1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD WRIT PETITION NO.4671 OF 2009 Bablu Nehrujalji Chaudhari, Age-43 years, Occu:Business, R/o-Bus Stand Road, Jalna. ...PETITIONER. VERSUS 1) The State of Maharashtra, Through its Secretary, Co-operative Department, Mantralaya, Mumbai, 2) The Minister, Co-operative Department, Mantralaya, Mumbai, 3) The Divisional Joint Registrar, Co-operative Societies, Aurangabad Region, Aurangabad. 4) Dhanraj Shankarrao Sambare, Age-42 years, Occu:Business, R/o-Near Maratha Building, Kadbi Mandi Road, Jalna, Dist-Jalna. ...RESPONDENTS. ... Mr.P.M. Shah, Senior Counsel i/b. A.S. Sawant Advocate for Petitioner. Mr.N.H. Borade, A.G.P. for Respondent Nos. 1 to 3. Mr.K.J. Suryawanshi Advocate for Respondent No.4. ... 2 CORAM: K.K. TATED, J. DATE : 14TH SEPTEMBER, 2009. PER COURT : 1. Rule. Rule made returnable forthwith. With the consent of the learned counsel for the parties, matter is taken up for final hearing at the stage of admission. 2. Heard learned counsel for the parties. By this Petition under Articles 226 and 227 of the Constitution of India the Petitioner challenges the Judgment and order dated 30th June, 2009 passed by the learned Minister in proceeding No. APP/1008/Pra.Kra./577/15-S and Judgment and order dated 26th September, 2008 passed by the Divisional Joint Registrar, Aurangabad Region, Aurangabad vide outward No. Arth-2/JPC/K-73 FF, 78/BNECHAU/2008. 3. It is the case of the Petitioner that the Petitioner was elected as Director of the Jalna Peoples Co-operative Bank Ltd., Jalna in the year 3 2005. Thereafter, the member of the bank submitted an application dated 5th May, 2008 with Divisional Joint Registrar, Aurangabad praying for disqualification of the Petitioner on account of default. It is alleged that the Petitioner was defaulter on the date of filing of the nomination form. On the basis of the said complaint, Divisional Joint Registrar, Aurangabad issued show cause notice dated 29th May, 2008 to the Petitioner calling upon the Petitioner to show cause why he should not be declared as defaulter under the provisions of Section 73 FF of the Maharashtra Co-operative Societies Act, 1960. In the said show cause notice, it is alleged that the Petitioner obtained the cash credit limit of Rs.9,50,000/- from the bank and it was not repaid prior to filing of the nomination form. It is the case of the Petitioner that cash credit limit was enhanced upto Rs.9,50,000/- in the year 2000. Thereafter on 29th May, 2005 the Administrator came to be appointed by the competent authority of Jalna Peoples Co-operative Bank Ltd., Jalna and the then Board of Directors came to be 4 superseded. It is the case of the Petitioner that on 25th August, 2005 the Committee of Administrator approved the cash credit limit of the Petitioner for the period upto 31st March, 2008. Hence the validity period of the cash credit limit was upto 31st March, 2008. Thereafter the Petitioner filed a detailed reply to the show cause notice issued by the Divisional Joint Registrar, Aurangabad. It was specifically stated in the said reply by the Petitioner that a cash credit limit of the Petitioner was renewed upto 31st March, 2008, hence in any manner, there was no dues against the Petitioner on or before 31st August, 2008. He further stated that apart from these facts, the Petitioner has repaid the entire amount on 11th May, 2006. Considering the Petitioner's reply, the Divisional Joint Registrar, Aurangabad passed order dated 26th September, 2008 holding the Petitioner disqualified for remaining as Director of the Jalna Peoples Co-operative Bank Ltd., Jalna. Being aggrieved by the said order dated 26th September, 2008, the Petitioner preferred Appeal before the 5 learned Minister under Section 152 of the Maharashtra Co-operative Societies Act, 1960. The said Appeal came to be rejected by the learned Minister on 30th June, 2009. 4. Learned senior counsel appearing on behalf of the Petitioner submitted that both the authorities failed to consider that cash credit facility is not a term loan which requires to be repaid in installments and therefore the provisions of Section 73 FF of the Maharashtra Co-operative Societies Act, 1960 are not applicable. He further submitted that the show cause notice issued by the Respondent authority is vague and it is vitiated on account of non disclosure of cause of action. He further submitted that the show cause notice refers to the arrears for the period ending on 31st March, 2005. There is no show cause notice with reference to the date of poll i.e. 27th November, 2005. Obviously the Petitioner was not called upon to offer any explanation with respect of the status of loan as on 27th November,2005, hence no further investigation 6 was required to be carried out. He further submitted that both the authorities failed to give any finding of fact that on 27th November, 2005 the Petitioner was a defaulter. He further submitted that prior to the date of election notification i.e. 12th December, 2005, there was a Board of Administrator for the period from 20th March, 2005 to 26th December, 2005. During that period the Board of Administrator sanctioned the validity of cash credit limit upto 31st March, 2008. Therefore, there is no question of Petitioner's being defaulter under Section 73 FF of the said Act. In view of these submissions, learned counsel for the Petitioner states that the Petition is requires to be allowed in terms of prayer clause (A). 5. On the other hand, learned counsel for Respondent No.4 submitted that the Petitioner had obtained loan amount of Rs.9,50,000/- from the Bank on 20th September, 2000 and the limit of the said loan was upto 31st March, 2004. He further submitted that the Petitioner failed to repay the dues in time 7 and loan account of the Petitioner was overdrawn and in default. He further submitted that an amount of Rs.10,81,250.51/- was due against the Petitioner as on 31st March, 2005. He further submitted that the said loan amount was in default till 11th May, 2006 and therefore the competent authority rightly issued show cause notice to the Petitioner under Section 73 FF of the Maharashtra Co-operative Societies Act calling upon the Petitioner to explain why he should not be declared as defaulter. He further submitted that both the authorities below rightly held that the Petitioner was defaulter under Section 73 FF of the said Act and therefore he is not entitled to hold the post of Director of the said Bank. Learned counsel for Respondent No.4 submitted that the contention of the Petitioner about renewal of his cash credit facility by Resolution dated 25th August, 2005 is absolutely false and incorrect. It is the case of the Respondent No.4 that loan account of the Petitioner was not renewed on 25th August, 2005. He further submitted that the Petitioner has produced on record the copy of Resolution dated 25th 8 August, 2005 first time before this Court, which cannot be relied upon. On the basis of these submissions, learned counsel for Respondent No.4 submitted that the impugned orders passed by both the authorities below are according to law and it is not necessary to interfere with the same under Articles 226 and 227 of the Constitution of India. He further submitted that it is settled principle that an account to be treated as out of order if the outstanding balance remains continuously in excess of the sanctioned limit. For that purpose, he relied on the passage of Commentary in respect of Non Performing Assets (NPA), which reads as under: "@ An account should be treated as 'out of order' if the outstanding balance remains continuously in excess of the sanctioned limit/ drawing power. In cases where the outstanding balance in the principal operating account is less than the sanctioned limit/drawing power, but there are no credits continuously for 90 days or credits are not 9 enough to cover the interest debited during the same period, these accounts should be treated as 'out of order'. " 6. Learned A.G.P. for Respondent Nos. 1 to 3 supported the impugned orders passed by both the authorities. 7. In my view following points for determination requires to be answered in the present Petition: (1) Whether the Petitioner can be held as 'defaulter' under Section 73 FF of the Maharashtra Co-operative Societies Act, 1960? (2) Whether the show cause notice issued by the Divisional Joint Registrar, Co-operative Societies, Aurangabad Region, Aurangabad dated 29th May, 2008 discloses any cause of action? 8. These two issues are squarely covered by the previous Judgment of this Court in Writ Petition No. 10 4672 of 2009 dated 25th August, 2009. Present Writ Petition as well as Writ Petition No.4672 of 2009 were on Board for hearing together on 22nd July, 2009. Therefore, in view of the Judgment delivered in Writ Petition No.4672 of 2009, which squarely covers the facts of the present Petition also, present Writ Petition is allowed with no order as to the costs. Rule is made absolute in terms of prayer clause (A) which reads as under: "(A) The Hon'ble High Court may be pleased to quash and set aside the judgment and order dtd.30.06.2009 passed by the learned Minister in proceedings No.APP/1008/Pra.Kra./577/15-S (Annexure- M) and judgment and order dtd. 26.9.2008 passed by the Divisional Joint Registrar Aurangabad Region Aurangabad vide outward no. Arth-2/JPC/K-73 FF, 78/BNECHAU/2008 (Annexure I) and further be pleased to pass necessary orders for the said purpose." [K.K. TATED, J.] asb/SEPT09/wp4671.09