1 FARAD CONTINUATION SHEET NO. IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE, BENCH AT AURANGABAD. WRIT PETITION NO.: 11516 OF 2010 Office Notes, Office Memoranda of Coram, appearances, Court’s orders or directions Court’s or Judge’s orders. and Registrar’s orders. WRIT PETITION NO.: 11516 OF 2010 *** 1. Heard finally. 2. Contention of petitioner is only because of the communication of Respondent no.4 bank about its recovery, action under section 78 (1) of Maharashtra Cooperative Societies Act, 1960 has been taken. Reply given by Petitioner pointing out steps taken, recoveries made, or then absence of notice to three coopted Directors has not been looked into. Advocate Shri Hon states that petitioner society had approached Respondent No.4 bank with proposal for one time settlement and to show bonafides amount of Rs.65 Lacs has also been paid. Amount of Rs. 50 Lacs can be paid more at any time. According to him, in this situation, interest of Respondent No.4 bank could have been protected by taking other appropriate measures, action under section 78 (1) of the 2 FARAD CONTINUATION SHEET NO. IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE, BENCH AT AURANGABAD. WRIT PETITION NO.: 11516 OF 2010 Office Notes, Office Memoranda of Coram, appearances, Court’s orders or directions Court’s or Judge’s orders. and Registrar’s orders. Maharashtra Cooperative Societies Act, 1960 is unnecessary. 3. Advocate Shri Thoke for Respondent Nos.3 and 4, learned A.G.P. for Respondent Nos.1 and 2. Respondent No.5 intervenor before Respondent No.1 has chosen not to appear though served. 4. Interim relief is already operating in favour of petitioners since 23rd December, 2010. 5. After hearing the parties, I find that there are two show cause notices under section 78 (1) of Maharashtra Cooperative Societies Act, 1960. The first one is dated 24th June, 2009 and it is in response to complaint of Respondent No.4 about the amount of Rs.50,71,00,000/- which has become overdue recoverable from petitioner. It is also alleged that after inquiry under section 88 Maharashtra Cooperative Societies Act, 1960 a recovery certificate under section 98 is 3 FARAD CONTINUATION SHEET NO. IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE, BENCH AT AURANGABAD. WRIT PETITION NO.: 11516 OF 2010 Office Notes, Office Memoranda of Coram, appearances, Court’s orders or directions Court’s or Judge’s orders. and Registrar’s orders. already issued and still petitioner has not taken any positive steps to recover amount of Rs.1,50,00,000/-. The petitioner is also alleged not to have submitted any progress report on the recoveries. Second show cause notice dated 31st December, 2009 is on same subject. In addition, it is alleged that petitioner has accepted the deposits from various cooperative societies and has failed to return it. 6. In their reply, the petitioners have pointed out that between 21st July, 2008 and 11th February, 2010 they have recovered amount of Rs.4,25,71,619/- in response to recoveries under section 88 read with section 98 of Maharashtra Cooperative Societies Act, 1960. Property of one Suresh Tatiya is also seized but it could not be proceeded further because of interest of other family members in it. It is further stated that no notices under section 78 (1) are served upon three 4 FARAD CONTINUATION SHEET NO. IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE, BENCH AT AURANGABAD. WRIT PETITION NO.: 11516 OF 2010 Office Notes, Office Memoranda of Coram, appearances, Court’s orders or directions Court’s or Judge’s orders. and Registrar’s orders. coopted directors viz. Shri S.S.Lathi, Shri P.H.Patil and Shri A.M.Shrishrimal. 7. Perusal of impugned order reveals that this reply has been considered only in last paragraph thereof mentioning it to be not satisfactory. Petitioners then approached Appellate Authority - Respondent No.1 in appeal under section 152 of Maharashtra Cooperative Societies Act, 1960 and their appeal has been rejected. 8. After hearing respective counsel, I find that loan taken from Respondent No.4 bank was by previous board and petitioners were elected for term 2088 to 2013. The correctness of efforts made by petitioners or its adequacy has not been looked into by any of the authorities. Not only this, it appears that three directors subsequently coopted after resignation of three elected directors have not been served with any notice under section 78 (1) though they lost 5 FARAD CONTINUATION SHEET NO. IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE, BENCH AT AURANGABAD. WRIT PETITION NO.: 11516 OF 2010 Office Notes, Office Memoranda of Coram, appearances, Court’s orders or directions Court’s or Judge’s orders. and Registrar’s orders. their seat because of removal of entire Board of Directors. In this view of the matter, I do not find it necessary to go into more details, at this stage. Two of the coopted directors are petitioner Nos.7 and 8 before this Court. 9. The Respondent No.2 has to find out the propriety of the stand taken by petitioners, as also its adequacy. If he is finding those efforts an eye-wash he has to record a finding accordingly by giving reasons therefor. That has not been done. I, therefore, find that petitioners who had received the notice and filed their reply as also petitioner Nos.7 and 8 who did not receive any such notice suffer a serious prejudice as they have not received opportunity to which they are entitled in law. Recording of reasons to reject stand of petitioner was essential at-least in present facts. 6 FARAD CONTINUATION SHEET NO. IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE, BENCH AT AURANGABAD. WRIT PETITION NO.: 11516 OF 2010 Office Notes, Office Memoranda of Coram, appearances, Court’s orders or directions Court’s or Judge’s orders. and Registrar’s orders. 10. During arguments petitioners have stated that they are in position to deposit amount of Rs.50 Lacs. Accordingly, petitioners are directed to deposit said amount with Respondent No.4 bank by 7th April, 2011. Apart from this, the petitioners shall deposit additional amount of Rs.50 Lacs by 21st April, 2011 with the Respondent No.4 bank. 11. Subject to such deposit, the impugned orders are quashed and set aside. Petitioners are directed to appear before the Respondent No.2 authority on 25th April, 2011 and to abide by its directions in the matter. Till then, petitioners shall not disburse any loan, shall not take any major financial decision. The Petitioner Nos.7 and 8 shall file their reply, if any, before Respondent No.2 by 25th April, 2011. The Respondent No. 2 to issue fresh notice to Shri S.S.Lathi and seek his reply on both notices by 25th April, 7 FARAD CONTINUATION SHEET NO. IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE, BENCH AT AURANGABAD. WRIT PETITION NO.: 11516 OF 2010 Office Notes, Office Memoranda of Coram, appearances, Court’s orders or directions Court’s or Judge’s orders. and Registrar’s orders. 2011. However, all this is subject to payment of amount by petitioners as mentioned above. 12. After the replies are received, Respondent No.2 shall hear petitioners and pass fresh orders as early as possible and in any case by 31st May, 2011. The interim restraint/ fetters of power of the petitioners shall continue till 31st May, 2011. Petition is, thus, disposed of. No costs. [B.P.DHARMADHIKARI, J.] Dated:05/04/2011. ans/11516