Skip to content


M. Nagarajan and anr. Vs. the Tiruchirappalli Co-operative House Construction Society Limited by Its Secretary and anr. - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtChennai High Court
Decided On
Reported in(1973)2MLJ188
AppellantM. Nagarajan and anr.
RespondentThe Tiruchirappalli Co-operative House Construction Society Limited by Its Secretary and anr.
Excerpt:
- .....a mistake in not following the statutory rules. the rule nisi is therefore made absolute and it is unnecessary for the second respondent, in the light of this judgment, to hear any more the appeals preferred by both the writ petitioners, as they have be come infructuous by reason of this order both the writ petitions are allowed. their will be no order as to costs.
Judgment:
ORDER

T. Ramaprasada Rao, J.

1. In each of these petitions a common question arises. It is agreed that the facts in Writ Petition No. 2999 of 1972, may be perused for an appreciation of the facts in the other petition. The petitioner is one of the Board of Directors as well as a member of the Tiruchirappalli Cooperative House Construction Society, Tiruchy. It is not in dispute that the writ petitioner, in both the writ petitions, was a Director of the Society and, but for the challenged order, would continue in such capacity till September, 1973. The petitioner in Writ Petition No. 2999 of 1972 borrowed a sum of Rs. 5,835-06 p. and the petitioner in W.P. No. 3002 of 1972 borrowed Rs. 8,000 for constructing a house in the Colony of the Society and, under the terms and by-laws governing the Society as also under the conditions under which the loans were secured, the petitioners were expected to pay the debts in instalments. He paid such instalments ever since the date of the borrowing and the last of such payments made by the writ petitioner in W.P. No. 2999 of 1972 was on 6th April, 1972 and by the other writ petitioner, on 26th May, 1972. When these amounts were received, it was recorded in what is known as the passbook that there was no amount due by way of principal and in one case (in the records concerning W.P. No. 2999 of 1972) it was also endorsed that the hire-purchase dues have been cleared. Fortified with such a remark in the pass-book that there were no arrears, the petitioners were under the impression that nothing more was due and payable towards the debts borrowed by them. It appears that on 29th September, 1972 the Secretary of the Society is said to have demanded from the first writ petitioner a sum of Re. 0.39 p. and from the other Rs. 7.77 p., and stated therein that if the amount is not paid within seven days from the receipt of that notice, appropriate action would be taken against them in accordance with law. The case of the petitioners is that they did not receive this notice, dated 29th September, 1972 said to have been sent by the Secretary under Certificate of Posting. The petitioners, therefore, claimed ignorance of any such paltry amount payable by them to the Society towards their debts which, in the circumstances already stated, prompted them to believe that there were no more arrears payable by them to the Society. As a matter of fact, in W.P. No. 2999 of 1972, the further fact appears that the Board of Directors met on 15th June, 1972 and resolved to release the hypotheca from the burdens of the mortgage, as apparently, the Board was satisfied that the mortgage was cleared by payment of the mortgage debt. This is only incidental, but an important additional factor which appears from the record. After all this, on 19th October, 1972 the Secretary of the Society passed the challenged order removing the petitioner from the office of the member of the Committee of the Society under Section 28(1)(b)(i) of the Tamil Nadu Co-operative Societies Act, read with by-law 21 (2) (F) of the By-laws of the Society. It is as against this order, the present writ petitions have been filed.

2. The Society, in its counter, states that as the petitioner in each of these petitions has availed himself of the alternative remedy of an appeal to the second respondent which is available under the provisions of the Act, no Rule under Article 226 of the Constitution of India should issue. It is also stated that as the petitioner in each case was notified of the default and he did not remedy the same within the time granted, he should be deemed to be a defaulter and the action, taken by the Secretary is therefore sought to be sustained.

3. The first question that arises is whether the Secretary of this Co-operative Society can at all remove a member of the Board of Directors. Prima facie it appears that the order of removal passed by the Secretary of the Society is unsustainable as, under By-law 29 of the Society, removal of the Members of the Board of Directors other than nominated Directors is a subject which has to be dealt with by the general body of the Society as the ultimate authority in all matters relating to the administration of the Society. That has not been done in this case. Therefore, the order resulting in the removal of the petitioner from the board of management of the committee as it is now called, is one which is repugnant and runs contrary to the express provisions in the by-laws, viz., By-law. 29.

4. The second question is whether the action of the Secretary in having initiated proceedings against the petitioner in each case on the ground that there was a default which has not been remedied is correct or not. No doubt, under Section 28 of the Tamil Nadu Co-operative Societies Act (hereinafter referred to as the Act), a committee member can be removed if he suffers from any one of the disqualifications mentioned therein. A list of such disqualifications is also found in By-law 21 (2), of the By-laws governing this Society. One such clause is that a member of the board of directors of the Society shall cease to hold his office if he commits default in respect of any loan taken by him from the Society and if the default continues for a period of three months. I am not extracting the By-law in full as it is not necessary. The question, therefore, is whether, in the instant, case, the action initiated by the Secretary against the petitioner on the ground that he was a defaulter and that such default continued for a period of three months and on account of such a continued default, the petitioner has automatically ceased to hold his office in the board of directors is sustainable. I have already referred to the relevant facts. The petitioners paid the last instalment on 6th April, 1972 and obtained an endorsement in the pass-book that there was no outstanding by way of principal. In both the cases no indication was given by the Society that such an entry was only provisional and that there is a possibility of some more amount being payable by the debtor, namely the member, at any future point of time. In any event it cannot be said that on 6th April, 1972, or on 26th May, (1972 (which is the date concerned in Writ Petition No. 3002 of 1972) the petitioner was conscientiously a defaulter within the meaning of Section 28 of the Act or By-law 21 (2) of the by-laws. The only intimataion given by the society about, such a default is by the notice dated 29th September, 1972 which notice, the petitioners say they did not receive. I shall advert to this aspect later. Even assuming that such a notice was sent, the Secretary did not follow the prescription as to time in By-law 21 (2) which says that even if there was a default such a default should have continued for a period of three months so as to make such a defaulter cease from holding the office as a director in the board. For the first time apparently after re-scrutiny of the accounts, it was discovered that the petitioners owed a sum of Re. 0-39 P. and Rs. 7-77 P to the Society. A demand notice was given in September 1972. The petitioners, therefore, were entitled, under the By-law, to pay off the; said amounts within three months from that date on which date only the default was notified. No such opportunity was given. But, on 19th October, 1972, the Secretary removed the petitioners from their respective offices as members of the committee. This is in the teeth of the by-law as it cannot be said that the petitioners are defaulters within the meaning of the by-law or even in the ordinary sense. When the petitioners were lulled into the belief that their loans have been cleared to the hilt and that there was no outstanding by way of principal and when there was no indication that such remark in the passbook was provisional, it cannot be expected that they had to pay some amount more to the society either in April or in May, 1972. For the first time, they were apprised of such a situation, if they were notified at all, only in September, 1972 The petitioners, therefore, were not given an adequate opportunity to shed their garb of default by paying off the paltry amounts of Re. 0-39 and Rs. 7-77 P. within three months from the date when they were informed about such dues. I am therefore, satisfied that the challenged order is permature as it is against the provisions of the law and particularly the bylaws of the Society.

5. The last question, even though it is unnecessary to consider, but having been urged before me, may also be touched upon. Under the rules of the Co-operative Society, any notice which a Society may send to its member should accord to the guidelines given in Rule 97 of the rules made under the Co-operative Societies Act. Rule 97 lays down the procedure for the service of notices. In the first instance, the notice must be tendered in person and if he is not found it must be left at his last known place of residence and if the address of the person is known, by sending such notice by registered, post and if none of the means aforesaid is available, by affixing such notice in some conspicuous part of the last known place of abode. It is not stated that there was any specific mode of service prescribed for sending a notice of default to a member of the Committee or a member of the Society. In the absence of such specified procedure, the general mode of service set out in Rule 97 has to prevail. In the instant case, the notice dated 29th September, 1972 is said to have been sent under certificate of posting but the petitioners refute receipt of such a notice. Even taking for granted that such a notice was sent under certificate of posting, that was not one of the accredited methods by which a notice has to be sent under the statutory rules governing the Society. Here also, there is an apparent error.

6. For all these reasons, the challenged, order is not sustainable and it has to be set aside. But, the argument of Mr. Raman is that a rule under Article 226 of the Constitution need not be issued at this stage because the second respondent, as the appellate authority under the Act, can remedy the evil which has crept in. It is not necessary for a Court exercising jurisdiction under Article 226, to postpone the remedy when an apparent error or an error apparent in law is so clear and postpone the removal of such an order which cannot remain any longer on record, on the only ground that the appellate Court is likely to give redress to the petitioners. In my discretion, I am satisfied that the rule has to issue even at this stage, for the Secretary had no power to issue the challenged order and even when initiating the process which resulted in the impugned order, he made a mistake in not following the statutory rules. The rule nisi is therefore made absolute and it is unnecessary for the second respondent, in the light of this judgment, to hear any more the appeals preferred by both the writ petitioners, as they have be come infructuous by reason of this order Both the Writ petitions are allowed. Their will be no order as to costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //