1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD (Unreported) WRIT PETITION NO 5889 of 2009 Date of decision:- 27.11.2009 For approval and signature HON'BLE MR. JUSTICE NARESH H.PATIL HON'BLE MR. JUSTICE K.U.CHANDIWAL 1. Whether the Reporters of Local Papers Yes may be allowed to see the Judgment ? 2. To be referred to the Reporter or not ? No 3. Whether Their Lordships wish to see No. the fair copy of the Judgment ? 4. Whether this case involves a substantial? No. question of law as to the interpretation of the Constitution of India, 1950, or any order made thereunder ? 5. Whether it is to be circulated to the No. Civil Judges ? 6. Whether the case involves an important No question of law and whether a copy of the Order should be sent to Bombay, Goa and Nagpur Office ? (A.G.PARALIKAR) Private Secretary agp/office/wp5889-09 2 IN THE HIGH COURT OF JUDICATURE OF BOMBAY BENCH AT AURANGABAD WRIT PETITION NO.5889 OF 2009. 1) Bhausaheb s/o Narayan Bagul Age: 54 Yrs., occu. Business R/o Kalemala, Kopargaon, Tq. Kopargaon, Dist.Ahmednagar 2) Vinayak s/o Mahadeo Baviskar Age: 45 Yrs., occu. Business, r/o Saraf Bazar, Kopargaon, Tq. Kopargaon,Dist. Ahmednagar 3) Arun s/o Trimbak Bhadakwade Age: 43 Yrs., occu. Business, r/o Subhadranagar, Kopargaon, Tq. Kopargaon, Dist. Ahmednagar 4) Deepak s/o Ganpatrao Salunke Age: 43 Yrs., occu. Business, r/o Court Road,Kopargaon, Tq. Kopargaon, Dist. Ahmednagar. ..PETITIONERS VERSUS 1) The State of Maharashtra Through Principal Secretary Co-operation and Textile Department, Mantralaya, Mumbai-32. 2) The Divisional Joint Registrar Cooperative Society, Nashik Division, Nashik. 3) The District Deputy Registrar Cooperative Societies, Ahmednagar, Dist.Ahmednagar. 4) Shreenath Nagari Sahakari 3 Path Sanstha Ltd. Wadgaon (Gupta), Tq. Nagar, District Ahmednagar Through its Manager. 5) Suvarna Nagari Sahakari Path Sanstha Ltd., Saraf Bazar, Kopargaon, Tq. Kopargaon, District Ahmednagar. through its Manager. 6) Tulsidas s/o Rijubhal Khubani Age: 52 Yrs., occu. Business, r/o Saraf Bazar, Kopargaon, Tq. Kopargaon, Dist.Ahmednagar 7) Nandkumar s/o Shankarrao Nikumbh Age: 50 Yrs., occu. Business. R/o Saraf Bazar, Kopargaon, Tq. Kopargaon, Dist.Ahmednagar. 8) Nandkumar s/o Ramchandra Vispute, Age: 48 Yr., occu. Business, r/o Saraf Bazar, Kopargaon, Tq. Kopargaon, Dist. Ahmednagar. 9) Anil s/o Pandirtao Jadhav, Age: 45 Yrs., occu. Business, R/o Saraf Bazar, Kopargaon, Tq. Kopargaon, Dist. Ahmednagar. 10) Dilip s/o Tukaram Bhalerao, Age: 49 Yrs., occu. Business, r/o Saraf Bazar, Kopargaon, Tq.Kopargaon,Dist. Ahmednagar. 11) Suresh s/o Sopanrao Vispute Age: 43 Yrs., occu. Business, r/o Saraf Bazar, Kopargaon, Tq. Kopargaon, Dist. Ahmednagar. 12) Kishor s/o Chandrakant Bagul, Age; 48 Yrs., occu. Business, r/o Kalemala, Kopargaon, Tq. Kopargaon, Dist. Ahmednagar. 4 13) Yogesh s/o Tulshidas Bagul Age: 44 Yrs., occu. Business, R/o Tuljabhawani Complex, Bajar Tal, Kopargaon, Tq. Kopargaon, Dist. Ahmednagar. 14) Vijaya w/o Kiran Dandegawal Age: 37 Yrs., occu. Business, r/o Kalemala, Kopargaon, Tq. Kopargaon, Dist.Ahmednagar. 15) Rajendra s/o Omkar Bhalerao Age: 47 Yrs., occu. Business r/o Sarafbazar, Kopargaon, Tq. Kopargaon, Dist.Ahmednagar. 16) Vijay s/o Nivrutti Bhadakwade Age: 40 Yrs., occu. Business, r/o Sarafbazar, Kopargaon, Tq. Kopargaon, Dist. Ahmednagar. 17) Sunita w/o Arun Bagul Age: 38 Yrs., occu. Business, r/o Sarafbazar, Kopargaon, Tq. Kopargaon, Dist.Ahmednagar. 18) Sandhyatai w/o Dilip Bhalerao Age: 38 Yrs., occu. Business, r/o Sarafbazar, Kopargoan, Tq. Kopargaon, Dist.Ahmednagar. 19) Babanrao s/o Jagannath Vispute Age: 38 Yrs., occu. Business r/o Sarafbazar, Kopargaon, Tq. Kopargaon, District Ahmednagar. ..RESPONDENTS ... Shri R.N.Dhorde, Advocate h/for Mr.N.R.Bhavar, Adv. for petitioners; Shri V.H.Dighe, AGP for Respondent Nos. 1 to 3; Shri N.V.Gavare, Adv. for Respondent No.4; Mr.PV Mandlik, Sr.Adv. h/for Mr. Amol Gandhi, 5 Adv.for Respondent No.7; Mr.A.K.Tiwari, Adv. for Intervenors; Mr.SK Chavan, Adv. h/for Mr. VD Salunke, Adv. for Intervenor. Mr.P.V.Barde, Adv. for Resp.Nos. 12, 14, 17 & 19. ... CORAM: NARESH H. PATIL & K.U. CHANDIWAL, JJ. Date: 27th November, 2009. Date of reserving the judgment: 21/11/2009 Date of pronouncing the judgment: 27/11/2009 *** JUDGMENT: (Per K.U.Chandiwal, J.) 1. Rule. Rule, made returnable forthwith with the consent of Counsel for the parties. 2. The order of merger/amalgamation of respondent No.5 Suvarna Nagari Sahakari Pat Sanstha Ltd. ( for short, 'Suvarna Pat Sanstha'), into Shrinath Nagari Sahakari Pat Sanstha Ltd. (for short 'Shrinath Pat Sanstha'), by order passed by the Divisional Joint Registrar, Cooperative Societies ( respondent No.2) is assailed by the petitioners who are borrower members of respondent no.5 Suvarna Pat Sanstha on the ground that there is blatant violation of Section 157 of Maharashtra Cooperative Societies 6 Act, 1960 ( for short 'the Act'). The intention of respondent no.2 is mala fide and the order is without following due procedure of law, as no hearing was given. 3. During the course of submissions, Mr. Dhorde, learned Counsel for the petitioner, has lamented on the so called General Body Meeting held on 16.8.2007, to take a decision of amalgamation of Suvarna Pat Sanstha into any other credit cooperative society, to be a fabricated event as few dead persons are shown to have attended the said General Body Meeting. According to him, there was no compliance of Section 157 of the Act and, in particular, proviso thereof. There is no resolution to this effect and hence, the order being vitiated in law, needs to be quashed. 4. The order dt.19.3.2008 has been passed by respondent no.2 in pursuance to the Government Resolution dt.18.3.2008 whereby the Government declared that the financial irregularities in 462 credit cooperative societies in the State has forced the Government, in order to safeguard the interest of the down-trodden depositors and, to ensure such reimbursement of the deposits to the creditors, to promulgate merger of the 462 credit cooperative societies into economically viable such other societies, in terms of powers vested 7 in the Government under Section 157 of the Act. It was in this scenario, the order referred above, by respondent no.2, the Joint Director dt. 19.3.2008 came to be passed. 5. Mr.N.V.Gavare, learned Counsel for Shrinath Pat Sanstha and learned Senior Counsel Mr.P.V.Mandlik, representing the applicants erstwhile chairman and office bearers of Suvarna Pat Sanstha, have condemned the approach of the petitioners as it is more cloathed with ulterior motives associated with a keen desire to stall the recovery proceedings initiated against few of the petitioners since they had defaulted in their obligations to repay the loan. The Counsel pointed out that there is delay in initiating action by present petitioners and also pointed out that the amalgamation and functioning of Suvarna into Shrinath Pat Sanstha having been already effected from 1st April 2008, the ad interim stay by this Court dt.16.9.2009 has created hindrances and developed cluster of cloud in the minds of depositors. 6. On analyzing the rival contentions, we find that the order in earlier Writ Petition (No. 3460/2008 ) of learned Single Judge dt.23.5.2008, in several other credit cooperative societies, need not be coined to take identical benefits in this case; for the simple reason, in those of the 8 cases, the merged credit cooperative societies had objected for such merger, as they were not heard, which was a requirement in terms of Section 157, proviso of the Act. 7. Reverting to the facts of the present case, indeed, there was an inclination, desire and offer of Suvarna Pat Sanstha, through its office bearers dt.16th/17th Jan.,2008, addressed to the Divisional Joint Registrar, Cooperative Societies, Nashik Region, Nashik, detailing the strength of its members and deposits, advances, profits or losses suffered. They have, by such communication, sought an assistance from the Joint Registrar and sought amalgamation/merger of Suvarna Pat Sanstha into any other viable credit cooperative society. This has been actively supported by Shrinath Pat Sanstha through their communication dt.17th Jan.,2008 ( received by the Joint Registrar on 4th Feb.,2008). The contention that such letter of Shrinath is fabricated as it does not refer to any General Body Resolution, either from Suvarna Pat Sanstha or from Shrinath Path Sanstha, is mis-placed. Non reference of General Body Resolution dt. 16.8.2007 will not mitigate the effects and credentials of the letter of Suvarna Pat Sanstha dt.16th Jan.,2008 ( Exh.R-10, page no.67 of the paper book). 9 8. Section 157 of the Act contemplates as under: " The State Government may, by general or special order, exempt any society or class of societies other than cooperative 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 cooperative 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." 9. The requirement is to give hearing to an aggrieved society which is sought to be merged as has been referred by the learned Single Judge in his interim order. The factual matrix of said Writ Petition No.3460/2008 ( Sane Guruji vs. State of Maharashtra) and other writ petitions will not be applicable to the set of facts of the present case, as there is specific line of 10 demarcation. 10. The challenge to the order of the State Government dt.18th March, 2008, granting exemption from application of Sections 17 and 18 of the Act, in relation to 462 societies, will not be on the same pedestal. 11. The order of amalgamation dt.19.3.2008, is subject of challenge in the present writ, almost after a period of one year. The amalgamation has come into force from 1st April, 2008 and, naturally, it was put into execution. All the assets and liabilities of Suvarna Pat Sanstha have been taken over by Shrinath Pat Sanstha. The record illustrates that after such amalgamation, Shrinath Pat Sanstha has recovered an amount of Rs.55,00,000/-(Rs.fifty five lacs) from the borrowers of Suvarna and, at the same time, Shrinath Pat Sanstha has paid an amount of Rs.2,25,00,000/- (Rs.two crores, twenty five lacs) for several projects of Suvarna Pat Sanstha. The salary of 28 employees of Suvarna Pat Sanstha, after amalgamation, amounting to Rs. 10,93,000/- (Rs. ten lacs, ninety three thousand) has been paid by Shrinath Pat Sanstha. An amount of Rs.1,98,61,483/- (One crore, ninety eight lacs, sixty one thousand, four hundred eighty three) has been refunded by Shrinath Pat Sanstha to 2215 depositors of Suvarna at its 11 various branches. It is pertinent that an amount of Rs.1,60,98,665/- (Rs.one crore, 60 lacs, ninety eight thousand, six hundred sixty five) has been disbursed by Shrinath Pat Sanstha to 1622 borrowers/members after amalgamation. It is, indeed, demonstrating that the activities, after merger, have taken place with vigour and velocity, naturally, to cater to the needs of the needy depositors and members of Suvarna Pat Sanstha and public at large. 12. The delay is not explained by the petitioners. The delay is more vital if other circumstances in the matter is evaluated, namely, the Suvarna Pat Sanstha, by virtue of a declaration dt.16.8.2007, had called upon objections to the amalgamation of the society. However, no voice was raised by anybody. There was a Resolution No.13(9) passed by Suvarna Pat Sanstha to effect immediate amalgamation to safeguard interests of the depositors and to have effective recovery from the defaulters who were proved to be musclemen. It was in this scenario that Suvarna Pat Sanstha has despatched the proposal referred above, seeking amalgamation of the society. Even then there was no objection from any of the petitioners/borrowers. The action of the State dt.18.3.2008, of the Resolution, invoking the powers under Section 157 of the Act, was of a general character, to 12 further avoid the instances of musclemen having occasioned in the credit cooperative societies, duping the honest depositors. The Government was prompted to take such decision in the larger public interest since there was a public outcry about credentials of the credit societies which developed like mushrooms. The amalgamation order dt.19.3.2008, indeed, has been accepted by Suvarna Pat Sanstha on 31.3.2008, vide Resolution No.15 of its Managing Committee. That apart, a paper publication regarding such amalgamation was published in the daily newspaper (Sakal) dt. 26.7.2008, calling upon the public at large to transact with Shrinath Pat Sanstha, in view of amalgamation of Suvarna Pat Sanstha with Shrinath Pat Sanstha. Even if the general body meeting held on 16.8.2007, is skipped, the overwhelming communication referred above, indicated that there was a genuine and bona fide effort from Suvarna Pat Sanstha to get amalgamation willingly into any other viable credit cooperative society. 13. The petitioners being defaulter members, prima facie, are more interested to stall the recovery process and have virtually succeeded in their exercise by the process of ad interim stay, referred above. 14. The action of the Government or 13 respondent no.2 of amalgamation, tested from any angle, does not sound to be an occasion either in haste or jeopardizing interest of the members of Suvarna Pat Sanstha. It was a conscious and coherent decision in the larger interest of public to meet the challenges occasioned due to mismanagement of Suvarna Pat Sanstha. 15. The writ petition lacks merit and it is dismissed. Rule discharged. 16. Civil Applications, seeking intervention and, other reliefs, are disposed of. The ad interim relief dated 16.09.2009 vacated. Sd/- Sd/- (K.U.CHANDIWAL) (NARESH H.PATIL) JUDGE JUDGE ... (bdv/agp/wp5889-09) Authentic copy (A.G.Paralikar) P.S.