Co-Operative Society A Part Of Constitutional Scheme, Interference In Their Affairs Should Be Avoided Unless Necessary: Bombay HC [Read Order]

The Bombay High Court on Wednesday observed that cooperative societies are a part of the constitutional scheme and should have the necessary space and autonomy to function and develop to its full potential. Thus, interference in its affairs should be avoided unless there is serious statutory breach or compelling necessity.

Division bench of Justice Ujjal Bhuyan and Justice Abhay Ahuja were hearing a writ petition filed by Rambujarat Chaurasia, Chairman of Vidhisha Shantiniketan Co-operative Housing Society Ltd. He had challenged an order passed by the Deputy Registrar, Thane directing Shyamrao Vitthal Co-operative Bank at Mira Road, Thane not to allow the petitioner to operate the Society's bank account and to allow another member of the Society who was appointed Administrator by the Deputy Registrar.

At the outset, Court noted that it is a case of a dispute between the office bearers of the Managing Committee of the Society, the petitioner being the Chairman and an individual member Ramesh Mankar who is arrayed as Respondent No.5 in this petition.

Petitioner's lawyer Advocate Neeta Karnik submitted that the Managing Committee of the respondent Society under the Chairmanship of the petitioner had passed a resolution that Ramesh Mankar has to pay penalty charges of Rs.22,000.

Aggrieved by this decision Ramesh Mankar filed a complaint with the Deputy Registrar, contesting the amount. In an order dated October 30, 2018 the Deputy Registrar directed the Society not to charge the amount of Rs.22,000 imposed as penalty and directed the Society to provide him with the revised bill. Since, no steps were taken in compliance of the said order, Mankar filed another complaint after which the Deputy Registrar in his order dated March 14, 2019 held that the Society is bound by the directions issued by its office and ought to have given Mankar the revised bill after reconsidering the penalty amount of Rs.22,000.

Thus, by this order, the Deputy Registrar directed the petitioner to provide Mankar with the revised bill at the earliest and within 15 days from the date of the said order failing which the Deputy Registrar would appoint an Administrator.

An appeal against the said order was filed by the respondent Society before the Joint Divisional Registrar. Meanwhile, in an order dated January 17, 2020, the Deputy Registrar passed an order for appointment of Administrator to take charge of the Society.

By the said order, the Deputy Registrar dissolved the Managing Committee of the Society, stating that the Administrator is to be appointed to administer the Society and take charge of its day-to-day affairs including operating its bank account maintained with the Respondent Bank. A penalty of Rs.5000 was also imposed by the in view of the non-compliance of its earlier direction dated March 14, 2019 to furnish the Respondent No.5 with the revised bill within 15 days.

Aggrieved by the said order dated January 17, 2020 dissolving the Committee and appointing an Administrator, the Society filed an appeal before the Divisional Joint Registrar, Co-operatives, who stayed the order dated January 17.

In order dated May 20, 2020 the Divisional Joint Registrar allowed the petitioner's appeal and quashed and set aside the Deputy Registrar's order dated January 17, 2020.

Advocate Karnik submitted on behalf of the petitioner that despite the order of status-quo the Deputy registrar has illegally via communication dated July 14, 2020 directed the Bank to allow the Administrator appointed by him to operate the Society bank accounts. Thus, the present petition was filed to restrain the Deputy Registrar and Administrator appointed by him from taking charge of the Society and its Bank accounts.

After hearing all contentions, Court decided not to interfere in the appeal pending before the Divisional Joint Registrar against Deputy Registrar's order dated February 10, 2020 and noted-

"In the interest of the Society and its members and that the day-to-day functioning of the Society is not hampered due to this dispute, we direct the Respondent No.3 to decide Appeal expeditiously within four weeks from today. In the meantime, the Society shall be jointly managed under the Chairmanship of the Petitioner and the Respondent No.6 Administrator only for day to day affairs including payment of municipal taxes, light bills and other outgoings of Respondent No.7 Society. All cheques of the Respondent No.7 Society to be jointly signed by Petitioner and Respondent No.6. The Respondent No.4 Bank is directed to unfreeze the account to allow the operation of account of Respondent No.7 Society as per our aforesaid direction."

Finally, the bench advised Deputy Registrar to exercise some restraint and observed-

"Before parting with the record, we would only say that cooperative societies are now part of the constitutional scheme as cooperative societies have been inserted in the Constitution of India as Part IX B by way of the Constitution (Ninety-seventh Amendment) Act, 2011 w.e.f. 15.02.2012. Therefore, co-operative societies should have the necessary space and autonomy to function and develop to its full potential. Interference in the affairs of cooperative societies should be avoided unless there is serious statutory breach or compelling necessity.

We find it a bit perplexing that for a dispute having its genesis in charging or billing of an individual shareholder member, drastic steps, such as, dissolution of the managing committee and appointment of Administrator have been resorted to. Departmental authorities like Respondent No.2 are expected to maintain a certain degree of restraint while taking such decisions, more so when the appellate authority is in seisin of the matter. We hope appellate authority will look into all these aspects. We say this and no more."

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