wp11222.10 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY, BENCH AT AURANGABAD WRIT PETITION NO. 11222 OF 2010 Shri Vithalsai Sahakari Sakhar Karkhana Ltd., Murum .. PETITIONER VERSUS The State of Maharashtra & others .. RESPONDENTS Mr. N.P. Patil Jamalpurkar, advocate for the petitioner. Mr. N.B. Khandare, GP for the State. Mr. R.N. Dhorde, advocate for respondent no. 3. Mr. V.D. Hon, advocate for respondent no. 4. ===== CORAM : B.R. GAVAI & R.M. BORDE, JJ. DATE : 20 th DECEMBER, 2010 PER COURT : 1 Petitioner herein is assailing order dt. 6-12-2010 passed by the Commissioner of Sugar, Maharashtra State, Pune. wp11222.10 2 2 Petitioner and respondent no. 4 have decided to enter into partnership and, the sugar factory being run and administered by respondent no. 4 – Karkhana is sought to be handed over to petitioner for carrying out crushing operations in terms of the agreement entered into between the two parties. It appears that an application was tendered to the Registrar seeking his approval for entering into partnership, in accordance with provisions of section 20 of the Maharashtra Co-operative Societies Act. Section 20 of the Act prescribes that any two or more societies may, with the prior approval of the Registrar by resolution passed by three- fourth majority of the members present and voting at a general meeting of each of such societies, enter into partnership for carrying out any specific business or businesses, provided that each member has had clear ten days, written notice of the resolution and the date of the meeting. It is thus clear that finalisation of the partnership between two parties is subject to approval of the Registrar. 3 On consideration of the application tendered by petitioner and respondent no. 4, the Commissioner of Sugar and Special Sub-Registrar, Co- wp11222.10 3 operative Societies, Maharashtra State, Pune, in view of order passed on 30 th November, 2010, accorded conditional approval to the agreement arrived at between the petitioner and respondent no. 4. Approval is subject to securing ‘No Objection’ from the Maharashtra State Co-operative Bank Ltd., Mumbai. It appears that accordingly, the proposal was forwarded to the Maharashtra State Co-operative Bank for securing ‘no objection’ from the concerned financial institution. The Maharashtra State Co-operative Bank in view of communication dt. 27 th November, 2010 has refused to accord approval for the reasons stated in the communication. It is specifically noted in the communication addressed to the Commissioner for Co-operation by Maharashtra State Co-operative Bank that the respondent no. 4 – Karkhana owes a sum of Rs.4610.91 lacs to the bank till the end of March 2010. The bank has also initiated action under Securitisation Act and has seized the property belonging to respondent no. 4 – Karkhana and has taken possession of all assets. 4 In a meeting of the Managing Committee of the Maharashtra State Co-operative Bank, convened on 8-4-2009, the Managing Committee has prescribed reserve price of the assets of respondent no. 4 – karkhana at wp11222.10 4 Rs.1110 lacs and has also resolved to dispose of the assets of respondent no. 4 – Karkhana in accordance with the provisions of law. As the liquidator and the members of the Committee of liquidators have opposed the proposed action, the bank could not take steps for disposal of the assets of respondent no. 4 – karkhana. It is also noted in the communication that respondent no. 4 – karkhana owes an amount of Rs.46.11 crores to the Maharashtra State Co-operative Bank. On previous occasion when the State Government permitted lease of the respondent no. 4 – Karkhana, the amount recoverable out of the lease premium amounting to Rs.237.5 lacs has also not been received by the bank and inspite of persuation made by the bank with the liquidator, the amount has not been remitted. In the opinion of the bank, even if respondent no. 4 – Karkhana is permitted to be operated on lease basis, the lease premium secured would not be sufficient to meet the liabilities of the bank. The proposal submitted by the Committee of liquidators was placed before the Board of Directors for consideration in a meeting dt. 13-11-2010 and it is resolved that instead of permitting respondent no. 4 – Karkhana to be operated on lease basis, it would be proper to initiate proceedings for disposal of assets. It is also resolved in the meeting that even if respondent no.4 – karkhana is to be handed over on wp11222.10 5 lease basis, an appropriate advertisement calling tenders shall be issued and the society or any other party willing to pay the highest lease premium should be permitted to operate Karkhana. The Managing Committee of the bank as such resolved to communicate the said decision arrived at in the meeting dt. 13-11-2010 to the Registrar recording its objection to the proposal tendered by the petitioner for entering into partnership with respondent no. 4 – karkhana. 5 Respondent no. 3 has also presented affidavit in reply and contested the claim raised by the petitioner in the petition. It is further contention of respondent no. 3 – bank that the instant petition is a proxy litigation initiated at the instance of respondent no. 4 – karkhana. It is also contended that the petitioner has no right whatsoever to raise any claim for running and operating respondent no. 4 – karkhana. The proposal tendered for according approval to partnership deed is also opposed on the ground that the partnership entered into between the petitioner and respondent no. 4 is illegal being without consent of respondent no. 3 bank. 6 It is to be noted that respondent no. 4 – karkhana has independent wp11222.10 6 right to enter into partnership agreement with the petitioner. In view of provisions of section 20 of the Act, petitioner – society cannot enter into partnership without prior approval of the Registrar. In the instant matter, respondent no.3 – bank who has lend finance to respondent no. 4 – karkhana has objected to the proposed partnership between the petitioner and respondent no.4 - karkhana. The alleged partnership agreement between the petitioner and respondent no. 4 – karkhana cannot be accorded finality without prior approval of the Registrar. It is to be noted that the management of the society in view of provisions of section 72 of the Act vests in the general body of the members and the management of the society is required to be conducted in accordance with the provisions of bye-laws of the society as well as in accordance with the provisions of Maharashtra Co-operative Societies Act. Section 73 of the Act prescribes that the management of every society shall vest in the committee constituted in accordance with the act, the rules and the bye-laws which shall exercise such powers and perform such duties as may be conferred by the act, rules and the bye-laws. It is needless to reiterate here that the Managing Committee shall have to function and take decision in consonance with the provisions of the Act, the rules and the bye-laws. In the wp11222.10 7 instant matter, agreement of partnership stated to have been entered into between respondent no. 4 and the petitioner is subject to fulfillment of requirements prescribed under section 20 of the Act. 7 The Registrar, in the instant matter, has refused to accord approval to the partnership agreement entered into between the parties and withdrew the earlier order dt. 30 th November, 2010. In the facts and circumstances of the case, we do not find that the action of respondent no. 2 is erroneous or illegal. We do not find any infirmity in the action taken by respondent no. 2 of rejecting the proposal presented by the petitioner and respondent no. 4 jointly. In exercise of extra ordinary jurisdiction conferred on this court under Article 226 of the Constitution of India, there is no reason to cause any interference in the order passed by respondent no. 2. Petition therefore stands rejected. ( R. M. BORDE ) ( B. R. GAVAI ) JUDGE JUDGE dyb