IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 8TH DAY OF AUGUST, 2019 BEFORE THE HON’BLE MR. JUSTICE ARAVIND KUMAR W.P.NOs.46144-46147/2011 C/W W.P.No.46148/2011(CS-RES) IN W.P. NOs.46144-46147/2011: BETWEEN:
1. SRI. R. NAGARAJ S/O LATE M. RAMU AGED ABOUT 44 YEARS PRIMARY MEMBER OF THE BHARAT ELECTRONICS AMBEEDKAR CO-OPERATIVE SOCIETY AND EMPLOYEE OF BEL FACTORY, STAFF NO.209163 REISIDING AT NO.49, B. NAGASANDRA YAMLUR POST BANGALORE-37.
2. SRI. HANUMANTHARAYAPPA V.T S/O LATE THIMMAIAH AGED ABOUT 60 YEARS PRIMARY MEMBER OF THE BHARAT ELECTRONICS AMBEDKAR CO-OPERATIVE SOCIETY EX EMPLOYEE OF BEL FACTORY STAFF NO.202676, R/AT NO.B-42 BEL COLONY, JALAHALLI, BANGALORE-13.
(VIDE COURT ORDER DATED:17.12.2017 P-2 IS DELETED) 3. SRI. SRIKRISHNA S/O ADIVAIAH M AGED ABOUT 36 YEARS PRIMARY MEMBER OF THE BHARAT ELECTRONICS AMBEDKAR CO-OPERATIVE SOCIETY AND EMPLOYEE OF BEL FACTORY STAFF NO.213305 RESIDING AT NO.159/2 4TH BLOCK, BYRAPPA GARDEN R.C. PURA, JALAHALLI BANGALORE – 13.
4. SRI. H.N. MURTHY S/O J.M. HANUMAIAH AGED ABOUT 45 YEARS PRIMARY MEMBER OF THE BHARAT ELECTRONICS AMBEDKAR CO-OPERATIVE SOCIETY EX-EMPLOYEE OF BEL FACTORY STAFF NO.206122, RESIDING AT NO.57/8 3RD CROSS, JALAHALLI BANGALORE – 13.
... PETITIONERS (BY SRI. M. VEERABHADRAIAH, ADVOCATE) AND:
1. THE PRINCIPAL SECRETARY DEPARTMENT OF CO OPERATION M.S. BUILDING, VEDHANA VEEDI BANGALORE – 01.
2. THE REGISTRAR CO-OPERATIVE SOCIETY, STATE OF KARNATAKA ALI-ASKER ROAD, BANGALORE – 01.
3. THE ADDL. REGISTRAR OF CO-OP SOCIETY IN KARNATAKA ALI-ASKER ROAD, BANGALORE -01.
4. THE JOINT REGISTRAR OF CO-OPERATIVE SOCITIES BANGALORE REGION GMC BANK BUILDING PAMPA MAHAKAVI ROAD CHAMARAJPET BANGALORE – 560 018.
5. BHARAT ELECTRONICS AMBEDKAR CO-OPERATIVE SOCIETY LIMITED HAVING ITS REGISTERED OFFICE AT B.E.L. COLONY, JALAHALLI POST BANGALORE – 560 013 REPRESENTED BY ITS SECRETARY.
6. SRI. NAGARJUNACHARYA P STAFF NO.209001 AGED ABOUT 49 YEARS PRESIDENT OF BHARAT ELECTRONICS AMBEDKAR CO-OPERATIVE SOCIETY LIMITED HAVING ITS REGISTERED OFFICE AT B.E.L COLONY, JALAHALLI POST BANGALORE – 560 013.
7. SRI. AMRUTHRAJ K.M STAFF NO.207982 AGED ABOUT 46 YEARS VICE PRESIDENT OF BHARAT ELECTRONICS AMBEDKAR CO-OPERATIVE SOCIETY LIMITED HAVING ITS REGISTERED OFFICE AT B.E.L COLONY, JALAHALLI POST BANGALORE – 560 013.
8. SRI. SURESH G STAFF NO.208832 AGED ABOUT 48 YEARS TRESSURER OF BHARAT ELECTRONICS AMBEDKAR CO-OPERATIVE SOCIETY LIMITED, HAVING ITS REGISTERED OFFICE AT B.E.L COLONY, JALAHALLI POST BANGALORE – 560 013.
9. SRI. SHANKAR J.M STAFF NO.209529 AGED ABOUT 48 YEARS INTERNAL AUDITOR OF BHARAT ELECTRONICS AMBEDKAR CO-OPERATIVE SOCIETY LIMITED HAVING ITS REGISTERED OFFICE AT B.E.L COLONY, JALAHALLI POST BANGALORE – 560 013.
10. SRI. KARTHIK K STAFF NO.212445 AGED ABOUT 37 YEARS TRESURER OF BHARAT ELECTRONICS AMBEDKAR CO-OP SOCIETY LIMITED HAVING ITS REGISTERED OFFICE AT B.E.L COLONY, JALAHALLI POST BANGALORE – 560 013.
11. SRI. PALANI R STAFF NO.211684 AGED ABOUT 38 YEARS DIRECTOR OF BHARAT ELECTRONICS AMBEDKAR CO-OP SOCIETY LIMITED HAVING ITS REGISTERED OFFICE AT B.E.L COLONY, JALAHALLI POST BANGALORE – 560 013.
12. SRI. THIRUVANAKARASU V STAFF NO.211521 AGED ABOUT 40 YEARS DIRECTOR OF BHARAT ELECTRONICS AMBEDKAR CO-OP SOCIETY LIMITED HAVING ITS REGISTERED OFFICE AT B.E.L COLONY, JALAHALLI POST BANGALORE – 560 013.
13. SRI. RAVI M STAFF NO.209288 AGED ABOUT 52 YEARS DIRECTOR OF BHARAT ELECTRONICS AMBEDKAR CO-OP SOCIETY LIMITED HAVING ITS REGISTERED OFFICE AT B.E.L COLONY, JALAHALLI POST BANGALORE – 560 013.
14. SRI. RAMESH R STAFF NO.209372 AGED ABOUT 46 YEARS DIRECTOR OF BHARAT ELECTRONICS AMBEDKAR CO-OP SOCIETY LIMITED HAVING ITS REGISTERED OFFICE AT B.E.L COLONY, JALAHALLI POST BANGALORE – 560 013.
15. SRI. VIJAYA KUMAR H.K STAFF NO.208821 AGED ABOUT 47 YEARS DIRECTOR OF BHARAT ELECTRONICS AMBEDKAR CO-OP SOCIETY LIMITED HAVING ITS REGISTERED OFFICE AT B.E.L COLONY, JALAHALLI POST BANGALORE – 560 013.
16. SRI. RAGHAVENDRAN S STAFF NO.204586 AGED ABOUT 58 YEARS DIRECTOR OF BHARAT ELECTRONICS AMBEDKAR CO-OP SOCIETY LIMITED HAVING ITS REGISTERED OFFICE AT B.E.L COLONY, JALAHALLI POST BANGALORE – 560 013.
17. SRI. LAKSHMI NARAYANA STAFF NO.210059 AGED ABOUT 42 YEARS DIRECTOR OF BHARAT ELECTRONICS AMBEDKAR CO-OPERATIVE SOCIETY LIMITED, HAVING ITS REGISTERED OFFICE AT B.E.L COLONY, JALAHALLI POST BANGALORE – 560 013.
18. SMT. VIJAYALAKSHMI S STAFF NO.209201 AGED ABOUT 44 YEARS DIRECTOR OF BHARAT ELECTRONICS AMBEDKAR CO-OP SOCIETY LIMITED HAVING ITS REGISTERED OFFICE AT B.E.L COLONY, JALAHALLI POST BANGALORE – 560 013.
19. SRI. SUBRAMANYA C STAFF NO.204881 AGED ABOUT 57 YEARS DIRECTOR OF BHARAT ELECTRONICS AMBEDKAR CO-OP SOCIETY LIMITED, HAVING ITS REGISTERED OFFICE AT B.E.L COLONY, JALAHALLI POST BANGALORE – 560 013.
... RESPONDENTS (BY SRI. A.C. BALARAJ, HCGP FOR R-1 TO R-4; SRI. A. HANUMANTHAPPA, ADVOCATE FOR R-5; SRI. JAYAKUMAR S PATIL, SR. COUNSEL A/W SRI. G. CHANDRASHEKHARAIAH, ADVOATE FOR R-6, R-7, R-9, R-12 TO R-18;
SRI. K.S. ANUSUYADEVI, ADVOCATE FOR R-8, R-10 & R-11;
SRI. G.R. ANIL GOSH, ADVOCATE FOR R-19) THESE W.Ps. ARE FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DATED:01.10.2011 PASSED BY THE ADDL. REGISTRAR OF CO-OPERATIVE SOCIETY THE 3RD RESPONDENT AS PER ANNEXURE-A, AND THE ORDER DATED:28.01.2011 PASSED BY THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETY THE 4TH RESPONDENT AS PER ANNEXURE-H, CONSEQUENTLY DISQUALIFY THE 6-18TH RESPONDENT U/S 29C OF THE K.C.S.C. ACT AS PER THE RECOMMENDATION MADE BY THE ENQUIRY OFFICER IN ITS REPORT DATED:06.07.2010.
IN W.P. NO.46148/2011:
BETWEEN:
SRI. R. NAGARAJ S/O LATE M. RAMU AGED ABOUT 42 YEARS PRIMARY MEMBER OF THE BHARAT ELECTRONICS AMBEDKAR CO-OPERATIVE SOCIETY AND EMPLOYEE OF BEL FACTORY STAFF NO.209163 RESIDING AT NO.49, B. NAGASANDRA YAMLUR POST BANGALORE – 37.
... PETITIONER (BY SRI. M. VEERABHADRAIAH, ADVOCATE) AND:
1. THE PRINCIPAL SECRETARY DEPARTMENT OF CO OPERATION M.S. BUILDING, VEDHANA VEEDI BANGALORE – 01.
2. THE REGISTRAR OF CO-OPERATIVE SOCIETY, STATE OF KARNATAKA ALI-ASKER ROAD, BANGALORE – 01.
3. THE ADDL. REGISTRAR OF CO-OP SOCIETY IN KARNATAKA ALI-ASKER ROAD, BANGALORE -01.
4. THE JOINT REGISTRAR OF CO-OPERATIVE SOCITIES BANGALORE REGION GMC BANK BUILDING PAMPA MAHAKAVI ROAD CHAMARAJPET BANGALORE – 560 018.
5. BHARAT ELECTRONICS AMBEDKAR CO-OPERATIVE SOCIETY LIMITED HAVING ITS REGISTERED OFFICE AT B.E.L. COLONY, JALAHALLI POST BANGALORE – 560 013 REPRESENTED BY ITS SECRETARY.
6. SRI. RAMESH R STAFF NO.209372 AGED ABOUT 46 YEARS DIERCTOR OF BHARAT ELECTRONICS AMBEDKAR CO-OPERATIVE SOCIETY LTD., HAVING ITS REGISTRED OFFICE AT B.E.L. COLONY, JALAHALLI POST BANGALORE - 560 013.
7. SRI. AMRUTHRAJ K.M STAFF NO.207982 AGED ABOUT 46 YEARS VICE PRESIDENT OF BHARAT ELECTRONICS AMBEDKAR CO-OPERATIVE SOCIETY LTD., HAVING ITS REGISTRED OFFICE AT B.E.L. COLONY, JALAHALLI POST BANGALORE - 560 013.
8. SRI. SHANKAR J.M STAFF NO.209529 AGED ABOUT 48 YEARS INTERNAL AUDITOR OF BHARAT ELECTRONICS AMBEDKAR CO-OPERATIVE SOCIETY LTD., HAVING ITS REGISTRED OFFICE AT B.E.L. COLONY, JALAHALLI POST BANGALORE - 560 013.
9. SRI. VIJAYA KUMAR H.K STAFF NO.208821 AGED ABOUT 47 YEARS DIRECTOR OF BHARAT ELECTRONICS AMBEDKAR CO-OP SOCIETY LIMITED HAVING ITS REGISTERED OFFICE AT B.E.L COLONY, JALAHALLI POST BANGALORE – 560 013.
10. SMT. VIJAYALAKSHMI S STAFF NO.209201 AGED ABOUT 44 YEARS DIRECTOR OF BHARAT ELECTRONICS AMBEDKAR CO-OP SOCIETY LIMITED HAVING ITS REGISTERED OFFICE AT B.E.L COLONY, JALAHALLI POST BANGALORE – 560 013.
11. SRI. LAKSHMI NARAYANA STAFF NO.210059 AGED ABOUT 42 YEARS DIERCTOR OF BHARAT ELECTRONICS AMBEDKAR CO-OPERATIVE SOCIETY LIMITED, HAVING ITS REGISTERED OFFICE AT B.E.L. COLONY, JALAHALLI POST, BANGALORE – 560 013.
12. SRI. RAGHAVENDRAN S STAFF NO.204586 AGED ABOUT 58 YEARS DIERCTOR OF BHARAT ELECTRONICS AMBEDKAR CO-OPERATIVE SOCIETY LIMITED, HAVING ITS REGISTERED OFFICE AT B.E.L. COLONY, JALAHALLI POST, BANGALORE – 560 013.
13. SRI. SURESH G STAFF NO.208832 AGED ABOUT 48 YEARS TREASURER OF BHARAT ELECTRONICS AMBEDKAR CO-OPERATIVE SOCIETY LIMITED, HAVING ITS REGISTERED OFFICE AT B.E.L. COLONY, JALAHALLI POST, BANGALORE – 560 013.
14. SRI. THRUVANAKARASU V STAFF NO.211521 AGED ABPIT 40 YARS DIERCTOR OF BHARAT ELECTRONICS AMBEDKAR CO-OPERATIVE SOCIETY LIMITED, HAVING ITS REGISTERED OFFICE AT B.E.L. COLONY, JALAHALLI POST, BANGALORE – 560 013.
15. SRI. RAVI M STAFF NO.209288 AGED ABOUT 52 YEARS DIERCTOR OF BHARAT ELECTRONICS AMBEDKAR CO-OPERATIVE SOCIETY LIMITED, HAVING ITS REGISTERED OFFICE AT B.E.L. COLONY, JALAHALLI POST, BANGALORE – 560 013.
16. SRI. NAGARAJUNACHARYA P STAFF NO.209001 AGED ABOUT 49 YEARS PRESIDENT OF BHARAT ELECTRONICS AMBEDKAR CO-OPERATIVE SOCIETY LIMITED, HAVING ITS REGISTERED OFFICE AT B.E.L. COLONY, JALAHALLI POST , BANGALORE – 560 013.
17. SRI. KARTHIK K STAFF NO.212445 AGED ABOUT 37 YEARS TREASURER OF BHARAT ELECTRONICS AMBEDKAR CO-OPERATIVE SOCIETY LIMITED, HAVING ITS REGISTERED OFFICE AT, B.E.L. COLONY, JALAHALLI POST, BANGALORE - 560 013.
18. SRI PALANI R STAFF NO.211684 AGED ABOUT 38 YEARS DIRECTOR OF BHARAT ELECTRONICS AMBEDKAR CO-OPERATIVE SOCIETY LIMITED, HAVING ITS REGISTERED OFFICE AT B.E.L. COLONY, JALAHALLI POST, BANGALORE - 560 013.
19. THE SECRETARY THE GAYATHRI CREDIT CO-OP SOCIETY LTD., NO.J40 & 41, 5TH CROSS MALLESHAWRAM, BANGALORE – 03.
20. THE SECRETARY THE BHARATH ELECTRONICS EMPLOYEES CREDIT CO-OP SOCIETY LTD., NO.T-70 B.E.L. COLONY, JALAHALLI POST BANGALORE – 13.
…RESPONDENTS (BY SRI. A.C. BALARAJ, HCGP FOR R-1 TO R-4; SRI. JAYAKUMAR S PATIL, SR. COUNSEL A/W SRI. G. CHANDRASHEKARAIAH, ADVOCATE FOR R-6 TO R-12, R-14 TO R-16;
SRI. A. HANUMANTHAPPA, ADVOCATE FOR R-5; SRI. K.S. ANUSUYADEVI, ADVOCATE FOR R-13, R-17 & R-18;
SRI. R.K. AMARNATH, ADVOCATE FOR R-19; SRI. V.B. SIDDARAMAIAH, ADVOCATE FOR R-20) THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DATED: 01.10.2011 PASSED IN CASE BY THE ADDL. REGISTRAR OF CO-OPERATIVE SOCIETY THE 3RD RESPONDENT AS PER ANNEXURE A AND THE ORDER DATED: 28.01.2011 PASSED IN CASE BY THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETY THE 4TH RESPONDENT AS PER ANNEXURE L, CONSEQUENTLY DISQUALIFY THE 6-18TH RESPONDENT U/S 17D OF THE K.C.S.C. ACT.
THESE PETITIONS COMING ON FOR HEARING THIS DAY, THE COURT MADE THE FOLLOWING:
O R D E R These writ petitions namely, W.P.Nos.46144- 46147/2011 have been filed for quashing of the order dated 01.10.2011- Annexure-A passed by third respondent and order dated 28.01.2011- Annexure-H passed by the fourth respondent whereunder the prayer of the petitioners to disqualify the respondent Nos. 6 to 18 under Section 29C of Karnataka Co-operative Societies Act, 1959 (for short ‘Act’) has been rejected. Petitioners in W.P.No.46148/2011 have sought for quashing of the order dated 01.10.2011-Annexure-A passed by the third respondent and order dated 28.01.2011- Annexure-L passed by fifth respondent whereunder prayer sought for by them to disqualify the respondent Nos.6 to 18 under Section 17(d) of Act has been rejected.
2. I have heard the arguments of Sryuths Veerabhadraiah M, learned Advocate appearing for petitioners and Sri. Jayakumar S. Patil, learned Senior Counsel appearing on behalf of Sri. Chandrashekaraiah representing the respondent Nos. 6, 7, 9, 12 to 18 in W.P.Nos.46144-147/2011 and for respondent Nos. 6 to 12 and 14 to 16 in W.P.No.46148/2011. Sri. Balaraj, learned HCGP appearing on behalf of respondent Nos. 1 to 4 and Sri. Hanumanthappa, learned Advocate appearing for respondent No.5 and Smt.K.S.Anusuyadevi, learned Advocate appearing for respondent Nos. 8, 10 and 11 and Sri. G.R.Anil Gosh, learned Advocate appearing for respondent No.19. though other respondents are served, represented but none appears.
3. The sum and substance of the grievance of the petitioners in W.P.Nos.46144-147/2011 is that respondent Nos. 6 to 18 who are directors of Bharat Electronic Ambedkar Co-operative Society Ltd., (for short ‘Society’) had granted loan in excess and contrary to bye-law of the Society namely bye-law No.30(1) namely they have granted loan to members beyond the prescribed limit of 2 Lakhs; they themselves as directors have borrowed loan in excess of the permissible limits; though co-development officer had recommended for their disqualification same has not been considered by authorities in proper perspective; the acts of omissions of these respondents would attract Section 29C (8)(b) of the Act. ] 4. Whereas in W.P.No.46148/2011 it has been contended by petitioners that respondent Nos. 6 to 18 are to be disqualified from the membership of society under Section 17(1)(d) read with Section 17(3) and Section 29C(1)(h) of the Act; the complaints/ representations came to be considered by the joint Registrar of Co-operative Societies and after extending full opportunity to the petitioners, by order dated 28/29.01.2011 (Annexure-H) he has rejected the prayer of the petitioners to disqualify respondent Nos. 6 to 18 under Section 29C of the Act; this order in original which was challenged by petitioners before the Appellate Authority namely Additional Registrar of Co-
operative Societies –third respondent came to be examined and on appreciation of entire material appeal came to be rejected vide order dated 01.10.2011- Annexure-A.
5. It is the contention of Sri. Veerabadraiah, learned Advocate appearing for petitioners that respondent Nos. 6 to 18 being directors of the Society had indulged in acts of fraud on society and they had not only sanctioned loans contrary to the bye-laws governing sanction of loan and in utter violation of the same they had acted contrary to the bye-laws. He would also submit that directors themselves had borrowed loan in excess of permissible limit fixed under bye-law and that too without following the prescribed procedure and these aspects were high lighted before authorities by petitioners and same has not been considered by them. He would also elaborate his submission by contending that an enquiry was conducted under Section 64 of the Act and also by C.I.D in respect of very society wherein it was high lighted with regard to illegality and irregularity and acts of omission and commission of the directors of the society and these aspects have not been taken into consideration by the authorities at all while passing the impugned orders.
6. He would also refer to FIR registered in Crime No.90/2010 registered for the alleged offence punishable under Sections 406 and 420 of IPC against one Sri. Lakshman, Former President of the Society and other office bearers which prima faice indicate that there has been mis-appropriation of funds of the society and as such this material evidence which was available on record ought to have been considered by respondent authorities.
7. He would further contended that even in the affidavit filed by the contesting respondent Nos. 6 to 18 they themselves have admitted about the acts of omission and commission and said admission itself was suffice to disqualify them under Section 29C which was in the best interest of the society. Hence, he prays for setting aside the impugned order by allowing these writ petitions. In support of his contentions he has relied upon the following judgments.
(1) ILR 1987 Kar.1336-
APPA SAHEB R. KERAKALAMATTI VS. ADDL. REGISTRAR OF CO- OPERATIVE SOCIETIES IN KARNATAKA (2) 2009(2) KCCR 1076-
SHRI N.G. SAMARAJU AND ANOTHER VS. SRI. V.V. PATIL AND OTHERS 8. Per contra Sri.Jayakumar S.Patil, learned Senior Counsel appearing for contesting respondents has supported the impugned orders and he would contend that petitioners do not have locus-standi to challenge the order inasmuch as it is not adversorial litigation which would enable petitioners to challenge the acts of omission and commission by the directors of the society and it is only statutory authorities as prescribed under Section 29C of the Act or Section 17(d) of the Act would be empowered to examine such complaint and as such petitioners would have no right to or locus-standi to challenge the impugned orders.
8.1. He would further contended this Court while exercising the power of superintendence under Article 227 of the Constitution of India or extraordinary jurisdiction under Article 226 should be slow to quash the order of the authorities until and unless this Court comes to a conclusion that said finding is capricious, vexatious and it is not based on either appreciation of evidence on record or erroneous appreciation of material evidence.
8.2. He would contend that extraordinary power vested in this Court should not be exercised that too for correcting factual errors even if any. He would submit order passed by the authorities would clearly indicate that allegations made in the complaint has been considered by both the authorities and they have arrived at a conclusion that there are no ground made out for disqualifying the petitioners either under Section 29C or under Section 17(d) of the Act and same doe not suffer from any infirmity.
8.3. However, by way of alternative submission he would contend that in the event, this Court arriving at a conclusion that impugned orders are liable to be set aside, matter will have to be remitted back to the authorities for re-doing or undertaking the exercise afresh for the reasons this Court may assign and writ petitions cannot be allowed simpliciter as sought for. Hence, he prays for dismissal of the both petitions.
9. Having heard the learned Advocates appearing for parties and on perusal of records would it disclose though issue relating to locus-standi of the petitioners to challenge the impugned order has been raised this Court do not propose to examine the same at threshold but at a later stage for the simple reason the learned Advocates appearing for parties have also delved upon merits of the case and as such it would be apt and appropriate to deal with the same later. Though, findings recorded by this Court with regard to locus-standi may have a bearing on the maintainability of the proceedings itself and also in the light of the fact that these writ petitions are of the year 2011 and pending since eight long years, it would be apt and appropriate to deal both on merits as well as maintainability, in order to give a quietus to the litigation.
10. Perusal of records would disclose that on 20.03.2010 elections to the board of directors respondent-society came to be held to elect its directors for the year 2010-2011 to 2014-2015 and in the said election respondent Nos. 6 to 18 came to be elected as members of the Managing Committee. Thus, this scrutiny of the records and examination of contentions raised by Sri.Veerabhadraiah, learned counsel for petitioners will have to be necessarily subsequent to 20.03.2010 not prior to it. Petitioners who were ordinary members of the society filed a complaint on 04.06.2010- Annexure-E with a prayer to initiate proceedings against petitioners to disqualify respondent Nos. 6 to 18 and to appoint an administrator in the place of managing committee to the society for better administration and in the larger interest of the members. Second respondent in turn directed the development officer, range-1 to enquiry into the complaint and submit a report vide communication dated 04.06.2010 and accordingly enquiry came to be held and a repot submitted on 06.07.2010-Annexure-F, whereunder it was opined that respondent Nos. 6 to 18 have acted contrary to the bye-laws and had borrowed loan amounts of Rs.5 lakhs i.e., in excess of prescribed limit and as such recommended for initiation of proceedings under Section 29C of the Act against respondent Nos. 6 to 18.
11. In the light of the principles of natural justice embodied under Section 29C resulted in notice being issued to respondent Nos. 6 to 18 and accordingly notice of enquiry came to be issued by fourth respondent to all the concerned including the petitioners vide notice dated 19.07.2010 to which respondent Nos. 6 to 18 replied vide Annexure-G. After hearing the parties including their authorized representatives, fourth respondent has passed on order dropping the proceedings under Section 29C(8)(b)and (d) against respondent Nos. 6 to 18- Annexure-H and also under Section 17(d) vide Annexure-L in W.P.No.46148/2011.
12. On perusal of these two orders it would indicate that in the objections of statement filed by the respondent Nos. 6 to 18 before 4th respondent they have clearly admitted to the fact that there was sanction of loan beyond prescribed limit namely, though bye-law No.30(1) prescribed that Managing committee is empowered to grant or sanction loan of Rs.2 lakhs, they had sanctioned Rs.5 lakhs to its members as loan. However, to substantiate their stand in this regard they contended that by taking into consideration precedents of sanctioning of loan to its members to the tune of Rs.5 lakhs and there being a demand by the members in this regard and as such it was sanctioned. Insofar as names of persons who had been sanctioned loan beyond Rs.2 lakhs was examined by the original authority under the impugned order dated 28/29.01.2011 vide Annexure-H and at paragraph 8 a finding has been recorded that out of 13 persons named therein loans which had remained unpaid as on date was less than Rs. 2 lakhs and insofar as borrower by name Smt.Vijayalakshmi (Respondent No.18 herein), original authority has stated that entire loan amount has been repaid. Likewise in respect of loan borrowed by respondent Nos.
10 and 15, original authority has clearly recorded a finding that there is no loan amount outstanding from them as is evident from the Co-development officer report dated 06.07.2010 itself. In fact, original authority has opined there is no prohibition for grant of loan to its members by Managing Committee of the society. However, restrictions to sanction beyond Rs.2 lakhs as prescribed under bye-law No.30(1) is a regulatory restriction and in the light of earlier committee also having sanctioned loan beyond prescribed limit of Rs. 2 lakhs, it had perforced the new committee consisting of respondent Nos. 6 to 18 to take such steps which was on account of demand made by the members of the society for whose interest society was established and is in existence. Apart from these aspects original authority has noticed that though borrowers had borrowed in excess of Rs.2 lakhs had either repaid the entire loan amount or have repaid excess borrowed amount so as to bring their borrowing within limit prescribed under the bye-law No.30(1). It is in this background, original authority has arrived at a conclusion that respondents- 6 to 18 cannot be disqualified under Section 29C of the Act.
13. Complainant being aggrieved by the order of the original authority as already noticed hereinabove, filed an appeal before third respondent in Appeal No.14/2010-11 vide Annexure-A. Appellate authority after taking into consideration the rival contention raised, materials placed on record and on re-
appreciation of entire materials has recorded the following findings.
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14. Perusal of the above order would indicate that irregularities if any, was also set right by existing committee consisting of respondent Nos. 6 to 18. Infact, development officer in his enquiry report dated 06.07.2010 vide Annexure-F has also noticed that signatures of the some of the complainants had been obtained by mis-leading them on the pretext of representation being submitted to the department for sanction of loan and as such they had submitted before the enquiry officer that they had affixed their signatures to the complaints under this bonafide impression and they had no grievance with regard to sanction of loan to the members of the society.
15. For the purposes of immediate reference Section 126-A of the Act which was then existing and analogous to provisions of 29-C of the Act, namely, substituted by Act 25 of 1998, w.e.f 15.08.1998 is as tabulated herein below.
Section 126-A then existing Present Section 29-C Removal and Disqualification of a member of a committee.— (1) If any member of a committee Disqualification for membership of the [board].— (1) No person shall be eligible for being elected or appointed of a co-operative society during the term of his office.
(a) becomes subject to any disqualification specified in section 29C; or (b) has acted or has been acting fraudulently or with gross negligence or in contravention of the provisions of this Act, the rules or the bye-laws or the co- operative society or without the sanction of the committee of the co-operative society where such sanction is necessary or contrary to any resolution of the co- operative society or its committee or in any way prejudicial to the interest of the co-operative society; or (c) has acted or has been acting persistently against the directions or orders issued under the Act or the rules made thereunder ; or (d) is not discharging his duties satisfactorily, the Registrar may, either on a report made to him or otherwise, by order, remove such member and in cases falling under clauses (b), (c) and (d) disqualify him from serving on the committee of the co-operative society or holding any office in any co-operative society for such period, not exceeding three years, as he may specify:
Provided that no such order shall be made except after giving such member an opportunity of or continued as member of the [[board] of any co-operative society], if.— (a)he is in default to that society or any other co-operative society in respect of any dues from him as borrower;
(b) he is interested directly or indirectly in any contract made with such co-operative society or in the sale or purchase made by such co-operative society privately or in auction or in any contract or transaction of the co- operative society (other than investment and borrowing) involving financial interests in that contract, sale, purchase or transaction;
(c)[he [xxxx] carries] on a business of the kind carried on by such co- operative society or by a co- operative society of which such co-operative society is a member;
9[xxxx.] (d) he is employed as legal practitioner on behalf of such co- operative society or accepts employment as legal practitioner against such co-operative society;
(e)he is a paid employee [other than the Chief Executive] of such co- operative society or of its financing bank;
2[xxxx.] (f) he is a near relation of a paid employee of such co-operative society.
making representation.
(2) A copy of the order made under sub-section (1) shall be communicated to the member and the co-operative society concerned.
16. In fact, Co-ordinate Bench of this Court in the case of APPA SAHEB R KERAKALAMATTI VS. ADDITIONAL REGISTRAR OF CO-OPERATIVE SOCIEITES IN KARNATAKA reported in ILR 1987 Kar. 1336, in the background of 126-A, the then existing provisions which is analogous provision to Section 29C had opined that expression of “acts of commission or omission” of a member is referable to individual acts and not in respect of decision of the committee to which such member of the committee was a party, inasmuch as if the intention of the Legislature was that when all or majority of the members of a committee joined together and had acted in a manner prejudicial to the interest of the society, action could be taken against individual members concerned and to remove and disqualify them for being members of the committee in addition to the action for replacing the Managing Committee either by appointing an Administrator under Section 30 or by appointing a Special Officer, under Section 30-A, Legislature would have done so by use of express words in Section 126-A itself. It came to be held that in the absence of such provision, resort cannot be had to disqualify the members of the Managing committee for collective action of the committee. A bare reading of these provisions would clearly indicate they are analogous. Hence, principles enunciated in the aforesaid decision would squarely be applicable to the facts on hand inasmuch as, it is neither the case of the petitioner nor authorities concerned who have initiated action/ proceedings against respondent Nos. 6 to 18 purportedly under Section 29(1) that there has been any individual act of omissions and commissions by them so as to proceed against themselves under Section 29C (a) .
17. To put it differently, the sum and substance of the allegation made in the complaint by petitioners is respondent Nos. 6 to 18 acting as directors of the society have collectively violated bye-law No.30(1) which prescribed the power of the committee to sanction loan was only up to Rs.2 lakhs only and they had been sanctioned beyond Rs.2 lakhs. In fact, at the cost of repetition, it requires to be noticed at this stage itself on facts that said authority as already noticed has held such irregularities in the matter of sanction of loan has also been rectified by the Managing committee of the society. In fact provision of disqualification which affect the civil rights of the directors or members of the society and results in penal consequences has to be nipped at the bud in strict sense and acts of omission and commission which affects the rights of the members as a whole or society in general. In other words such omission and commission should be sine qua non of the interest of the society or general members of the society. In the absence of nexus invocation of Section 29C of the Act itself would become otiose. As such, this Court does not find any infirmity in the orders passed by the original authority as affirmed by the appellate authority.
18. Insofar as second writ petition which relates to disqualification of petitioners under Section 17 (d) of the Act is concerned, it would not detain this Court for too long to reject the prayer inasmuch as, State namely, respondents Nos.1 to 4 in their statement of objections have categorically stated that there is no dual membership of the respondent Nos. 6 to 18 as alleged by the petitioners. In fact, as rightly pointed out in the objections filed by the respondent Nos.1 to 4 that, that would be a ground based on which petitioners could have raised a dispute under Section 70 of the Act instead of taking circuitous route of challenging the order of authority seeking for rejection of the claim for disqualifying respondent Nos.6 to 18. The said finding recorded by both the authorities under impugned orders passed in W.P.No.46148/2011 would not call for any interference at the hands of this Court.
19. As already noticed hereinabove issue relating to locus-standi is concerned, pales insignificance in the light of finding recorded with regard to merits of the case itself having been delved upon. This Court would not express any opinion in that regard, in as much as, Co-ordinate benches of this Court prima facie have been taken diametrically opposite views in W.P.Nos.54844-849/2013 disposed of on 04.03.2014 and in W.P.No.5277/2006 disposed of on 12.02.2008 and same is left at it for being adjudicated in appropriate case if need arises.
Hence, I proceed to pass the following:
ORDER (1) Writ petition Nos.46144-4617/2011 and W.P.No.46148/2011 are dismissed (2) No order as to costs.
SD/- JUDGE RU