Maharashtra Co-Operative Societies Act Promotes Open Membership, Rejection Of Applicant Unwarranted If All Conditions Are Met: Bombay High Court
The Bombay High Court observed that Section 23 of the Maharashtra Co-operative Societies Act, 1960 (MCS Act) promotes the concept of 'open membership'. Thus, the rejection of membership by a Co-operative Bank based on alleged motives to disrupt its administration, despite the applicants fulfilling all conditions mandated by the MCS Act, was deemed to be a violation of Section 23 of the MCS Act.
A single judge bench of Justice S. G. Chapalgaonkar was considering the petitioners' challenge to the order of the Cabinet Minister for Co-operation, Maharashtra, by which the decision of the Bank/respondent to refuse its membership to the petitioners was upheld.
The petitioners had applied for membership of the Ahmednagar Merchant's Co-operative Bank Ltd. (respondent no.4). However, the Director Board of the bank passed a resolution refusing membership to the petitioners. They appealed to the Commissioner of Co-operation and Registrar Co-operative Societies (respondent no.2), who allowed the appeal and directed the bank to admit petitioners as members.
The Bank filed a Revision application under Section 154 of the MCS Act before the Appellate Authority/Cabinet Minister (respondent no.1). The Cabinet Minister allowed the bank's appeal and thus rejected the petitioners' membership application.
The High Court noted that the petitioners duly paid the prescribed fees and charges required for the membership of the bank. However, the bank rejected their applications due to the reason that the bulk applications of the petitioners were made with a motive to disturb administration of the Bank.
The Court referred to Section 23 of the MCS Act and observed that the provision promotes the concept of 'open membership' i.e., the Cooperative Society cannot refuse the membership of any person who has fulfilled the criteria under the MCS Act and bye-laws.
The Court thus held that the bank's resolution was in violation of Section 23 MCS Act and bye-laws of the Bank.
It also held the Cabinet Minister's order did not provide proper reasons to reverse the Commissioner's order. It noted that the Cabinet Minister did not consider the purpose and scope of the MCS Act. Further, “No reason is recorded by Hon'ble Minister justifying denial of membership to petitioners or justifying decision of the Managing Committee, in face of concept of open membership under Section 23 of the M.C.S. Act, 1960.”
The Court thus set-aside the resolution of the Bank and the order of the Cabinet Minister. It directed the Bank to grant membership to the petitioners, once they satisfy the conditions provided in the Bank's bye-laws.
Case title: Mrs. Madhura Mukul Gandhe & Ors. vs. The Hon'ble Cabinet Minister for Co-Operation Maharashtra State & Ors. (Writ Petition No.10807 of 2016)