Vinay Kore Majur Sahkari Sanstha Ltd. Thr Authorized Representative And ORS v. The State Of Maharashtra Thr Its Principal Secretary And ORS

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY

CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 1154 of 2022 Vinay Kore Majur Sahkari Sanstha Ltd, thru Authorized Representative and ors .. Petitioners

Versus

The State of Maharashtra, thru its Principal Secretary and ors .. Respondents ...

Mr. Vijay Patil with Adv. Dhairyasheel V. Sutar for the petitioners.

Smt. V.S. Nimbalkar, AGP for the State respondent nos.1 and 2. Mr.Deelip Patil Bankar, Chief Standing Counsel SCEA for respondent nos.3 and 4.

Mr.Anand Patil for respondent no.5.

CORAM: RAVINDRA V. GHUGE, J.

DATED : 9th FEBRUARY, 2022 P.C:- This matter has been extensively heard in the first session as well as in the second session.

The specific issue raised in this case is, whether the term "defaulter" would include the non-payment of 1% annual subscription (एक % वाररकवरणी) by a member/society.

2 11 WP 1154-22.doc The 25 petitioner Taluka Majoor Societies are aggrieved by their non-inclusion in the list of valid voters for the election of the District Federation. Grievance raised by the petitioners has been dealt with by respondent no.4 District Cooperative Election Officer or District Dy. Registrar, New Shahupuri, Kolhapur, by the impugned common order dated 17/1/2022, concluding that these petitioners are defaulters as they have not paid the 1% annual subscription to the Federation and hence, cannot be included in the final voters list. The strenuous contentions of the petitioners are twofold. Firstly, that the term 'defaulter' would mean and include only non-repayment of loan amounts. Non-payment of the 1% annual fees of the federation, would not be a component to be included in the term 'defaulter'. Secondly, that a defaulter cannot be precluded from being a valid voter. Such member may, at the most, incur a disqualification from continuing as an elected member.

Respondent no.4 District Co-operative Election Officer has contended that the record was made available to him for verification during the course of hearing on the objections raised by the petitioners on account of their exclusion from the voters list. He has followed an uniform approach and has

3 11 WP 1154-22.doc considered the default on the part of the petitioners under Section 73 CA of the MCS Act, 1960. He has also relied upon the by-law Nos.7, 7(3), 17, 28 and 49(2). The view taken by the learned Single Judge in Bajrang Majur (supra) would not be applicable to these cases as the issue raised in this petition was not addressed to the learned Single Judge. He has then referred to Section 91 read with Rule 78 of the MCS (Elections to Committee) Rules, 2014, to contend that the petitioners have a statutory remedy available. Respondent no.4, Chairman of the Kolhapur District Labour Co-operative Society Federation Ltd, Kolhapur has entered an exhaustive affidavit-in-reply. In short, it is contended that the Federation has been providing business to the petitioner Mazoor Societies. This is strictly in accordance with by-law no.

7. It is on account of the business provided by the Federation that these co-operative Societies receive income. Earlier, they were unorganized. It is on account of the creation of law that the District and State Federations have been established. As charges for the services provided which have been accepted by the petitioners, the annual subscription of 1% of the business earnings is to be paid to the Federation which is strictly provided by the by-laws.

4 11 WP 1154-22.doc annual subscription of 1%, their nominee would not be entitled to vote. These petitioners have been consistently taking the business from the Federation and have also have been paying the annual fixed subscription. Once they have accepted the by-laws and enjoyed the benefits flowing therefrom, they now cannot contend that they are not defaulters. The District Federation does not have any independent source of income and it is only the payment of the annual fixed subscription of 1% from which it pays 5% to the Divisional Federation and 5% to the State Federation.

Section 26(1) and the relevant first proviso read as under :- 26.

Rights and duties of members (1) A member shall be entitled to exercise such rights as provided in the Act, rules and by-laws. Provided that, no member shall exercise the rights, until he has made such payment to the society in respect of membership, or acquired such interest in the society, as may be prescribed and specified under the by-laws of the society, from time to time.

Section 27(10) of the Maharashtra Co-operative Societies Act, 1960 provides as under :- 27(10) If a member has taken a loan from the society, such member shall, whenever he is a defaulter, as provided in the Explanation to clause (I) of sub-section (1) of section 73CA have no right to vote in the affairs of the society.

5 11 WP 1154-22.doc dues, either in whole or in part, takes place at a later stage. Section 73CA (1) reads as under:- 73CA Disqualification of committee and its members:-

(1) Without prejudice to the other provisions of this Act or the rules made thereunder in relation to the disqualification of being member of a committee, no person shall be eligible for being appointed, nominated, elected, co-opted or, for being a member of a committee, if he (i) is a defaulter of any society;

Explanation - For the purposes of this clause, the term "defaulter" includes - (c) in the case of any society - (ii) a member who has purchased any goods or commodities on credit or availed himself of any services from the society for which charges are payable; and failed to repay the full amount of such anamat or advance or pay the price of such goods or commodities or charges for such service, after receipt of notice of demand by him from the concerned society or within thirty days from the date of withdrawal of anamat or advance by him or from the date of delivery of goods to him or availing of services by him, whichever is earlier;

A reading of Section 27(10) clearly indicates that a loan defaulter would have no right to vote. This is an impression carried by the petitioners as well. However, a constricted meaning to the language used in Section 27(10) is not permissible

6 11 WP 1154-22.doc if it has to co-exist with sub-clause (i)(c) and (ii) under Section 73CA. These provisions have to co-exist in harmony. The interpretation of both the provisions should be such that neither of them is rendered nugatory. A member defaulting on a loan taken from the Society is one contingency set out in Section 27(10).

Sub-clause (i), Section 73CA(1) defines a defaulter. The explanation introduced by the legislature is not only for the sake of clarity, but is intended to clear all doubts about who would be termed as a defaulter. Sub-clause (c) (ii) thereunder provides the contingencies which need to be fulfilled by a member in order to steer clear of the definition of defaulter. Even non-payment of anamat amount or advance or the price of goods or commodities, would also be a defaulter. A Member Society which stands at par with the definition of member when it comes to being organized as a group of mazoor societies under the District Federation, is mandated to pay the charges for such services which are provided by the Federation to such society, as enlisted in by-law 7 (1 to 14). This interpretation is further reinforced by the services provided, by the by-law 28 which repeats at two places that a defaulter will not have the right to vote (underlined portion below by-law 28 reproduced in paragraph no.16 hereafter)

7 11 WP 1154-22.doc As such, the definition also includes the failure of a Society to pay such charges as are payable for any services availed from the Society by the Member. In the instant case, if the petitioner Societies become defaulters, they lose their single representative vote which is available to them after nominating their representative to represent the Society in the federation. As each of these petitioner Societies is treated as a Member, since it has a single vote, the word 'a Member' would mean and include such a petitioner Society which is treated as one member vote. This is an undisputed position as all such individual societies at the taluka levels, become members of the District Federation, which in turn becomes a member of the State Federation.

It calls for no debate that hundreds of Societies like these petitioners, which were unorganized earlier and could not function systematically, were brought under the umbrella of a District Federation. For the sake of the Kolhapur region, the model by-laws were created by the Kolhapur District Labour Cooperative Societies Federation Limited. These by-laws have undergone various amendments and which have been formulated under the Maharashtra Co-operative Societies Act, 1960 and the Maharashtra Co-operative Society Rules, 1961. It is undisputed that these petitioners have not challenged the legality and validity of the By-laws or the Rules.

8 11 WP 1154-22.doc and have been paying the annual subscription to the Federation for several years. They have been abiding by the by-laws and have been availing of the services offered by the Federation under by-law 7.

By-law 7 contains 14 types of services that are provided by the Federation to the Society members. It would be apposite to reproduce by-law 7 (1 to 14) as under :- 1.

जजिल्हा फेडरेशन माफरत मजिूर सहकारी संस्थांना तांतत्रिक व पशासकीय सुतवधा उपलब्ध करुन देणे/ मारदशरन करणे.

2.

मजिूर संस्थांच्ेकरररता तकफायतशीर दरानेमशशनरी तमळवून देणे तसेच् खडी, दरड, च्ुना वीट इ. उत्पादनाकरररता सहाय करणे व मदत करणे.

3.

मजिूर संस्थांच्ी अंतरत व्यवस्था सुधारणेकरररता व परतीवर राहणे करररता जजिल्हा फेडरेशन माफरत तहशेब, देखरेख, परररक्षण, पच्ार इ. बाबत मारदशरन, तनयंत्रिण ठेवणे त्याच्पमाणे मजिूर संस्थांना आवश्यक त्या तांतत्रिक पशशक्षणाच्ी सोय उपलब्ध करुन देणे. 4.

मजिूर संस्थांच्े जजिल्हा पातळवरील पत्यक्ष कामकाजिातील अडच्णी दूर करणेकरररता राज्य मजिूर संघाचया समन्वयाने / मारदशरनानूसार पयत्न करणे.

5. मजिूर सहकारी संस्थांना पुरेसा पत पुरवठा होणेकरररता पयत्न करणे. 6. काम देणा-या खात्याकडील च्ालू दर ठरतवणेबाबत शासनाचया तनरतनराळ्या खात्यांशी संपकर साधून योगय ते दर ठरतवण्यास सहायभूत होणे व त्याबद्दल पयत्नशशल रहाणे. 7.

मजिूरसहकारीसंस्थांच्ीसवाररीणउनतीहोणेकरररताअदावतवआदशरयोजिनाठरतवणे वत्याराबतवणेससहकायरकरणे.

8.

मजिूर संस्थांना उपयुक होईल अशी मातहती जिमतवणे व ती पजसध्द करणे व पुरतवणे. 9.

मजिूर संस्थांचया कामकाजिातून त्यासंबंधी तनमारण होणा-या पशांवर अथवा सभासदांनी उपसस्थत केलेल्या पशांवर योगय ती कारवाई करणेस मदत करणे.

10. मजिूर संस्थांचया ररजिा लक्षात घेवून त्यांना कच्चा माल, बांधकाम सातहत्य तमळवून देणेस मदत करणे.

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11. काम देणा-या खात्याकडील सवर कामे जजिल्हा फेडरेशनकडूनच् वाटप केली जिाऊन वेळेत पूणर होतात ककवा नाही याकडे लक्ष ठेवून ती पूणर करुन घेणे.

12. सभासदांना लारणारी यंत्रिसामुग्री व ततच्े सुटे भार आशण इतर कच्चा माल पुरतवणेस योगय ते सहाय करणे.

13. वरील उद्देशात कातहतह नमूद केले असले तरी, मजिूर सहकारी संस्थांच्े कायर परतीवर रहाणेकरररता जिे जिे करता येण्यासारखे आहे ते वेळोवेळी करणे.

14. संस्थेचया सभासदांना, संच्ालकांना, तसेच् कमरच्ा-यांना सहकार पशशक्षण देणे व त्यासाठी स्वतंत्रि आरथक तरतूद करणे.

By-law 17 provides a mandate to these Societies to pay fixed supervision charges which are, in a sense, fees charged by the Federation @ 1% of the total business that the petitioner Societies have made in a financial year. By-law 28 refers to Section 27 of the Act and Rule 60 of the Rules for the purpose of holding elections. The petitioner Society is treated as a Member and the person nominated by the Society is the voter who votes in the Elections as a representative of his society. The eligible society is considered to be an active member and such active member Society should be attending at least one Annual General Body Meeting in 5 consecutive years and should not be a defaulter in paying 1% fixed annual subscription of the Federation in each of these five financial years. It is then provided under by-law 28 that a defaulter member of the Federation will not have a right to vote.

10 11 WP 1154-22.doc For the sake of clarity, it would be apposite to reproduce by-law 28 hereunder :- "28 कलम27 वतनयम60 मधीलतरतूदीनुसारअतधमंडळबैठकीत मतदानकेलेजिाईल.

सभेसहजिरअसणा- यापत्येकसभासदालाएकच्मत देण्याच्ाअतधकारराहील.

परंतुथकबाकीदारवतकयाशीलनसलेल्या सभासदांसमतदानाच्ाअतधकारअसणारनाही .

अध्यक्षासइतरपात्रि सभासदापमाणेएकमतअसेल.

परंतुएखादाठरावावरमतदानसारखेच् तवभारलेरेल्यासमात्रिअध्यक्षासजिादाएकतनणारयकमतअसेल. एखादा ठरावावर( मतैकयनझाल्याने) सभासदतवभारलेरेलेअसतीलतेव्हा, मतदान करणा- याकोणाहीसभासदासमतदान(पोल) करण्याच्ीमारणीकरतायेईल.

त्यानंतरअध्यक्षानेतीमंजिूरकेलीपातहजिे, तकयाशील सभासद महणजिे ज्या सभासद संस्थेने मारील सलर पाच् वरारत तकमान एका अतधमंडळाचया वाररक बैठकीत उपसस्थती व मारील सलर पाच् वरारतील केलेल्या कामांपोटी 1% वरणी जजिल्हा मजिूर सहकारी संघास वाररक तहशोबासतहत तदली असली पातहजिे.

अशा तकयाशील सभासदांच्ी नोंद संस्थेने सहकार आयुक व तनबंधक, सहकारी संस्था यांनी सूतच्त केलेल्या तवतहत नमून्यात ठेवावयाच्ी आहे. केवळ तकयाशील सभासदासच् संस्थेचया संच्ालक मंडळ तनवडणुकीमध्ये मतदानाच्ा अतधकार रातहल. (कलम 27) तसेच् तकयाशील सभासदच् संस्थेच्ा संच्ालक महणुन तनवडून येण्यास पात्रि रातहल. उपरोक पमाणे तकयाशील सभासदत्वाचया अटी पूणर न करणारे सभासदाच्े नावे अतकयाशील सभासद नोंदवहीत राहील. संस्थेने सभासदांच्े अतकयाशील सभासद असे वरर्गीकरण केल्यास त्यास आरथक वर संपल्याच्े तदनांकापासून 30 तदवसात कळतवले पातहजिे. तथातप तकयाशील व अतकयाशील सभासदांच्े वरर्गीकरणा बाबत वाद उदभवल्यास असे वरर्गीकरण केल्याच्े तदनांकापासून 60 तदवसाच्े आत तनबंधकाकडे अतपल करता येईल.

थकबाकीदार सभासदास मतदानाच्ा अतधकार राहाणार नाही ."

11 11 WP 1154-22.doc By-law 49 defines the responsibilities of the petitioner societies and clause 2 mandates the payment of 1% Annual subscription to the District Federation. A default in such payment would entitle the Federation to initiate recovery proceedings. By-law 49(3) prescribes that such Federation should pay 10% membership subscription from the 1% subscription received by it, to the State Federation.

A list of defaulter Societies is placed on record which includes the names of these petitioners. As these petitioners were not included in the list of eligible societies so as to cast one membership vote per society, they had approached respondent no.4, who rejected their application with a reasoned order which is impugned in this petition.

Respondent no.5 which had indicated the default on the part of the petitioners, has placed copies of the notices issued by the Federation to all these petitioners indicating outstanding dues ranging from Rs.15,000/- to Rs.3,04,000/-. This includes large unpaid amounts towards advances taken by these petitioners as well as the unpaid subscriptions @ 1% of the business per financial year. Respondent no.5 has also placed on record, by way of an example, two notices issued by the Addl. Commissioner and Special Registrar Co-operative Societies, State of Maharashtra dated 6/4/2002 and 9/4/2002 to indicate the modus operandi of

12 11 WP 1154-22.doc such member societies in creating different bank accounts for diverting business proceeds so as to camouflage the annual earning for which 1% subscription had to be paid to the Federation which actually provides business to such societies. It is a matter of record and undisputed as well that every majur society, including the petitioners, have been paying this annual fixed subscription for several years. It is not the case or the stand of these petitioners that the by-laws do not apply to them or that they do not have the force of law or that they are not binding on them.

The learned Advocate for the petitioners has placed heavy reliance upon a judgment dated 29/4/2015 delivered by the learned Single Judge at Nagpur in WP No.2113/2015 filed by Bajrang Majur Kamgar Sahakari Sanstha and 2 ors vs. The District Co-operative Election Officer and ors. He submits that the issue of 1% contribution has been dealt with in the said judgment and non-payment of 1% contribution to the Federation would not make a Society a defaulter. I am afraid that this was neither an issue before the Court, nor was such a view taken in the said judgment. In fact, it has been specifically observed in paragraph no.8 by the learned Judge that "there is no provision contained in the said Act, said Rules or by-laws of the Federation brought to my notice requiring the member Societies to submit

13 11 WP 1154-22.doc the 'No dues' certificate in respect of 1% supervision charges as on 31/3/2015 so as to become eligible to include the names of the representatives of the member - societies in the provisional or final list of voters. Section 26 of the said Act does not speak of any such requirement.

It is obvious from the judgment delivered in Bajrang Majur (supra), that the learned Single Judge was dealing only with the issue as to whether a 'No dues' certificate is mandatorily required to be presented by a member Society so as to be included in the final voters list. The learned Judge concluded that no provisions are cited before him , setting forth the requirement of a 'No dues' certificate to be produced. He further held that though the petitioners have raised a dispute about supervision charges, such a dispute can be resolved in an appropriate forum as it has nothing to do with the membership subscription.

Per contra, the issue raised in this case is with regard to non-payment of 1% subscription which can be said to be covered by Section 73 (CA)(1)(i)(c)(ii), leading to the ineligibility of the petitioners for being included in the final voters list. Neither was this provision cited in the Bajrang Majur case (supra), nor were the by-laws pertaining to the payment of annual subscription by the member society and forfeiture of right to vote due to non-payment, cited.

14 11 WP 1154-22.doc indicates that a Member can be a defaulter if he has availed of services from the Society for which charges are payable. By-law 28 provides for forfeiture of the right to vote being a defaulter. This was not brought to the notice of my esteemed brother who dealt with the Bajrang Majur case (supra). Moreover, this issue was not raised before him as the issue that was brought up for adjudication was whether a 'no dues' certificate is mandatorily to be produced.

In view of the above, I find that the ground taken by respondent no.4 in declaring the petitioners to be defaulters, is sustainable as non-payment of the 1% annual subscription to the Federation to be a valid member, would indicate that the nonpayment of such subscription would fall within the meaning of defaulter as is explained below Section 73(CA)(1)(i)(c)(ii) reproduced above. I therefore, hold that such non-payment of annual subscription fee as charges to the Federation would be covered by the definition of defaulter and the petitioners have therefore, been rightly held to be defaulters. Hence, this Petition fails and the same is therefore, dismissed.

RAVINDRA V. GHUGE, J