1 LPA167.11.sxw IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION LETTERS PATENT APPEAL NO.167 OF 2011 IN WRIT PETITION NO.10077 OF 2010 1 Nashik District Central Co-op.Bank Ltd., ) Having its office at Mumbai Agra Road, Near ) Dwarka Circle, Nashik-422 011. ) Through its Managing Director ) 2 Mr.Parvez Mohd. Yusuf Konkani ) Nashik Dist.Central Co-op. Bank Ltd., ) Having its office at Mumbai Agra Road, ) Near Dwarka Circle, Nashik-422 011. )..Appellants Vs. 1 Rajendra Laxman Bhosale ) Age- 41 years, Residing at 813, Mausam Bridge, ) Malegaon, Taluka Malegaon, Dist. Nashik. ) 2 Divisional Joint Registrar ) Co-operative Societies, Nashik Division, Nashik ) 3 The State of Maharashtra ) Through the Hon’ble Minister, Co-operative ) Mantralaya, Mumbai. ).Respondents 2 LPA167.11.sxw W I T H LETTERS PATENT APPEAL NO.168 OF 2011 IN WRIT PETITION NO.285 OF 2011 1 Nashik District Central Co-op. Bank Ltd., ) Having its office at Mumbai Agra Road, Near ) Dwarka Circle, Nashik-422 011. ) Through its Managing Director ) 2 Mr.Parvz Mohd. Yusuf Konkani ) Nashik District Central Co-op. Bank Ltd., ) Having its office at Mumbai Agra Road, Near ) Dwarka Circle, Nashik-422 011. )..Appellants Vs. 1 Shri Chandrakant Lumchand Gogad ) Age-55 years, Occupation-Business, ) Residing at Manake Compound, Manmad ) Taluka Nandgaon, District-Nashik ) 2 Divisional Joint Registrar ) Co-operative Societies, Nashik Division, Nashik ) 3 The State of Maharashtra ) Through the Hon’ble Minister ) Co-operative Mantralaya, Mumbai ).Respondents ---- 3 LPA167.11.sxw Mr.P.K.Dhakephalkar Sr.Advocate with A.S.Desai & R.S.Ghadge for for the appellants. Mr.N.V.Walawalkar Sr.Advocate i/by S.M.Sabrad for respondent no.1 in LPA 167/2011. Mr.Y.S.Jahagirdar Sr.Advocate i/by Amit Borkar for respondent no. 1 in LPA No.168/2011. Mr.R.M.Patne AGP for respondents/State. Mr.S.S.Patwardhan for respondent no.4 in LPA 167/2011. ---- CORAM : P.B.MAJMUDAR & MRS.MRIDULA BHATKAR, JJ. JUDGMENT RESERVED ON : 20.7.2011 JUDGMENT PRONOUNCED ON : 3.8.2011 JUDGMENT :- ( PER : MRS.MRIDULA BHATKAR,J) 1 The learned single Judge by his order dated 13.6.2011 set aside the order passed by the Divisional Joint Registrar dated 22.10.2010 giving acceptance and registering the amendment of bye-laws of the petitioner Co-operative Bank (In short, hereinafter referred to as “bank”) and remanded it to the registration. The petitioner bank has challenged the said order. 4 LPA167.11.sxw 2 The Commissioner of Co-operation, State of Maharashtra by his letter dated 12.12.2008 gave directions that the State of Maharashtra, Central Government and Nabard have entered into an agreement in terms of recommendation of Vaidyanathan Committee and the State of Maharashtra has amended the Maharashtra Co-operative Societies Act and have framed a model bye-laws for the Co-operative societies and after circulating the said bye-laws to all the Co-operative societies, the Societies were directed to make the suitable amendment in their respective bye- laws by adopting the model bye-laws. Some variations while adopting model bye-laws, suitable to the local requirement were permissible but deviation from the basic structure of the model bye-laws was not. The Divisional Joint Registrar was directed to see the implementation of the said policy. Accordingly, the petitioner-society in the General Body Meeting of the bank on 27.7.2010 proposed certain amendments in the bye-laws of the society. The said proposed amended bye-laws were sent to the Registrar, respondent no.2. However, respondent no.2 by his letter dated 19.10.2010 (Exh.1) communicated the refusal of the 5 LPA167.11.sxw amendment of the bye-laws and asked for explanation of the same immediately on the same day. The said letter was received by the bank on 21.10.2010 and by letter dated 21.10.2010 the petitioner-bank submitted explanation pointing out that the suggested amended bye-laws were not contrary to the Act and rules of the Co-operative Societies Act. Pursuant to that, on satisfaction, Commissioner of Co-operation on 22.10.2010 accepted and registered the said bye-laws with necessary amendment. 3 Being aggrieved by the registration of the amended bye- laws, the respondent no.1 in both the petitions who are the members of the said society, filed two writ petitions before the single Judge challenging the action of the Divisional Registrar. The amendments were like :- “In bye-laws no.8, change was made in respect of number of representatives of the employees i.e. 2. Change was made in bye-law no.33. The tenure of the Chairman was made from 12 months to 30 months. In bye-laws 35-2-(A)-2, the eligibility of the Taluka representative was changed. He was required to work for 5 years as a Chairman and besides he was required to be a resident of minimum 5 years of that particular Taluka.” 6 LPA167.11.sxw 4 The registration of bye-laws was objected because bye-laws were not consistent with the model bye-laws especially the increase in the tenure of the Chairman of the society which was extended by 1 year to 2 & ½ years was vehementally challenged as contrary to the model bye-laws and also rules. Secondly, the procedure adopted by the Divisional Registrar while approving the said bye-laws was incorrect, illegal and he has not followed the procedure laid down under Section 13 of the Maharashtra Co- operative Societies Act of 1960 and Rule 12 of the Maharashtra Co-operative Societies Rules 1961 framed under the Act. 5 For ready reference, Section 13 of the Act and rule 12 are reproduced as under :- 13 Amendment of bye-laws of society - 1. No amendment of the bye-laws of a society shall be valid until registered under this Act. For the purpose of registration of an amendment of the bye-laws, a copy of the amendment passed, in the manner prescribed, at a general meeting of the society, shall be forwarded to the Registrar. Every application for registration of an amendment of the bye-laws shall be disposed of by the Registrar within a period of two months from the date of its receipt. 7 LPA167.11.sxw Provided that, the application for registration of the amendment of bye-laws of the co-operative credit structure entity shall be disposed of, by the Registrar within a period of one month from the date of its receipt. (1A) Where there is a failure on the part of Registrar to dispose of such application within the period aforesaid, the Registrar shall, within a period of fifteen days from the date of expiration of that period refer the application to the next higher officer and where the Registrar himself is the registering officer, to the State Government, who or which, as the case may be, shall dispose of the application within two months from the date of its receipt and on the failure of such higher officer of the State Government, as the case may be, to dispose of the application within that period, the amendment of the bye-laws shall be deemed to have been registered. (1B) No amendment of the bye-laws of a society shall be registered by the Registrar under this section or in the case of the bye-laws which are deemed to have been registered shall have effect, if the amendment is repugnant to the policy directives, if any, issued by the State Government under section 4. (2) When the Registrar registers an amendment of the bye-laws of a society or where an amendment of the bye-laws is deemed to have been registered, he shall issue to the society a copy of the amendment certified by him, which shall be conclusive evidence that the same is duly registered. (3) Where the Registrar refused to register such 8 LPA167.11.sxw amendment, of the bye-laws of a society, he shall communicate the order of refusal together with his reasons therefor, to the society.” 12 Amendment of bye-laws - (1) Subject to the provisions of this rule, bye-laws of a society may be amended by passing a resolution at a general meeting of the society held for that purpose. (2) The society shall give due notice in accordance with its bye-laws to all the members for considering any amendment thereof. (3) An amendment shall be deemed to have been duly passed, if a resolution in that behalf is passed at a general meeting by not less than two thirds of the members present thereat, and voting. (4) After the resolution is passed, a copy thereof shall, within a period of two months from the date of the meeting at which the resolution was passed, be furnished to the Registrar along with (a) a copy of the relevant bye-laws in force with amendments proposed to be made in pursuance of the resolution, together with reasons justifying such amendments ; (b) four copies of the text of the bye-laws as it would stand after amendment, signed by the officers duly authorised in this behalf by the committee of the society ; (c) a copy of the notice given to the members of the society of the proposal to amend the bye-law ; (d) such other information as may be required by 9 LPA167.11.sxw the Registrar. (5) On receipt of a copy of the resolution and other particulars referred to in sub-rule (4), the Registrar shall examine the amendment proposed by the society and if he is satisfied that the amendment is not contrary to the Act or the Rules and is in the interest of the society and co-operative movements, he may register the amendment and issue to the society a copy of the amendment certified by him under sub-section (2) of section 13 where the Registrar is of opinion that the proposed amendment may be accepted subject to any modification, he may indicate to the society such modification after explaining in writing his reasons therefor.” 6 The order of registration under Section 13 is appelable under Section 152 of the said Act. The petitioner in Writ Petition No.10077 of 2010 had challenged the said order by filing Appeal under Section 152 of the Act. However, the appellate authority dismissed the appeal on the ground that issue; whether resolution in respect of proposed amendment or bye-laws was passed or not cannot be determined under Section 152 of the Act and therefore, it did not entertain the appeal. Being aggrieved by the said order of the appellate authority, the petitioners in Writ Petition No. 10077 of 2010 have filed writ petition before the learned single 10 LPA167.11.sxw Judge. 7 The learned single Judge held that the Divisional Registrar did not apply mind and no reasons were given by the Registrar in support of the amendments acceptance and registration of the bye-laws and on this sole ground the learned single Judge quashed and set aside the order of the Divisional Joint Registrar and the order of the appellate authority and remanded to Respondent No.3 to pass reasoned order. 8 Learned Counsel Mr. Dhakephalkar for the appellants has submitted that the amended bye-laws are not against the public policies. He pointed out that the acceptance of the amended bye- laws was challenged by the respondent no.1 under three grounds viz. 2) retrospective effect cannot be granted to extension of the tenure of the Chairman; 3) increase in the tenure of the Chairman should be in effect prospectively; retrospective application of increase in the tenure is against the Act and Rules and the public policy; (1) While accepting such amendment, Registrar of the Co- 11 LPA167.11.sxw operative Societies did not give reasons. He submitted that in the amended bye-laws, in the General Body Meeting, some modifications suitable to the existing nature of the impugned society were proposed and by the sanction of the majority, the resolution was passed in General Body Meeting of the society. Resolution was passed by 2/3rd votes and bye-laws were amended. There were some other amendments in respect of the credit of the society and about the business of the Co-operative society were proposed and admittedly were on the agenda. The subject of increase in the tenure was not on agenda but it was taken on the spot as suggested and was approved. He submitted that under Section 13(3) of the Co-operative Societies Act, Registrar is required to give reasons when he refuses to register the amendment of the bye-laws of the society and he is required to communicate the order of refusal with reasons to the society. However, there is no such provision of recording reasons when the proposed amendments are accepted. He pointed out that under sub-rule 5 of Rule 12 also, the Registrar is not required to give reasons while registering the proposed amendment. Therefore, it 12 LPA167.11.sxw is only on refusal, he is required to give reasons. It is submitted that the learned single Judge has committed an error in interpreting sub-rule 5 of Rule 12 and ignoring Section 13(3) of the Act. He submitted that Registrar is not a judicial authority but he performs quasi judicial function or administrative function and registration of the society is a ministerial act and while performing this ministerial act, Registrar of the society is not required to give reasons for such acceptance. He submitted that section over-rides the rules and learned Judge ought to have given weightage to section 13(3) of the Act. He further submitted that the satisfaction mentioned in sub-rule 5 of Rule 12 does not contemplate to give reasons [but it is only a state of mind.] Registrar has power to decide but it is not unlimited. Registrar is not a full-fledged forum to hear and decide the issue of acceptance of non-registration. He submitted that no mechanism is provided to registration under Section 13 of the Act but it is left to the subjective satisfaction by the Registrar. He further argued that presentation of the amended bye-laws is done by the society pursuant to the resolution passed by the General Body 13 LPA167.11.sxw Meeting. Thus, it is a matter between the society and the Registrar. Registrar is an authority and society is a presenting party and therefore, there is no `lis’ is created. Hence there is no conflict, when it is accepted. Only if it is refused, then there is a conflict and therefore, the reasons are required to be recorded. 9 Learned Counsel further submitted that Act does not prescribe a statutory bye-laws. The model bye-laws are given for consideration. There was no direction that model bye-laws as it is to be adopted by the society and therefore, some changes were permissible and accordingly, the changes proposed were not inconsistent with the Act. 10 In support of his submissions, he relied on Kranti Associates Private Limited Vs. Masood Ahmed Khan & Ors reported in (2010) 9 SCC 496 and Union of India and Ors. Vs. E.G.Nambudiri (1991 (3) SCC 38). He submitted that acceptance does not affect civil rights of the individual. The scheme of the Act provides society to forward bye-laws for registration and no 14 LPA167.11.sxw such authority is given to individual member. He submitted that the individual member, if at all, has grievance about the working of the society or the management of the society or about the General Body Meeting, then the remedy is open under Section 91 of the Act. He relied on Vasudev G.Deshmukh Vs. State of Maharashtra (1995 (2) Mh.L.J 160). He submitted that the effect of the order of the single Judge is drastic. By this order the Registrar will have to give reasons for each and every bye-laws if they are accepted and he submitted that therefore, such order is illegal and LPA be allowed. 11 Learned Counsel Mr.Dhakephalkar relied on following authorities :- 1) Omprakash Gowardhandas Singhania Vs. G.v.Koimatlur (1966-ILR(BOM)-0-491, Special Civil Application No.1815 of 1964.) This is in respect of Appeal under Section 152 challenging the order passed under Section 13. 2) Shantilal Amolakchand Burad & Ors. Vs. Vijay Ramji Pawar & Ors. ( 1986 Mh.L.J 713). 15 LPA167.11.sxw 3) Vijay Ramj Pawar & Ors. Vs. Girna Sahakari Sakhar Karkhana Ltd., & Ors. (1986 Mh.L.J 314) 12 Mr.Walawalkar learned Senior Counsel appearing for respondent no.1 in LPA 167/2011 and Mr. Jahagirdar learned Senior Counsel appearing for respondent no.1 in LPA 168/2011, both submitted that the function of registration of the amended bye-laws cannot be said to be only administerial but it is a quasi judicial function. Whether amendment is consistent with the object of the society or not, is required to be verified by the Registrar and to that extent, he has to record his satisfaction in writing. Learned Counsel while addressing their submissions on the point of deemed registration as mentioned in section 13 of the Act, argued that Registrar has to register the amended bye-laws within a period of two months and if he does not do so then the bye-laws are deemed to be registered. It was argued that if proposed bye-laws are repugnant to the object of the society and against the model bye-laws and if requires deemed registration, such amended bye-laws definitely can be subjected to challenge 16 LPA167.11.sxw and de-registered. Learned Counsel argued that it cannot be said that function of the Respondent is an administrative function, no reasons are required when the order is passed. Administrative law is advanced so much that principles of natural justice are to be always implemented. Learned Counsel submitted that the bye- laws is a contract between the society and the members and therefore, it should be registered in accordance with law. Though sub rule-4 of Rule-12 specifically casts duty on Registrar to apply mind and give reasons for refusal, it does not prohibit the Registrar to give reasons at the time of acceptance and registration of the bye-laws. In the present case, sub-rule 4, (a) (b)(c) & (d) of Rule 12 are not complied with Registrar’s satisfaction for the registration should reflect in the order or in the noting by the Registrar and this procedure laid down in Rule 12 is to be followed scrupulously to keep the co-operative movement alive. It was argued that initially on 19.10.2010 Registrar has refused the proposed amendment and sent it back. However, within two 17 LPA167.11.sxw days when the amendment was again sent back to the Registrar, the Registrar has accepted the said amended bye-laws which he had found earlier inconsistent; and registered the same without giving reasons on 22.10.2010. The reply given by the society sent by the Registrar was in fact, never returned to the Registrar and it was a fabricated letter subsequent to the filing of the petition and Registrar without considering any such reply has registered the bye-laws for some other reasons. It was further argued that in the peculiar set of facts, the Registrar was required to give reasons. Learned Counsel submitted that the sub-rules of 4 (a)(b)(c) & (d) and 5 in rule-12, are checks and balances provided to control the management of the co-operative societies and it is in the benefit of the co-operative society. From the record, we do not come across any reason or the noting given by the Registrar for accepting amended bye-laws. To interpret section 13 that reasons are not to be given when bye-laws are accepted is not conducive. Mr.Jahagirdar emphasized that when reason exists, it should reflect in the order . Clause 13(3) of the Act speaks of communication of the reasons not only when there is a refusal but 18 LPA167.11.sxw also it speaks about the communication of the reasons when the registration is accepted under the Act. Such interpretation is conducive to the scheme of the Act. Rules can supplement if something is lacking in the Act. 13 Learned Counsel for the respondents submitted that though the bank had issued an explanation dated 21.10.2010, there is no corresponding entry about the issuance of the said letter either in outward register of the appellant or there is no proof to show that it was received by the Registrar showing any entry in the inward register of the society. Therefore, the order of acceptance passed by the Registrar is mechanical on the point of recording reasons. Learned Counsel relied on the Judgment of the Supreme Court in Kranti Associates (supra). 14 It was argued that in Mohinder Singh Gill Vs. Chief Election Officer reported in (1978 (1) SCC 405) it was held that absence of reasons is appelable orders cannot be supplied by way of filing affidavit in reply as it was held by the Supreme Court in the case 19 LPA167.11.sxw of Mohinder singh Gill Vs. Chief Election officer (1978 (1) SCC 405). It was further argued that giving extension to the existing Chairman and Vice Chairman is inconsistent with the model bye- laws and if at all it is adopted, then it is to be only prospectively as the petitioners’ right to contest the election for the post of Chairman or Vice Chairman is violated. Learned Counsel specifically objected the working of Divisional Joint Registrar who approved the amended bye-laws because first time in the affidavit dated 18.4.2011 the said Additional Joint Registrar has mentioned that he had received the explanation of the society and it was considered by him while accepting the bye-laws and such statement was not made by him before the learned single Judge. On the point of giving reasons learned Counsel relied on the following cases :- 1) Kumbhargaon Vividh Karyakari Sahakari Seva Society Ltd., Vs. Assistant Registrar, Co-op. Societies ( 1993 Mh.L.J. 178) ; 2) S.N.Mukherjee Vs. Union of India ( (1990) 4 SCC 594) 3) Indian National Congress (I) Vs. Institute of Social Welfare 20 LPA167.11.sxw & Ors. ((2002) 5 SCC 685). In this case the Supreme Court has distinguished the administrative function from quasi judicial function. That quasi judicial authority is required to act according to rules and administrative authority is dictated by policy and experience but strictly in accordance with the statutory provisions. 4) Subhas Anna Kool Vs. Daund Tal. Sahakari Dudh Utpadak Sangh Maryadit ( 2006(4) Mh.L.J 611. 15 Heard extensive arguments of both the parties. In Writ Petition No.10077 of 2010, the respondents have challenged the order of the acceptance of the bye-laws passed by the Registrar under Section 13 of the Act in Appeal filed under Section 152 of the Act. However, in the appeal, issue was raised whether General Body Meeting was held and it passed the Resolution on 22.7.2010 or not. The appellate authority did not entertain this appeal under Section 152 as such issues cannot be answered and decided under Section 152 as the scope of section 152 was limited 21 LPA167.11.sxw and the issue in respect of the working of the management committee and general body can be raised and agitated under Section 91 of the Act and before the another forum and therefore, this Writ petition was filed. 16 Section 152 does not limit its scope only in respect of the orders of the refusal but the order of acceptance of the bye-laws is also appelable under Section 152 of the Act. At this stage, we may refer to the arguments of learned Counsel Mr.Dhakephalkar who has rightly pointed out that when society proposes amendment to the bye-laws, it is a matter between the society and the Registrar and the presentation of the amended bye-laws is not a `lis’ but is a proposal. Therefore, if the bye-laws are registered by the Registrar, then it can be said that the proposal of the amendment given by the society is accepted by the Registrar. On such acceptance, society cannot be an aggrieved party. However, group members who are in minority, may be an aggrieved party, as they have not concurred to such amendment at the time of General Body Meeting. That group of members or a member can 22 LPA167.11.sxw file appeal under Section 152 of the Act. If such appeal is filed, the appellate authority may hear the appeal. The appellate authority while accepting and registering the bye-laws has to see whether the Registrar of the society has followed the procedure properly and has not committed any procedural error in registering the bye-laws under Section 13 of the Act. The scope of the appellate authority under Section 152 of the Act is limited because of the nature and the manner in way the order of the acceptance under Section 13 is required to be passed. The Registrar has no power to hear the parties raising