after giving an opportunity to the

member concerned, that would come into effect with effect from

the date on which he incurred disqualification as envisaged

under the provisions of Rule 24(1) and not from the date of the

order. To the same effect are the above two decisions of the

Division Benches of this Court. In that view of the matter, with

respect, I should state that the opinion expressed by the learned

Single Judge in Arepally Satyanarayana v. Deputy Registrar of

Cooperative Societies, Bhimavaram (supra) is not a good law,

and per incuriam. In fact, the decisions of the Division Benches

are not considered in that decision.'

14. In view of the above-said legal positon, this Court is

of the view that disqualification should be incurred from the

date of default ie. from April 2021. The Tribunal also while

quoting the above-extracted provision of law, observed that in

the light of the legal position, it becomes the responsibility of the

1st respondent to show that period of default committed was for

a period exceeding one year; in order to show the same,

statement of account was not produced. It further observed that

if petitioner therein allegedly committed default since April

2021, why the bank kept quiet till January 2024 without

proceeding to avail the remedy i.e. seizure of subject vehicle for

such a long period. Further, as per the law under Section 21-

A(1)(b) of the Act read with Rules 75 and 24, if the period of

default exceeds one year, the membership of the borrower itself

shall be disqualified, to this effect, whether the 2nd respondent

got knowledge or not, whether the terms and conditions of loan

agreement reflected this information to the borrower of loan or

not, whether the bank before completing alleged one year

default period, issued any notice to the 2nd respondent to this

effect or not. It is fathom to note that the Tribunal ought not to

have recorded such observations for, the 2nd respondent being

the Member and Chairman of the Society at the relevant point of

time, is expected to know the repercussions in the event of

default and there is no question of explaining him the

consequences thereof. Further, the bank initiated legal action by

issuing certificate under Section 71 of the Act on 20.01.2023

itself, however, the 2nd respondent did not pay the amount. The

bank waited till the loan period is over and thereafter, issued

notice on 09.01.2024. Hence, the bona fides of bank cannot be

doubted and the mala fides attributed by the 2nd respondent

cannot be accepted.

15. As regards the other contention of

suppression of facts, the Tribunal recorded that 'learned

counsel appeared for the 2nd respondent before the Tribunal

himself admitted that his client approached the High Court

much before filing the C.T.A. before the Tribunal. Before filing

the Appeal, he fairly conceded that for the same relief, both

cases were filed and the party did not inform him about Writ

Petition No. 2190 of 2024, hence, he did not refer the same in

case papers filed before the Tribunal. He further submitted that

the party was suggested to approach the Tribunal first locally,

that he gave instructions to his learned advocate not to press

the said Writ Petition. That his party with all bona fides

believed that said Writ Petition was dismissed as not pressed

and that was the reason why he did not think it is necessary to

inform learned Advocate. Upon admission by the learned

advocate that Writ Petition No. 2190 of 2024 was pending by the

date the Tribunal passed order dated 01.02.2024, without

knowledge of pending proceeding before the High Court. Upon

this single ground, this Court is setting aside the docket order

dated 01.02.2024'. Once the interim order obtained duly

suppressing the facts, was set aside, the Tribunal ought not to

have taken up I.A.No.5 of 2024 and passed the order impugned.

In view of the admission of counsel appeared on behalf of the 1st

respondent itself, the justification of the Tribunal to suspend

the order dated 01.02.2024 and again passing the impugned

order 08.02.2024 cannot be appreciated.

16. The Supreme Court in Kishore Samrite's

case (supra) dealt with the issue 'abuse of process of court' in

detail and held that......

32. The cases of abuse of process of court and such allied matters have been arising before the courts consistently. This Court has had many occasions where it dealt with the cases of this kind and it has clearly stated the principles that would govern the obligations of a litigant while approaching the court for redressal of any grievance and the consequences of abuse of process of court. We may recapitulate and state some of the principles. It is difficult to state such principles exhaustively and with such accuracy that would uniformly apply to a variety of cases. These are:

32.1. Courts have, over the centuries, frowned upon litigants who, with intent to deceive and mislead the courts, initiated proceedings without full disclosure of facts and came to the courts with "unclean hands". Courts have held that such

litigants are neither entitled to be heard on the merits of the case nor are entitled to any relief.

32.2. The people, who approach the court for relief on an ex parte statement, are under a contract with the court that they would state the whole case fully and fairly to the court and where the litigant has broken such faith, the discretion of the court cannot be exercised in favour of such a litigant.

32.3. The obligation to approach the court with clean hands is an absolute obligation and has repeatedly been reiterated by this Court.

32.4. Quests for personal gains have become so intense that those involved in litigation do not hesitate to take shelter of falsehood and misrepresent and suppress facts in the court proceedings. Materialism, opportunism and malicious intent have overshadowed the old ethos of litigative values for small gains.

32.5. A litigant who attempts to pollute the stream of justice or who touches the pure fountain of justice with tainted hands is not entitled to any relief, interim or final.

32.6. The court must ensure that its process is not abused and in order to prevent abuse of process of court, it would be justified even in insisting on furnishing of security and in cases of serious abuse, the court would be duty-bound to impose heavy costs.

32.7. Wherever a public interest is invoked, the court must examine the petition carefully to ensure that there is genuine public interest involved. The stream of justice should not be allowed to be polluted by unscrupulous litigants.

32.8. The court, especially the Supreme Court, has to maintain the strictest vigilance over the abuse of process of court and ordinarily meddlesome bystanders should not be granted "visa". Many societal pollutants create new problems of unredressed grievances and the court should endure to take cases where the justice of the lis well justifies it. (Refer : Dalip

Singh v. State of U.P. [(2010) 2 SCC 114 : (2010) 1 SCC (Civ) 324] , Amar Singh v. Union of India [(2011) 7 SCC 69 : (2011) 3 SCC (Civ) 560] and State of Uttaranchal v. Balwant Singh Chaufal [(2010) 3 SCC 402 : (2010) 2 SCC (Cri) 81 : (2010) 1 SCC (L&S) 807] .)

17. From the law laid down by the Supreme Court in

the above judgment and from the observations made by the

Tribunal above, it is clear that the 2nd respondent has not

approached the Tribunal with clean hands and he obtained the

order by misrepresenting the facts.

18. Yet another contention Sri P.V. Ramana, learned

counsel for petitioner in Writ Petition No. 5242 of 2024 raised is

that in the Appeal before the Tribunal, the name of the 6th

respondent herein was shown as Vice-Chairman, and in fact, no

such person is acting as Vice-Chairman of the Society.

According to him, petitioner was the affected person as he was

conferred with the powers of the President of the Society to

discharge duties as such by order dated 26.01.2024, but he was

not made as party. Sri A.M. Qureshi, learned Senior Counsel

appearing on behalf of the 2nd respondent submits that

petitioner has to establish that he has been deprived / denied of

a legal right and has sustained injury to any legally protected

interest. The learned Senior Counsel relied on the judgment of

the Hon'ble Supreme Court in Ravi Yashwant Bhor v. District

Collector, Raigad 5, wherein it has been held as under:

" The complainant has to establish that he has been deprived of or denied of a legal right and he has sustained injury to any legally protected interest. In case he has no legal peg for a justiciable claim to hang on, he cannot be heard as a party in a lis. A fanciful or sentimental grievance may not be sufficient to confer a locus standi to sue upon the individual. There must be injuria or a legal grievance which can be appreciated and not a stat pro ratione voluntas reasons i.e. a claim devoid of reasons.

Under the garb of being a necessary party, a person cannot be permitted to make a case as that of general public interest. A person having a remote interest cannot be permitted to become a party in the lis, as the person who wants to become a party in a case, has to establish that he has a proprietary right which has been or is threatened to be violated, for the reason that a legal injury creates a remedial right in the injured person. A person cannot be heard as a party unless he answers the description of aggrieved party (Vide Adi Pherozshah Gandhi v. Advocate General of Maharashtra ((1970) 2 SCC 484), Jasbhai Motibhai Desai v. Roshan Kumar ((1976) 1 SCC 671, Maharaj Singh v. State of U.P. ((1977) 1 SCC 155, Ghulam Qadir v. Special Tribunal ((2002) 1 SCC 33 and Kabushiki Kaisha Toshiba v. Tosiba Appliances ((2008) 10 SCC