Consultation With Federal Society Prerequisite For Removal Of Committee Member Under Section 78 Of Cooperative Societies Act: Bombay High Court

"Therefore, when member of the committee is to be removed for the alleged act, which is prejudicial to the interest of the society or for not discharging function properly or diligently, consultation with the federal society is pre-requisite before removing him from the committee of the society", the court held.

Justice Sandeep K. Shinde partly allowed a writ petition challenging the decision of the Deputy Registrars, Cooperative Societies decision to remove the petitioners from the committee of a cooperative society.

The petitioners were office bearers of a co-operative society. The Deputy Registrar, Cooperative Societies under Section 78A(1)(b) of the Maharashtra Cooperative Societies Act, 1960 removed the petitioners and held them ineligible to be re-elected, re-co-opted, or re-nominated as members of any committee of the society till the end of next term of the committee.

The Deputy Registrar constituted a three-member committee to manage the society. The divisional joint registrar and the Minister confirmed the Deputy Registrar's decision in an appeal and revision petition respectively. Hence, the petitioner approached the High Court.

Advocate Subhash Jha for the petitioners submitted that consultation with federal society is mandatory before removing members of the committee. The Deputy Registrar could not have removed the petitioners as in this case there was no consultation with the federal society at all.

Advocate Surel Shah for the three-member committee contended that the society was not receiving financial assistance from the government and the government holds no share in the society. Hence, the Deputy Registrar was not obligated to consult the federal society.

The court noted that the Registrar has the power to remove a member of the committee if the acts of the member are prejudicial to the interest of the society or if the committee or its members are negligent in performing duties. However, these powers can be exercised after giving the committee or the member reasonable opportunity and after consultation with the federal society, the court held.

The court said that the registrar cannot supersede the committee of a society that does not receive financial assistance from the government.

It noted that the federal society requested the Deputy Registrar to send the complaint, inspection report, reply of society to the show cause notice. However, the Deputy Registrar did not respond or comply with the federal society's request.

The court concluded that in this case there was no consultation with federal society. The Deputy Registrar did not even send the documents required by the federal society for forming the opinion, noted the court.

While the federal society's opinion is not binding, it still must be sought by the Deputy Registrar, the court said. "Although the opinion of the Federal Society is not binding on the authority, yet, the authority must establish that it sought opinion of the Federal Society by providing requisite documents."

The court set aside the Deputy Registrar's order agreeing with Jha's contention that the Deputy Registrar could not have held petitioners to be ineligible to be re-elected, re-co-opted or re-nominated as members of any committee of the society without consulting the federal society.

The court noted that the election is due and the term of the committee of the society has come to an end. It directed the three-member committee appointed by the Deputy Registrar to take steps to hold the election in accordance with Election to Committee Rules, 2014. The court further directed that the committee appointed by the Deputy Registrar shall manage the day-to-day affairs of the society but take no policy decision till the new committee is elected.

"To put it differently, committee is authorised to make all statutory payments, including payment to house-keeping personnel, security services, renewal and annual maintenance charges, etc. of which account shall be maintained," it said.

Case no. – Writ Petition No. 7731 of 2022

Case title – Kusum Ramesh Agarwal and Ors. v. State Minister for Co-operation, Department of Co-operation and Ors.

Citation: 2022 LiveLaw (Bom) 412