wp27.11 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD WRIT PETITION NO.27 OF 2011 1) Shivaji s/o Annasaheb Gadhve, Age-59 years, Occ:Agri. R/o-Rajangaon (Kh), Tq-Rahata, Dist-Ahmednagar, 2) Babanrao s/o Ramrao Ghorpade, Age-45 years, Occ: Agri. R/o-Ganeshnagar, Tq-Rahata, Dist-Ahmednagar. ...PETITIONERS. VERSUS 1) The State of Maharashtra, Through its Secretary, Cooperative Department, Mantralaya, Mumbai-32, 2) The Collector, Ahmednagar, Dist-Ahmednagar, 3) Shri. Ganesh Sahakari Sakhar Karkhana Maryadit, Ganeshnagar, Tq-Rahata, Dist-Ahmednagar, Through its Managing Director, 4) Shri. Narayan Dnyaneshwar Karle Patil, Chairman, Shri Ganesh Sahakari Sakhar Karkhana Maryadit, Ganeshnagar, Tq-Rahata, Dist-Ahmednagar. ...RESPONDENTS. wp27.11 2 ... Shri. V.D. Salunke Advocate i/b. Shri. S.S. Shete Advocate for Petitioners. Shri. B.V. Wagh, A.P.P. for Respondent Nos. 1 and 2. Shri. V.D. Hon Advocate for Respondent No.3. Shri. R.A. Tambe Advocate for Respondent No.4. ... CORAM: NARESH H. PATIL AND S.V. GANGAPURWALA, JJ. RESERVED ON : 24TH FEBRUARY, 2011 PRONOUNCED ON : 14TH MARCH, 2011 JUDGMENT [PER NARESH H. PATIL, J.] : 1. By an order dated 15th February, 2011, notice was issued to the Respondents for final disposal of the Petition at admission stage. Rule. Rule made returnable forthwith. 2. The Petitioners contend that they are members of Respondent No.3 Sugar Factory namely, Ganesh Sahakari Sakhar Karkhana, Tq-Rahata, Dist- wp27.11 3 Ahmednagar. The Petitioners challenge impugned order dated 22nd November, 2010, passed by the State Government, by which the State Government granted exemption under Section 157 of the Maharashtra Co-operative Societies Act, 1960 (for short "the Act of 1960") in favour of Board of Directors of Respondent No.3 Sugar Factory. 3. The Petitioners state that Respondent No.3 Sugar Factory is specified society within the meaning of Section 73-G of the Act of 1960. The Board of Directors of the said Sugar Factory was elected in the year 2005. The Committee was constituted on 15th December, 2005 and the term of the Committee expired on 14th December, 2010. In accordance with the provisions of Section 73-H of the Act of 1960, the Director Board is bound to take steps in advance to hold elections as per the term. It is contended that Respondent No.3 Sugar Factory prepared provisional voters list and submitted copies of the same to the Collector. The wp27.11 4 Petitioners contend that final list of the voters was published by the Collector, Ahmednagar. The Petitioners were requesting for declaration of election programme, but to their surprise, an order was passed by the State Government in exercise of its powers under Section 157 read with Section 73 (1A) (b) of the Act of 1960. Under the impugned order, the State Government granted extension to the present Board of Directors for a further period of six months from 15th December, 2010. 4. The Petitioners contend that grant of exemption under Section 157 of the Act of 1960 was contrary to law and unsustainable in the facts of the case. 5. The Writ Petition was filed on 2nd December, 2010. The Division Bench of this Court passed an order of issuance of notice to the Respondents on 11th January, 2011. The Respondent wp27.11 5 Nos. 3 and 4 filed affidavit in reply. The Petitioners had filed rejoinder. The Respondent No.1 had also filed affidavit in reply dated 21st February, 2011 through Shri Shaikh Fayyaz Ahmed, Regional Joint Director of Sugar, Ahmednagar. 6. The Respondent No.1 State in Para 6 of the affidavit in reply averred that: "6. With regards to para 6 and 7 of the petition, I hereby submit that, order dt. 22.11.2010 is self explanatory. Extension of 6 months has been granted on the grounds of surplus sugarcane, paucity of harvesting labour during the crushing season and the financial difficulties being faced by the Resp. No.3 Karkhana. This extension has been granted U/s 73 (IB) and not U/s 73(IA)(b). Reasons for granting of extension have been wp27.11 6 enumerated in the order itself and Resp. No.1 has the authority to issue such order." 7. The learned counsel Shri. V.D. Salunke appearing for the Petitioners urged that the term of the present elected Board of Directors was already over and in the light of the provisions of law, the Collector ought to have taken steps for holding elections and in fact fresh elections ought to have been concluded by this time. But due to political pressure and intervention and to favour the present Board of Directors, the State Government issued an order dated 22nd November, 2010, stating therein that Respondent Sugar Factory is to crush 4,00,000 Metric Ton sugar-cane and for the said purposes, additional labour is required. The Sugar Factory is in financial crisis, which would affect the functioning of Sugar Factory. The Board of Directors would be busy in arranging and managing affairs in crushing wp27.11 7 season, therefore, the present Board of Directors had requested for extension of their term. The State Government, therefore, passed order of exemption under Section 157 of the Act of 1960, by giving exemption in respect of the provisions of Section 73 (IA)(b) of the Act of 1960 and extended the term of the Board of Directors from 15th December, 2010 for a further period of six months i.e. till 14th June, 2011. The learned counsel submits that the impugned order is not passed in respect of society but it is in respect of the members of the Board of Directors. According to the learned counsel, Respondent Sugar Factory does not have sugar-cane to crush now and therefore they are trying to take sugar-cane from other Sugar Factories. The learned counsel submits that in Ahmednagar District, elections are going on in respect of other Sugar Factories. In the light of the provisions of Section 73-H and other relevant provisions of the Act of 1960, the State/Collector was bound to take steps to hold elections to wp27.11 8 constitute Board of Directors. 8. Shri. Salunke, learned counsel appearing for the Petitioners, in support of his submissions, placed reliance on the following Reported Judgments: 1) Indian Labour Co-operative Society Ltd. & Anr. vs. Union of India & Ors., 1997 (7) S.R.J. 386, 2) Shivamrut Dudh Utpadak Sahakari Sangh Maryadit and others vs. State of Maharashtra and others, 2004 C.T.J. 167, 3) Purna Co-operative Sugar Factory and another vs. Jaiprakash s/o Shankarlal Mundada and others, 2003 C.T.J. 484, 4) Judgment delivered by the Division Bench of this Court wp27.11 9 (CORAM: P.V. HARDAS AND S.P. KUKDAY, JJ) in Writ Petition No.8040 of 2006 dated 24th January, 2008 in the case of Ramesh Bhairoba Mane vs. The State of Maharashtra and others. 5) Anandrao Yashwantrao Nalawade & others vs. State of Maharashtra & others, 2005 (6) Bom. C.R. 174. 6) Maroti Vishnu Borkar vs. State of Maharashtra & ors., 2008 B.C.I. 6. 9. Shri. Salunke, learned counsel appearing for the Petitioners, specifically relied on Para 18 of the Judgment in the case of Maroti Vishnu Borkar vs. State of Maharashtra & ors., 2008 B.C.I. 6, cited supra, which reads thus: "18. It would be pertinent to wp27.11 10 note that the State Government has the power under section 73(1A)(b) to nominate the first provisional Committee to manage the affairs of a Co-operative sugar factory newly established. The life of the first Provisional Committee is initially for a period of three years and thereafter can be extended by a further period of two years. Therefore, the maximum term of the Provisional Committee can be of five years. In the instant case, the term of the Provisional Committee came to an end sometime in 2005 and since the elections were not held by the Provisional Committee, vide order dated 2-10-2005, the State Government in exercise of the powers under section 73-H appointed an Administrator. However, by order dated 7-12-2005, the said appointment of the Administrator came to be stayed wp27.11 11 and by a further oder dated 10-11-2006 an Administrative Board came to be appointed under Section 73-H of the said Act. The term of the said Administrative Board came to an end on 9-11-2007 in view of the statutory prescription that an Administrative Board could continue only for a period of six months. The State Government to get over the said difficulty invoked the provisions of section 157 of the said Act by exempting the respondent No.10 from the provisions of section 73-H of the said Act and thereafter by a subsequent order dated 5-1-2008 continued the Administrative Board in terms of the said order dated 5-1-2008. We find considerable merit in the submission of Shri Salunke that the said Administrative board could not continue beyond 9-11-2007 on wp27.11 12 which date the statutory period of six months comes to an end. The invocation of section 157 by the State Government in the instant case, in our view is wholly unsustainable. As held by the Division Bench in the judgment cited supra in Writ Petition No.8040 of 2007, the said power could not be exercised to continue a Committee which otherwise could not be continued under the provisions of law. This, in our view, would amount to perpetuate an illegality as the Administrative Board is thereby allowed to continue beyond the statutory period prescribed. It is not as if the State Government is powerless, it can act thorough the Registrar of Co-operative Societies who is sufficiently empowered under the provisions of the said Act to appoint an Administrator to look after the affairs of the wp27.11 13 Committee. Why the same has not been done in the instant case only leads credence to the allegations of the petitioner that the same has been done to favour the Administrative Board whose members are close to the powers that be in the ruling coalition. In so far as the submission of the learned Government Pleader that the Administrative Board has been continued in exercise of powers under section 77-A (1)(f)(ii) of the said Act is concerned, we are baffled by the said submission made on behalf of the State Government and its authorities. In our view, a reading of the said provisions ex facie makes it clear that the said provision is not at all applicable in the facts of the instant case. In fact the instant case does not fall in any of the categories mentioned in the said section 77-A. It wp27.11 14 was then sought to be faintly submitted before us that the instant case fits in Clause (1-a) of Section 77-A(1) of the said Act. We are unable to countenance such a submission. It appears that the State Government finding that the term of the Administrative Board has come to an end has sought to rely upon a provision which is not at all applicable. The said order dated 5-1-2008 is, therefore, unsustainable and is, therefore, required to be set aside." 10. Shri. Hon, learned counsel appearing for Respondent No.3 submitted that the Petition has become infructuous in the light of the order passed by the State Government on 18th February, 2011, substituting Para 3 of the impugned order. The substituting Para in the corrigendum issued by the State Government demonstrates that the State Government had extended the term of the present wp27.11 15 Board of Directors of the Respondent Sugar Factory from 15th December, 2010 for a period of six months i.e. till 14th June, 2011, pursuant to the provisions of Section 73-IB of the Act of 1960. The counsel submits that in the light of the said corrigendum, the challenge in the Petition does not survive. The voters list is already finalized. The Petition deserves to be dismissed, according to the counsel, for non-joinder of necessary parties i.e. 25 members of the Board of Directors. It is submitted that said 25 members are necessary and proper parties to the Petition. A reference was made to the provisions of Section 73 (2B), 73-H of the Act of 1960, by the learned counsel. In the submissions of the counsel, the Board of Directors is not avoiding to hold elections but due to peculiar facts and circumstances, more precisely the financial crisis, the State Government thought it fit to extend the period of present Board of Directors. The continuation of the Board of Directors, according to the counsel, wp27.11 16 would be in the interest of Respondent Sugar Factory. The counsel summed up the argument by submitting that Respondent No.3 Sugar Factory is willing to hold elections to the Board of Directors from 15th March, 2011 without asking for any further extension and this Court may issue such directions for holding elections. Shri. Hon, the learned counsel, in support of his submissions, placed reliance on the reported Judgment in the case of Dinesh Kantilal Panchal & ors. vs. State of Maharashtra & ors., 2008(5) Bom.C.R. 668. 11. Shri. Tambe, learned counsel appearing for Respondent No.4 submitted that the Petition has become infructuous for want of necessary parties and it be dismissed. 12. Shri. Wagh, the learned A.G.P. submitted that in the light of the order passed by the State Government on 18th February, 2011, the Board of wp27.11 17 Directors could continue for a further period of six months, which would not be prejudicial to the interest of Respondent Sugar Factory. 13. We have perused the documents placed on record, relevant provisions of the Act of 1960 and considered the submissions advanced before us. 14. It is not disputed that term of the present elected Board of Directors has expired on 15th December, 2010. The election to constitute Board of Directors was required to be held and the Collector was to take necessary steps in this regard. The voters list was finalized. But before the election programme could be declared, the State Government issued impugned order granting exemption under Section 157 of the Act of 1960 and extended the term of Board of Directors for a further period of six months. 15. We are in fact disturbed to find that on wp27.11 18 15th February, 2011 notice for final disposal of this Petition was issued, making it returnable on 24th February, 2011 and before the said date, the State Government issued a corrigendum to the impugned order on 18th February, 2011; whereby Para 3 of the impugned order, which was objected to by the Petitioners, was substituted and the term of Board of Directors was extended for a further period of six months by giving reference to the provisions of Section 73-IB of the Act of 1960. 16. In the affidavit in reply filed by Respondent No.1, the State did not refer to this corrigendum, which was placed on record through Respondent No.4 by an affidavit in reply. Instead, the State adopted a stand in the affidavit in reply that the extension was granted under Section 73 (IB) and not under Section 73 (1A)(b). 17. In the light of the fact that the matter wp27.11 19 was subjudice before this Court, the State Government ought not to have interfered with the impugned order by modifying it. We strongly deprecate the act of the State, and the manner in which the State had issued a corrigendum, in a subjudice matter. 18. In the light of the principles laid down governing exercise of powers under Section 157 of the Act of 1960 by the State, we find that the impugned order and the corrigendum was not sustainable in the facts of the case and in the light of the provisions of law. 19. The provision of Section 157 of the Act of 1960 reads as under: "157. Power to exempt societies from provisions of Act The State Government may, by general or special order, wp27.11 20 exempt any society or class of societies [other than co- operative credit structure entity] from any of the provisions of this Act, [or of the rules made thereunder,] or may direct that such provisions shall apply to such society or class of societies [other than co-operative credit structure entity] with such modifications not affecting the substance thereof as may be specified in the order: Provided that, no order to the prejudice of any society shall be passed, without an opportunity being given to such society to represent its case." 20. The State Government had exercised powers to grant benefit to the Board of Directors in extending their term for a period of six months. The exemption was not granted qua the society from any of the provisions of the Act of 1960. wp27.11 21 21. The reasons for passing the impugned order was that the crushing season was going on and the Respondent Sugar Factory was facing financial difficulties. These statements are disputed by the Petitioners. According to the Petitioners, enough sugar-cane is not available for Respondent Sugar Factory and therefore Respondent Sugar Factory is borrowing sugar-cane from other Sugar Factories. The learned counsel for the Petitioners submitted that in the same District i.e. Ahmednagar District, elections are being held to the Board of Directors of other Sugar Factories, during the same period; whereas the case of Respondent No.3 is met with an exception. It was alleged that due to political interest and interference, the impugned orders were passed. 22. The Managing Director of the Sugar Factory is made party to this Petition along with wp27.11 22 the Chairman of the Board of Directors. In normal circumstances, we would have insisted for adding all the Directors of the Board to the proceedings of this Petition. Learned counsel for the Petitioners submitted that considering peculiar facts of the case, adding all the members of the Board is not very essential and the same would consume considerable time, by which even the period of extension granted by the State would expire. 23. Considering peculiar facts of the case, We find that the Petition need not be dismissed on the ground of non-joinder of necessary parties. 24. In the light of the facts of the case and the impugned order passed by the State, which was later on changed during pendency of this Petition, we are not much impressed by the arguments of the learned counsel appearing for Respondent No.3, that the Petition has become infructuous. The wp27.11 23 argument of the learned counsel for Respondent No.3 is required to be considered in the light of the submissions advanced that Respondent No.3 would hold elections from 15th March, 2011 without seeking any further extension and this Court could even issue such directions to hold elections. We do not find any reasonable ground for the State Government to extend the term of the Board of Directors when they are willing to hold elections. But the fact remains that their term expired on 15th December, 2010 itself and for near-about four months the Board of Directors continued on the basis of this extension. In the facts of the case, we find that the Collector should take appropriate steps in the light of the provisions of the Act of 1960, to hold elections to constitute Board of Directors of Respondent Sugar Factory. We are not convinced that the case was made out for the State to exercise powers under Section 157 of the Act of 1960. wp27.11 24 25. For the reasons stated above, the Petition deserves to be allowed. The impugned order dated 22nd November, 2010 (Exhibit B) issued by the State Government and the corrigendum dated 18th February, 2011 issued by the State in the Department of Co-operative, Marketing and Textile, is quashed and set aside. We direct the Respondent No.2 - Collector, Ahmednagar to take immediate steps to hold election to constitute Board of Directors of Respondent No.3 Sugar Factory. . Rule is made absolute in the above terms, with costs. [S.V. GANGAPURWALA, J.] [NARESH H. PATIL, J.] asb/MAR11/wp27.11