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President, Nagarpalika Prathamik Shala Shikshak Servants Co-operative Credit Society Ltd. Vs. Ramchandra Damodar Umalkar and ors. - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtMumbai High Court
Decided On
Case NumberSpl. Civil Appln. No. 119 of 1966
Judge
Reported inAIR1967Bom319; (1967)69BOMLR643; 1967MhLJ473
ActsMaharashtra Co-operative Societies Act, 1961 - Sections 23(1) and 23(2); Constitution of India - Articles 226 and 227
AppellantPresident, Nagarpalika Prathamik Shala Shikshak Servants Co-operative Credit Society Ltd.
RespondentRamchandra Damodar Umalkar and ors.
Appellant AdvocateS.S. Deshpande, Adv.
Respondent AdvocateC.S. Padhye, Adv. and ;C.S. Dharmadhikari, Asstt. Govt. Pleader
Excerpt:
.....-- application for admission for membership made to society -- pending disposal of application by society assistant registrar asking society to admit applicant as member -- whether assistant registrar competent to take cognizance of matter before appeal filed under section 23(2).;until an appeal is filed under section 23(2) of the maharashtra co-operative societies act, 1960, and the registrar's jurisdiction is invoked, there is no authority in the registrar or his delegate to take interest in or cognizance of the matter relating to the rejection by a society of an application for membership while it is at the stage of deliberation and decision with the society itself. it is only after an application for admission to membership is disposed of by the society and its decision is adverse..........that an application for membership is normally disposed of by the managing committee of the co-operative society, and if the managing committee rejects the application, the person seeking membership is entitled to prefer an appeal which is disposed of by the general body of the society.(3) the application of the first respondent was considered by the managing committee at its meeting held on 16-6-1965. the managing committee did not accept the application for membership but instead directed the first respondent to produce certain documents at the next meeting so that the society may consider his application. for this purpose they passed resolution no.2 to the following effect:'it is brought to the notice of the president of the society that when the present applicant was secretary of.....
Judgment:

Abhyankar, J.

(1) This petition under Article 227 of the Constitution is filed by the President of a Co-operative credit society styled as Nagar Palika Prathamik Shala Shikshak Servants Co-operative Credit Society. Buldana. The petitioner challenged the legality of the orders of the second and third respondents in purported exercise of their powers under the Maharashtra Co-operative Societies Act (Maharashtra Act No. XXIV of 1961).

(2) A few facts giving rise to this petition may now be noticed. The petitioner society has been registered under the Maharashtra Co-operative Societies Act, 1960, and consists of 25 members. The Society is a co-operative credit society for the benefit of primary school teachers employed in the Municipality at Buldana. The first respondent Shri R.D. Umalkar, is apparently the Headmaster of Primary School No.2 run by the Buldana Municipal Committee. He made an application on 5th April 1965 for being admitted to the membership of the petitioner society. A copy of that application has not been produced by the petitioner. The petitioner society has made byelaws regulating admission of members to that society. It is stated that an application for membership is normally disposed of by the Managing Committee of the Co-operative Society, and if the Managing Committee rejects the application, the person seeking membership is entitled to prefer an appeal which is disposed of by the General Body of the Society.

(3) The application of the first respondent was considered by the Managing Committee at its meeting held on 16-6-1965. The Managing Committee did not accept the application for membership but instead directed the first respondent to produce certain documents at the next meeting so that the society may consider his application. For this purpose they passed resolution No.2 to the following effect:

'It is brought to the notice of the President of the Society that when the present applicant was Secretary of the Buldana Municipal Sangh, regarding report of the annual meeting held in June 1960 and the copy forwarded to the office, there was some objection (raised). hence Shri Umalkar should, by producing the proceedings of the Teachers Sangh should prove before the next meeting that there was nothing objectionable regarding that matter; so that the society will consider his application (for admission). If it is not done (by him) his application shall be deemed to be rejected and the share-amount of Rs. 10/- and Re. 1/- entrance fee, in all Rs. 11/- should be taken back after giving due receipt. He be informed accordingly.'

(4) Accordingly a letter was addressed to the first respondent conveying the decision of the Managing Committee along with the resolution reproduced above.

(5) The first respondent, probably on the same day on which he received the communication from the petitioner society, sent a reply to the President of the society intimating that the same had no concern with the admission of his membership and that he considered himself to have been duly admitted and had become a member of the society when the petitioner society received his admission fee and membership fee i.e. Rs. 11/-. He therefore demanded that prompt reply should be sent regarding his application and further proceedings.

(6) It appears the first respondent instead of complying with the resolution of the petitioner society, approached the second respondent i.e. Assistant Registrar, Co-operative Societies, Buldana, and addressed a communication to him on 22-6-1965. A copy of that communication has been made available to us by the learned counsel appearing for the second and third respondents. In that communication he complained that some irrelevant objection was being raised to his admission as a member and that justice should be done to him. The second respondent i.e. Assistant Registrar, addressed a communication on 30th June, 1965 to the Chairman of the petitioner society in which the Assistant Registrar stated that the Municipal Prathamik Shikshak Sangh and the Co-operative Society were different concerns and that the ground for refusing membership was unconvincing. He therefore requested the petitioner society that the first respondent should be admitted as a member in the ensuing Managing Committee meeting of the Society. In the third paragraph of the letter the Assistant Registrar directed that the line of action proposed to be taken by the petitioner society should be reported to his office to enable him to proceed further in the matter. As no reply was apparently received from the petitioner society by the Assistant Registrar till 21-7-1965, a communication seems to have been sent by he District Deputy Registrar, inviting the attention of the society to the Assistant Registrar's letter. In this communication a grievance is made that a report was asked for regarding the action taken on the application of Shri Umalkar, the first respondent, and that the society's reply was still awaited. The society was therefore enjoined to send a reply within three days of the receipt of the letter. On receipt of this letter the President of the petitioner society sent a detailed reply on 22-7-1965 of which Annexure P-5 to the petition is a copy. In this reply the petitioner society brought to the notice of the District Deputy Registrar that Shri Umalkar had deliberately sent a frivolous letter without clearing the society's doubts. he further pointed out to the District Deputy Registrar that every society felt that its documents should be well protected and that tearing of documents or losing them or providing bogus resolutions are practices which are deprecated in any society. then he further stated that there was enough room for doubt and therefore an explanation was sought regarding the truth of the proceedings of 1960 from Mr. Umalkar which was not supplied by him. Then he also pointed out that because of this incident since that time the Municipal Shikshak Sangh has also become defunct and inactive and ceased to exist,and then stated 'Because repetition of it should not happen in this society, Shri R. D. Umalkar was informed vide resolution No. 2 of the General Meeting held on 16-6-1965 to clarify all doubts by producing the proceedings book to the satisfaction of the society.'

(7) In the meanwhile, the Managing Committee again considered the matter at its meeting on 14-7-1965 and decided to inform the first respondent No. 2 of 16-6-1965 and do he needful, his application was rejected and that he should submit his say regarding admission to membership before the General Body meeting which was convened on 31-7-1965 at 2-30 P. M. They further intimated that this General Body meeting was called to hear Shri Umalkar on his application when a final decision would be taken. It seems the Assistant Registrar was also intimated by the petitioner society that the case for admission of Shri Umalkar was being placed before the Annual General Meeting convened for 31-7-1965. Thereupon the Assistant Registrar on his own intimated to the first respondent about this by his letter dated 19-7-1965, of which he forwarded a copy to the President the petitioner society. It may be noted here that while forwarding the copy the Assistant Registrar remarked that a copy of the notice of the Annual General meeting convened on 31-7-1965 ought to hav been submitted to his office well in advance but that it was not received. The petitioner society was therefore directed to send a copy of the proceedings of that meeting immediately after the meeting was over.

(8) Accordingly a meeting of the General Body was held on 31-7-1965, the General Body acceded to the request of the first respondent for priority of consideration of his application and his application was considered. A copy of the resolution which was passed by the body has been filed and that resolution was in the following terms:-

'Resolution No. 1:- What Shri R. D. Umalkar stated about this Co-operative Society and M. Pr. S. Sangh, Buldana, having no concern with each other, this Committee does not think (it) as correct. Because both these sansthas are of Buldana M. Pr. Shikshak (teachers). Shikshak Sangh protects the rights of the teachers while this Co-operative Society guards monetary rights of the teachers. Therefore in the opinion of this meeting both the institutions from the point of view of we teachers, are of equal importance. The benefit of any institution should be available to all its members. But in the year 1960 Shri R. D. Umalkar when he happened to be the Secretary of M. Pr. Shikshak Sangh, a resolution in the meeting (dt 25-6-60) of which he took advantage for his personal case, the report fo the proceedings of that very meeting was not shown by Shri Umalkar to another member B. D. Ubarhande, and was not allowed to have benefit thereof. This Committee is convinced of this fact after perusal of all the papers concerned. This conduct of Shri R. D. Umalkar in the opinion of the meeting is against the principles of co-operation.

Similarly as per resolution No. 2 of the general meeting held on 16-6-65 though asked to do the needful he (Shri Umalkar) instead made false accusations against the society and indulged in unnecessary correspondence. This committee is not satisfied by the explanation given by him. Without fully explaining the things informed by the Society, writing frivolous letters against the Society and looking to his conduct with members in other Societies his application for membership be rejected. He should not be admitted as member.'

(9) An amendment of the resolution moved by some members was first put to vote and was rejected by majority, whereafter the original resolution was put to vote and 14 members voted for the resolution, three against the resolution and one member remained neutral. Before passing the resolution the record of the proceedings with all the correspondence, resolutions and letters from the Registrar, was read and Mr. Umalkar who was present in person was given an opportunity to give clarification and the clarification given by him was heard, whereafter the resolution was moved and passed.

(10) Against this decision of the General Body of the petitioner Society, the first respondent preferred an appeal addressed to the Deputy Registrar. The appeal came to be heard and disposed of, however, by the Assistant Registrar i.e., the second respondent. The appeal was allowed and the petitioner Society was ordered to admit Shri R. D. Umalkar to the membership of the Society. In the preamble of the order the second respondent has observed that the decision of the petitioner Society was in contravention of the provisions of bye-laws 4 and 5 of the bye-laws of the said Society and the provisions of S. 23(1) of the Maharashtra Co-operative Societies Act and the rules made thereunder. Then appears the following statement in the preamble:

'Further it is found that there are reasons to believe that admission to Shri R. D. Umalkar as member of the said Society is refused on the grounds not concerning the affairs of the said Society and also against the principles of co-operation i.e. open membership. . . . . . .'

(11) The petitioner Society filed a copy of byelaw No. 5, and according to clauses (3), (4) as well as (8), it is provided by this byelaw that no person will be eligible for membership of the Society unless (3) he must be of good character; (4) he must have good repute and must not be debtor or defaulter to the Government without sanction of Government dues and/or no Civil Court's decree passed against him; and (8) his written application for admission to membership is sanctioned by majority of members more than half members of the Society. These are among other conditions required to be fulfilled.

(12) The general power of revision is vested in the Registrar of the Co-operative Societies under Section 154 of the Maharashtra Co-operative Societies Act. It is admitted that this power has been delegated by the Registrar to the Divisional Joint Registrar of the Societies. The petitioner Society filed a revision application before the Divisional Joint Registrar at Nagpur. a copy of the memorandum of revision has been filed by the petitioner. Among other grounds the petitioner Society had specifically complained that the second respondent had already started giving opinion and interfering in this matter and was approached against the petitioner, and therefore acted illegally in entertaining the appeal and deciding it against the petitioner.

(13) When the revision application came up for a hearing before the Divisional Joint Registrar i.e. the third respondent, it is apparent from paragraph 4 of the order that the Assistant Registrar was present and also seems to have argued in justification of his order. The third respondent rejected the revision petiton, holding that the petitioner Society had taken into consideration irrelevant matters and there was no sufficient ground for refusing the application of Shri Umalkar to be admitted to membership. It will be necessary to deal in some detail with other parts of this order a little later, but that was the gist of the decision.

(14) The petitioner society now challenges by this petition the exercise of jurisdiction by the second respondent and the validity of the orders passed by the second and the third respondents. The complaint of the petitioner is that the Assistant Registrar having been approached by the first respondent even before any final decision was taken by the society in the matter of admission of the first respondent as a member of the Co-operative Society, and the Assistant Registrar having come to the conclusion that the first respondent was entitled to be admitted as a member, and having issued directions in the matter, was incompetent to entertain and adjudicate the appeal filed by the petitioner society. In other words, the second respondent had become a tribunal corium non-juries having already expressed himself in a particular way before the matter was in lawful seisin of the second respondent as an appellate authority. When a complaint was made about this position before the revisional authority, that authority did not appreciate the force of this contention and has not given any finding or consideration to this complaint either.

(15) On the merits of the decision it is contended that it was well within the jurisdiction of the General Body of the society to take into consideration the antecedents of the person applying for membership of the Co-operative Society. The antecedents of the conduct of the first respondent in another body did not inspire confidence of the majority of the members and when the explanation given by the first respondent was found to be unsatisfactory the general body was acting within its rights to decline admission of the first respondent to its membershiip. It is also urged that both the authorities were clearly in error in exercise of their jurisdiction in considering that the affair relating to another society of teachers and the complaint made against the conduct of the first respondent when he was holding an office in that body were irrelevant. They were very much relevant in considering whether the first respondent was eligible to be admitted. In this connection reliance is also placed on the specific provisions of the 3rd, 4th and 8th Clauses of byelaw No. 5 referred to above. As the first respondent failed to satisfy those tests, in the opinion of the majority of the members the rejection of his application was proper and should not hav been interfered with by the second and third respondents.

(16) In our opinion, these contentions are well founded and the petition must succeed. We have tried to find out whether there was any legal authority in the second respondent as Assistant Registrar to entertain the complaint of the first respondent Shri Umalkar when the question of his eligibility to be admitted as a member of the Co-operative Society was still undecided by the petitioner society, and to issue directives to the petitioner society to admit the first respondent as a member on the view that the matters which were taken into consideration were irrelevant. When the second respondent constituted himself as an authority entitled to give gratuitous advice which in effect would amount to an order, coming as it does from an officer of the Department, he was clearly acting in excess of his jurisdiction and also of powers exercisable by him in administrative capacity under the provisions of the Maharashtra Co-operative Societies Act. So, far as the question of admission of a person as member of the society is concerned, the only power that is entrusted to the Registrar or his delegate is an appellate power under Section 23(2) of the Act. The very fact that the Registrar is constituted the appellate authority to entertain an appeal against a decision of a co-operative society on behalf of a person whose application for membership is rejected, postulates that until such an appeal is filed and his jurisdiction is invoked there is no authority in the Registrar to take interest in or congnizance of the matter while it is at the stage of deliberation and decision with the society itself. It is only after an application is disposed of and the society's decision is adverse to the applicant that the applicant can involve the jurisdiction of the appellate authority. We fail to see under what powers the Assistant Registrar or the Deputy Registrar could send communications like Ex. P-3 or Ex. P-4 which was done in this case, and none is shown to us. It is desirable that officers of the co-operative department, even if it is necessary to encourage healthy growth of co-operative societies, should act strictly within the ambit of their powers and not allow thier enthusiasm to overrun discretion in the matter. The Assistant Registrar in the instant case, having taken upon himself to decide that a decision likely to be arrived at by the petitioner Society would be based on irrelevant consideration (and his opinion was obviously formed without giving any hearing or opportunity to the petitioner society at that stage) chose to issue a directive that first respondent should be admitted as a member. That the General Body of the Society did not act on this advice must in the circumstances have had its natural effect when that very officer was dealing with the appeal filed by the first respondent against the adverse decision of the society. It is in this sense that the petitioner made a genuine grievance before the revisional authority that the Assistant Registrar having already formed an adverse opinion even before any decision was taken. could have brought an independent and impartial judgment to bear when the matter was to be considered by him judicially. In the fitness of things, the Assistant Registrar should have declined to adjudge the matter in appeal before him as he had already taken a particular view. There is no doubt that in the circumstances disclosed on the record the second respondent could not have entertained the appeal or disposed it of without impairing the confidence of the petitioner Society in obtaining an unbiased and impartial consideration of the dispute.

(17) We are also unable to see that the decision, such as it was, is supportable on merits. The Assistant Registrar had before him a lengthy communication from the Society in which the position was fully explained. That was the letter Annexure P-5 sent by the President of the society in reply to the communication from the Assistant Registrar, on 22-7-1965. In this letter the petitioner society had pointed out that the conduct of the first respondent in another body was such as not to inspire confidence in his displaying a sense of public duty as a member of a social organisation, and they have stated in clear terms that they wanted to avoid repetition of similar things happening in the petitioner society. We fail to see how the opinion of the majority,which was obviously influenced by these factors, could be said to be wrong or without sufficient cause if the interest of the society had to be safeguarded to the decision of the majority. The conduct of the first respondent when he was an office-bearer of another society of teachers may be a general society and not necessarily a co-operative society- was such as to destroy in him. and if the majority felt that his action had resulted in making that society ineffective and defunct, the society cannot be said to have taken the impugned decision on any irrelevant considerations. It is common knowledge that healthy growth of co-operative societies is primarily dependent on mutual trust among others. If majority of members do not have a trust in the member, the best thing of everybody is that that person stays out. We therefore fail to see how the Assistant Registrar could take upon himself to foist a person whose membership was rejected by the overwhelming majority of the members on the specious ground that the principle of open membership ought to be supported. It is true while on the one hand an institution like a co-operative society should not be allowed to be exploited by influential persons to form a caucus, it is equally necessary that elements considered undesirable by overwhelming majority of persons should not be foisted on unwilling members to destroy the homogeneity of the organisation by which the very basis of co-operative effort will be put in jeopardy.

(18) But when the matter went before the revisional authority, we are amazed at some of the expressions made in the order. In paragraph 5 of the order the revisional authority it is observed:-

'. . . . . even assuming that there was misbehaviour on the part of Shri Umalkar while member in that body, he cannot be debarred forever to become a member of a co-operative credit society of teachers and to improve his economic position thereby. The membership is open under the provisions of M. C. S. Act, 1960. No moral turpitude of any kind is involved and the point of reported misbehaviour on the part of Shri Umalkar in the past is some other corporate body seems to have been stretched too far by the applicant society. Thus there is no moral turpitude involved which has been made by the society as the main cause for refusal of admission to Shri Umalkar . . . . . . . .'

If it is possible to assume even for a moment that there was any misbehaviour while he was a member of another society, it is difficult to see how that did not involve, if not actual moral turpitude, at least an attitude which did not inspire confidence. Ultimately. it is for the majority of members of the society to decide with whom they will deal and who should be associated with if the principle of co-operation is to bear its fruitful results to the advantage of the majority of the members. We therefore fail to see how he revisional authority could have at all taken the view that the petitioner society was guilty of any impropriety in refusing to admit the first respondent to the membership because of the antecedents of the first respondent as explained in their resolution. It is not as if the first respondent has not been given fair opportunity to explain his case. If after full opportunity was given to the first respondent he has failed to satisfy the majority of the members. (and it has not been alleged that everyone of them was prejudiced against him unreasonably), then in the light of the provisions of byelaw No. 5 of the byelaws of the society. which are registered byelaws and which must govern the procedure for admission of new members, the petitioner society must be held to have acted well within its rights in keeping out the first respondent from its membership. The view of both the Assistant Registrar and the Divisional Joint Registrar that the resolution passed by the General Body had taken into consideration irrelevant matters is obviously erroneous. The matter which has been taken into consideration was very relevant, and if th majority of the members came to a particular decision on taking into consideration all the circumstances, they cannot be said to have acted unreasonably or without sufficient cause. Under Section 23(2) of the Co-operative Societies Act, the appellate authority would be justified in interfering with the decision of the society in the matter of refusal of membership only if the society has acted without sufficient cause. We do not think in the instant case the petitioner society can be said to have acted without sufficient cause.

(19) We are constrained to observe also that the conduct of the second respondent in this case in entering into correspondence at the instance of the first respondent even before the matter reached him as an appellate authority was not only uncalled for but such for which care should have been taken to avoid. We do not think that the Assistant Registrar has been constituted the controller of the affairs of the Co-operative society. Apparently, it is not one of the functions of the Assistant Registrar to take sides or interest himself unduly in such matters, especially when the matter is bound to come before him at the instance of the person aggrieved by an adverse decision of the society in the matter of admission to membership. We are not sure, therefore, whether the Registrar may not consider the desirability of delegating the powers of hearing appeals not by office but by selection of the personnel. An appellate authority is expected to approach questions before it judicially and without pre-judging the issue. If by anything done in the course of administrative action an officer interests himself or takes side and yet is required to entertain and dispose of appeals from that very matter against the final decision of a society he not only places himself in embarrassing position but would be acting in a manner wholly prejudicial to an effective exercise of a right of appeal by one or the other party.

(20) We have come to the conclusion that the decision of the second and third respondents in this case was wholly without jurisdiction and it could not be said that the decision taken by the petitioner society was without sufficient cause. The result therefore is that the orders of the second and third respondents are set aside. The petition is allowed. The petitioner is entitled to its costs from all the three respondents.

(21) Petition allowed.


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