MCS ACT RULING BY BOMBAY HIGH COURT - MEMBER CANT BE EXPELLED WITHOUT DUE OPPORTUNITY - MAJORITY CAN'T DECIDE MINIROTY''S FATE WITHOUT FAIR HEARING
Maharasthra Cooperative Societies – Expulsion of Members – Bombay High Court Ruling 5Mar15
Cites 2 docs
Bombay High Court
Pravin Ramji Alias Priti P. Shah vs State Of Maharashtra
And 4 Others on 5 March, 2015
Bench: Anoop V. Mohta
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IN
THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL
JURISDICTION
WRIT PETITION
NO. 2840 OF 2008
Mrs. Pravina Ramji
alias Priti P. Shah,
at present
Residing at 6/C, Vaibhav
Building,
"A" Wing, 140, S.V. Road,
Vile Parle (West),
Mumbai-400 056.
....Petitioner.
Vs.
1 State of Maharashtra
Through
its Co-operation Department,
Mantralaya, Bombay 400 032.
2 Shri Patangrao Kadam,
The
Hon'ble Minister for Co-operation,
Mantralaya, Bombay 400 032.
3 Divisional Joint Registrar,
Co-operative Societies, Malhotra House,
6th
floor, Fort, Bombay 400 001.
4 Assistant Registrar, 'F/N' Ward,
Co-operative Societies, Malhotra House,
6th
floor, Fort, Bombay 400 001.
5 The Sion Kamgar Co-operative Housing
Society
Ltd., 126, Bhandarwada,
Sion
(East), Mumbai 400 022.
....Respondents.
Mr. Piyush M. Shah
a/w Mr. M.K. Tanna for the Petitioner.
Mr. R.R.Bhosale,
AGP for Respondent Nos. 1, 3 and 4.
Mr. R.S. Tripathi
for Respondent No.5.
WITH
WRIT PETITION
NO. 2838 OF 2008
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George
D'Souza ....Petitioner.
Vs.
State of
Maharashtra & Ors.
....Respondents.
WITH
WRIT PETITION NO. 2755 OF 2008
Jyotsna V. Shah
& Ors. ....Petitioners.
Vs.
State of
Maharashtra & Ors.
....Respondents.
WITH
WRIT PETITION NO. 2854 OF 2008
Vijesh P.
Shah ig ....Petitioner.
Vs.
State of
Maharashtra & Ors.
....Respondents.
Mr. P.M. Shah a/w
Mr. M.K. Tanna for the Petitioner.
Mr. R.R.Bhosale,
AGP for Respondent Nos. 1, 3 and 4.
Mr. R.S. Tripathi
for Respondent No.5.
WITH
WRIT PETITION NO. 2797 OF 2008
Dina R. Shah alias
Dina M. Daxini
....Petitioner.
Vs.
State of
Maharashtra & Ors.
....Respondents.
WITH
WRIT PETITION NO. 2839 OF 2008
Sunil Shivji
....Petitioner.
Vs.
State of
Maharashtra & Ors.
....Respondents.
Mr. P.M. Shah a/w
Mr. M.K. Tanna for the Petitioner.
Mr. Milind More,
AGP for Respondent Nos. 1, 3 and 4.
Mr. R.S. Tripathi
for Respondent No.5.
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CORAM:- ANOOP V. MOHTA, J.
DATE :- 5 MARCH 2015.
ORAL JUDGMENT:-
Taken out from the final hearing board. Heard finally by
consent of the parties.
2 By this common Judgment, I am inclined to dispose of all
these Writ Petitions filed by the members of Respondent No.5 Society, who were
expelled from the membership and the said decision of the Society was approved
under Section 35 of the Maharashtra Co-
operative Societies Act, 1960 (for short, the MCS Act). It
is further confirmed by the Appellate Authorities, therefore, all these Writ
Petitions.
3 There is no serious dispute to the fact that the
Petitioners become members of Respondent No.5-Society by paying necessary and
requisite charges towards the entrance fees, share money, donation etc. and in
pursuance to that, their names were duly recorded in "I" &
"J" Register of the Society some time in the year 1979-80. Respondent
No.5-Society entered into the Development Agreement. The ssm 4
3-wp2840.08gp-judgment.sxw Petitioners' names were included in the list of
members of the Society, annexed to agreement dated 31 March 1981 itself. The
respective Petitioners made requisite payment to the Developer/Contractor
towards the construction cost of the flats. The same was even confirmed by the
Society on 30 March 1984. Further payments were also made when actual
construction of building No.2 commenced.
Because of the dispute between the members of Respondent
No.5 and the Developer/Contractor, the Petitioners filed Disputes in the year
1987 against the Society. On the date of impugned orders, those disputes were
pending. The Society, even withdrew the Appeals challenging injunction order
dated 30 May 1987 against them from dispossessing the Petitioners from the flat
alloted. That was done in the year 1990.
4 The Society, as stated, illegally and without following
due procedure in the year 1994, deleted the names of the Petitioners from the
membership list and records and created third party membership rights. The
Petitioners, therefore, lodged a complaint in the year 2000 and an inquiry was
held under Section 83 of the MCS Act. It was held by the Enquiry Officer on 24
September 2001, that this action/transfer ssm 5 3-wp2840.08gp-judgment.sxw
of membership, including of all the Petitioners, were illegal and required a
corrective step. The election disputes were also pending at the relevant time.
5 In the Managing Committee meeting of the Society dated 31
July 2005, the issue of expulsion of the Petitioners was considered.
On 4 October 2005, the requisite notices were stated to be
issued to the Petitioners on the old and incomplete addresses. On the same day,
the paper publication in two newspapers "Nav Shakti" and "Free
Press Journal" were also issued. The statement is made by the learned
counsel appearing for the Petitioners, on instructions, that those two
newspapers were never subscribed by them and they never read those two papers, at
the relevant time and till this date also. The notices were then again sought
to be served by courier services on 19 October 2005. The packets addressed to
the Petitioners referring to notice dated 4 October 2005, returned unserved
with remarks "require building name, Plot Nos., short and insufficient
address etc.". The fact of return of those letters, is not in dispute or
at least there is no further material to justify that the Society, before
taking further action, duly served the requisite notices of membership
expulsion. In thessm 6 3-wp2840.08gp-judgment.sxw Special General Body Meeting
of Society dated 5 November 2005, therefore, the Petitioners, for want of
service/notice/communication not appeared and/or participated. In the Special
General Body Meeting dated 5 November 2005, it is stated that one member Vipul
Dharod, the Petitioner in Writ Petition No. 2855 of 2008, was present at about
11.10 a.m. The reason for his attendance on that date, in any way, not
sufficient to deny and/or overlook the factual situation of non-receipt and/or
non-service of requisite notices, as recorded above.
All these Petitioners case, who are expelled from membership
based upon the mandatory unserved notices, in my view, therefore, need to be
tested in accordance with law.
6 Admittedly, in the General Body Meeting, the Society
though noted that the Petitioners could not be served for want of correct and
detailed address, and as the Society forwarded the notices on the basis of
pending record of litigations and as the Society did not have any other correct
address and as they issued public notices in two newspapers on 4 October 2005,
and as all those members inspite of above publication and the issuance of
notices, were failed to appeared and put their cases and therefore, proceed to
expel them ssm 7 3-wp2840.08gp-judgment.sxw and passed the resolution
accordingly by stating it to be unauthorized membership by treating them as an
"unauthorized members" after so many years.
7 Strikingly, when the Applications were forwarded as
contemplated under Section 35 of the MCS Act, the Assistant Registrar, also
accepted the resolution and approved the action of expulsion of membership, by
further observing that "the Respondent neither remained present for the
said meeting nor submitted her say in writing". Various comments were also
made by accepting the contentions of the Society that they were unauthorized
members of the Society. The Appeals preferred by the Appellants-Petitioners
under Section 152 of the MCS Act were also dismissed by order dated 2 January
2007 by the Divisional Joint Registrar, Co-operative Societies, so also the
Revisions under Section 154 of the MCS Act.
8 Section 35 of the MCS Act is reproduced as under:-
"35. Expulsion of members (1) A society may, by
resolution passed 1[by a majority of not less than three-fourths] of the
members entitled to vote who are present at a general meeting held for the
purpose expel a member for acts ssm 8 3-wp2840.08gp-judgment.sxw which are
detrimental to the interest or proper working of the society:
Provided that, no resolution shall be valid, unless the
member concerned is given an opportunity of representing his case to the
general body, and no resolution shall be effective unless it is approved by the
Registrar.
(2) No member of a society who has been expelled under the
foregoing sub-section shall be eligible for re-admission as a member of that
society, or for admission as a member of any other society, for a period of one
year from the date of such expulsion:
Provided that, the Registrar may, on an application by the
society and in special circumstances, sanction the re-admission or admission,
within the said period, of any such member as a member of the said society or
of any other society, as the case may be".
9 Relevant Rules 28 and 29 of the Maharashtra Co-operative
Societies Rules, 1961 (for short, "the MCS Rules") read thus:-
"28. Expulsion of Members Any member who has been
persistently defaulting payment of his dues or has been failing to comply with
the provisions of the by-laws regarding sales of his produce through the
society, or other matters in connection with his dealings with the society or
who, in the opinion of the committee, has brought disrepute to the society or
has done other acts detrimental to the interest or proper working of the
society 2[or for the reasons mentioned in section 26 of the Act,] may, in
accordance with the provisions of sub-section (1) of Section 35, be expelled
from the society. Expulsion from membership may involve ssm 9 3-wp2840.08gp-judgment.sxw
forfeiture of shares held by the member.
29. Procedure for expulsion of members (1) Where any member
of a society proposes to bring a resolution for expulsion of any other member,
he shall give a written notice thereof to the Chairman of the society. On
receipt of notice or when the committee itself decides to bring in such
resolution, the consideration of such resolution shall be included in the
agenda for the next 1[general body meetings] and a notice thereof shall be
given to the member against whom such resolution is proposed to be brought,
calling upon him to be present at the 1[general body meetings] to be held not
earlier than a period of one month from the date of such notice and to show
cause against expulsion to the general body of members. After hearing the
member, if present, or after taking into consideration any written
representation which he might have sent, the general body of members shall
proceed to consider the resolution.
(2) When a resolution passed in accordance with sub-rule (1)
is sent to the Registrar 2[along with application, the Registrar may consider
the resolution and after due inquiry and giving reasonable opportunity of being
heard to such member give his decision within ninety days from the date of
receipt of application and communicate the same to the society and the member
concerned.] The resolution shall be effective from the date of such
approval."
10 The aspect of their membership claim, based upon the
respective Petitioners case and contentions, as they were members of the newly
formed Society in the year 1979-80, why shares were not ssm 10
3-wp2840.08gp-judgment.sxw alloted and why their names were deleted from the
original registers and what is the justification for treating such members as
"unauthorized members", in my view, just cannot be gone into the writ
jurisdiction for the first time, at this stage of the proceedings, basically
for the reasons that admittedly, in the Special General Body Meeting, they were
not present and as recorded above, for want of legal and proper service of
notices, they unable to participate and put their case to such allegations. The
Society also, as recorded, not served the Petitioners before taking such
drastic action behind their back. The expulsion of members itself contemplate the
existence of membership.
The unilateral observation treating them as
"unauthorized members", again without giving opportunity to them, in
my view, is in a clear breach of provisions of settled law, apart from a basic
principle of natural justice. The decision, therefore, so taken by the Society,
though stated to be unanimous decision, in view of above position, is
unacceptable. The majority decision of any Society needs to be respected only
if the Society and/or its Managing Committee takes appropriate decision by
giving opportunity to the person concerned.
The opportunity and the procedure need to be followed as
prescribed and provided including written notices and the opportunity to
put ssm 11 3-wp2840.08gp-judgment.sxw their case, are missing in the present
cases. This, in my view, goes to the root of the matter. It is clearly in
breach of the provisions of law.
Merely because, such action/majority decision of the
Society, inspite of above position, approved by the Authority under Section 35
of the MCS Act and further confirmed by the Appellate authorities, cannot be
the reason to accept the expulsion action initiated by the Society in such
fashion.
All the Authorities, in my view, committed jurisdictional
error by confirming such expulsion, which was without following the due
procedure of law and/or breach of principle of natural justice.
The whole procedure, in my view, adopted by the Society and
confirmed by the concerned Authorities are illegal, impermissible and contrary
to the law and definitely affect the rights of the Petitioners and also causes
great injustice and hardship to them.
12 Having noted above, I see a case is made out by the
Petitioners to interfere with the orders so passed by the Authorities.
However, for the reasons so stated above, I am inclined to
remand all the matters before the Assistant Registrar, Co-operative Society
being ssm 12 3-wp2840.08gp-judgment.sxw the first Authority, who has given
approval to the resolution passed by the Society, as contemplated under Section
35 of the MCS Act.
13 The learned counsel appearing for the Society relied upon
common judgment dated 19 August 2013 passed in disputes between the respective
parties, which was referred earlier and pending at the relevant time. For the
reasons so recorded above, as all the points are kept open, and even while
admitting the matters, this Court permitted the Petitioners to initiate the
proceedings in accordance with law, for any other aspects if any, I am inclined
to keep all points open. The subsequent events, in no way sufficient to decide
the issue so raised about the membership. Therefore, there is no point to deal
with the same, for the submission so raised by the learned counsel appearing
for the Petitioners, and for the reasons so recorded above. For the above reasons
itself, impugned orders dated 19 March 2008, 2 January 2007 and 22 February
2006, are required to be quashed and set aside.
14 It is necessary to note that though served, Respondent
No.5 Society not controverted the averments so made in ssm 13 3-wp2840.08gp-judgment.sxw
these Petitions, till this date. The matters were admitted in the year 2008.
Called out from the final hearing from time to time on 25 February 2015, 26
February 2015, 27 February 2015 and today again.
The learned counsel/Advocate who appeared for Respondent
No.5-
Society even at the time of admission and till this date,
inspite of repeated communications, unable to get instructions. The Society, if
decided not to contest and/or not to participate, considering the reasons so
recorded above, I see no case is made out to grant further time to the Society.
However, after hearing the learned counsel /Advocate appearing for Respondent
No.5-Society and for the reasons so recorded above, I am inclined to dispose of
all these Petitions, as the issue of membership of Petitioners is pending since
2005. Their entitlement needs to be taken care of at the earliest. However, I
am inclined to keep all points open, if they want (both the parties), even
permitting them to add subsequent material and evidence to justify their rival
cases.
15 Therefore, the following order:-
O R D E R
a) Impugned orders dated 19 March 2008, 2
January
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2007 and 22 February 2006, are quashed and set aside.
b) All the Petitions are remanded back to the Assistant
Registrar, Co-operative Societies 'F/N' Ward, Mumbai, for re-consideration by
restoring the respective Applications filed by the Society-
Respondent No.5 under Section 35 of the MCS Act.
c) The parties are at liberty to file additional affidavit
and/or material to justify their rival cases, if any.
The Assistant Registrar, Co-operative Societies
"F/N"
Ward, Mumbai to permit the same and pass order by giving
equal opportunity to all the parties, as early as, possible preferably within
six months from today.
d) All points are kept open, for all the parties.
e) All the Writ Petitions are accordingly allowed.
f) Rule made absolute accordingly.
g) There shall be no order as to costs.
(ANOOP V. MOHTA, J.)
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