1 WP NO.6628/09 mpt IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE WRIT PETITION NO.6628 of 2009 Shree Vitthal Sahakari Sakhar Karkhana Ltd. ... Petitioner versus Wadikuroli Vividh Karyakari Seva Society Ltd. & ors., ... Respondents ... Mr. Y.S. Jahagirdar, Sr. Counsel with Mr.Sarang S. Aradhye & R.V. Govilkar & Mr.S.B.Kharjekar for the petitioner. Mr.P.K.Dhakephalkar, Sr. Counsel with Rohan Darandale and Mr.R.S.Datar for respondent nos.1 to 11. Mr.R.S.Patne, AGP for respondent nos.12 to 15. Mr.Surel S. Shah for Intervenor. CORAM : D.G. KARNIK, J. DATED : 29th June 2010 2 WP NO.6628/09 ORAL JUDGMENT:- 1. By this petition, the petitioner challenges the order dated 16 July 2009 passed by Maharashtra State Co-operative Appellate Court, (for short “the appellate Court”) granting injunction against the petitioner Shri Vitthal Sahakari Sakhar Karkhana Ltd. 2. The petitioner is a co-operative society registered under the Maharashtra Co-operative Societies Act. Under its bye-laws the petitioner has different classes of members. “Class-A” members are individual producer members. “Class-B” members are themselves are co-operative societies registered under the Maharashtra Co- operative Societies Act. The dispute relates to the “Class-B” members. The petitioner has raised money (capital) by issuance of shares to both classes of members. Prior to 7 March 2000 the face value of each of the share issued by the appellant to Class-B members was Rs.2,000/-. In view of a letter/order of the Regional Joint Director of Sugar, State of Maharashtra, dated 7 March 2000, face value of each of the share was required to be increased to Rs. 3,000/- to Rs.5,000/-. A resolution increasing the face value of the 3 WP NO.6628/09 shares held by Class-B members is alleged to have been passed in the general body meeting and necessary amendment to the bye- laws of the petitioner is also alleged to have been effected. Respondent nos.1 to 11, who are Class-B members of the petitioner hold shares, which were fully paid up till March 2000. However, on account of the increase in the face value of each share to Rs.5,000/- a call was made on the Class-B members to pay additional money upto the new face value of the shares. Respondent nos.1 to 11 did not pay the call. Therefore, by a resolution (Resolution no.9A) passed in the general body meeting of the petitioner held on 28 December 2007 the shares held by respondent nos.1 to 11 were forfeited. Aggrieved by the resolution/decision of forfeiture of the shares, respondent nos.1 to 11 raised a dispute u/s.91 of the Maharashtra Co-operative Societies Act before the Co-operative Court at Solapur. In that proceeding respondents made an application for interim injunction for stay of the resolution no.9A passed in the Annual General Meeting dated 28th December 2007 forfeiting their shares. The trial court, after hearing the parties dismissed the application. In 4 WP NO.6628/09 appeal No.60 of 2008 filed by respondent nos.1 to 11, the Co- operative Appellate Court set aside the order of the trial court and passed an order of injunction, the operative part of which reads as follows:- “Subject to making payment of the dues as per letters dt.24.05.2006 and 4.12.2006 issued by respondent society (the petitioner herein) to the appellant, the effect of the Resolution No.9 B (sec. 9-A) of General Body dated 28.12.2007 is stayed until further orders” 3. Aggrieved by the decision of the appellate court, the petitioner is before this court. 4. The impugned order is an interlocutory order arising out of an interim application passed in a dispute u/s.91 of the Maharashtra Co-operative Societies Act and as such I am not inclined to interfere. Even otherwise, I am of the view that the order requires no interference on merits. 5 WP NO.6628/09 5. Arguable points were raised before the Co-operative Appellate Court as well as before me on whether the petitioner would have a right to forfeit the shares for non payment of a call arising out of increase in the face value of the shares. It may be noted that prior to the year 2000, the face value of the shares was only Rs.2,000/-. A shareholder member was therefore required to contribute only Rs.2,000/- per share towards the share capital of the petitioner. Whether the liability of a member to contribute Rs. 2,000/- per share can be increased without his consent is a triable issue. Assuming however, such liability can be increased whether the membership of a member can be terminated for non payment of a call, arising out of the increase in the face value of the share without following the requisite procedure and whether such procedure was followed in the case at hand are other triable issues. Section 25 of the Maharashtra Co-operative Societies Act says that a person shall cease to be a member of the society on resignation from the membership thereof being accepted, or on the transfer of whole of his share or interest in the society to another member, or on his death, or removal or expulsion from the society, 6 WP NO.6628/09 or where a firm, company any other corporate body, society or trust is a member, on its dissolution or ceasing to exist. The respondents, prima facie, do not fall under any of the aforesaid clauses, except “removal or expulsion” from the society. Procedure for removal or expulsion from the society is prescribed under Rule 28 and 29 of the Maharashtra Co-operative Societies Rules. Admittedly, Rules 28 and 29 were not followed. Mr.Jehagirdar, learned Sr. Advocate for the petitioner submitted that procedure prescribed by Rules 28 and 29 was not required to be followed because respondents 1 to 11 were not removed or expelled from the membership but theirs was a case of cessation of membership on account of the breach of the bye-laws. I am, prima facie, of the view that any breach of a bye-law would not result into automatic cessation of membership but the procedure for removal or expulsion from membership would be required to be followed even in case of breach of bye-laws of a society. Consequently, in my view, strong prima facie case for grant of injunction was made out by respondents 1 to 11 and appellate court committed no error in granting the injunction. 7 WP NO.6628/09 6. Mr.Jehagirdar submitted that the appellate court erred in granting injunction subject to making payment of the dues as per the letters of the petitioner dated 24 May 2006 and 4 December 2006. According to him, the appellate court had no jurisdiction to impose such a condition. In my view, the grievance is misconceived. The condition that the injunction would become operative subject to the respondent nos.1 to 11 making the payment was introduced for securing and protecting interest of the petitioner. It cannot be disputed that while passing an order of injunction, the Court is entitled to impose conditions so as to protect the interest of the defendant or the person likely to be affected by the order of injunction. In Shivkumar Chadha Vs. Delhi Municipal Corporation of Delhi , 199(3) SCC 161, the Supreme Court while emphasizing the needs for exercising caution at the time of grant of interim injunction pointed out the need to protect the interest of the defendant while granting an injunction in the following words:- 8 WP NO.6628/09 “Under the changes circumstance with so many cases pending in courts, once an interim order of injunction is passed, in many cases, such interim orders continue for months; if not for years. At final hearing while vacating such interim orders of injunction in many cases, it has been discovered that while protecting the plaintiffs from suffering the alleged injury, more serious injury has been caused to the defendants due to continuance of interim orders of injunction without final hearing. It is a matter of common knowledge that on many occasions even public interest also suffers in view of such interim orders of injunction, because persons in whose favour such orders are passed are interested in perpetuating the contraventions made by them by delaying the final disposal of such applications. The court should be always willing to extend its hand to protect a citizen who is being wronged or is being deprived of a property without any authority in law or without following the procedure which are fundamental and vital in nature. But at the same time the judicial proceedings cannot be used to protect or to perpetuate a wrong committed by a person who approaches the court.” 9 WP NO.6628/09 7. In Mahadev Savlaram Shelke Vs. Pune Municipal Corporation, 1995 Vol. 2 JT SC 504, the Supreme Court after referring to its earlier decision in Shivkumar Chadha (supra) emphasised the need to call upon the plaintiff to execute a bond to the satisfaction of the Court that in the event of his failing in the suit to obtain the relief asked for in the plaint he would adequately compensate the defendant for the loss ensued to the defendant due to the order of injunction granted in his favour. 8. The decisions in the case of Shiv Kumar Chadha(supra) and Mahadev Shelke (supra) unmistakably point out the need of caution to be exercised by the Court while granting the injunction. As also the need in appropriate cases to direct the plaintiff to execute a bond to compensate the defendant in the event the plaintiff ultimately fails in the suit. What has been done in the present case is that in order to compensate the defendant (petitioner herein) for the loss that may be to be caused to it by the order of injunction, if the respondents ultimately fail in the 10 WP NO.6628/09 suit, the appellate court has imposed a condition on the plaintiffs (respondent nos.1 to 11) to pay the amount equivalent to the call due on the shares. Actual payment of money is far better security than mere execution of a bond. The plaintiffs have not complained about imposition of this condition of payment of money equivalent to the amount of the call. By no stretch of imagination, the defendant petitioner can complain of imposition of the condition which has been imposed on the plaintiffs for the benefit of the defendant-petitioner. 9. Mr.Dhakephalkar, learned Sr. Advocate for respondent nos.1 to 11 submitted that in pursuance of the condition imposed by the appellate court in the order of injunction, the respondent nos.1 to 11 tendered the money to the petitioner which it refused to accept. This fact is disputed by Mr.Jehagirdar, learned counsel for the petitioner. Without entering into the controversy, I grant respondent nos.1 to 11 time to tender money by Demand draft to be sent by Registered Post A.D, within four weeks. 11 WP NO.6628/09 8. Mr.Jehagirdar submits that the payment of the money would not obliterate consequences of non payment of money due in the year 2006. The appeal arising out of the interim order calls for no adjudication of this issue. Parties are at liberty to raise all issues before the appropriate forum at appropriate stage. With this observation, the writ petition is rejected. (D.G. KARNIK,J.)