Case Note & Summary
The dispute arose from orders passed by the Deputy Registrar, Co-operative Societies, Meerut, removing the petitioner and two other delegates from the Board of Directors of the District Co-operative Federation, Bulandshahr, and annulling resolutions of the Committee of Management. The petitioner, a delegate from the Co-operative Union of Unchagaon, had been elected as a Director and later Chairman of the Federation. An inspection in February 1971 by the Deputy Registrar found that three constituent unions, including the petitioner's, were defaulters in respect of dues owed to the Federation. The Deputy Registrar viewed these dues as loans and considered the delegates disqualified under bye-law No.1(Ta), which disqualified members who were defaulters in loan repayment. Consequently, on 2 May 1972, the Deputy Registrar passed an order under Section 38 of the Uttar Pradesh Co-operative Societies Act, 1965, removing the petitioner and two others from the Board and disqualifying them for three years. The same order also annulled resolutions passed at the Federation's meeting on 15 March 1971 under Section 128, on the ground that the minutes were not recorded by the Secretary, thereby violating bye-laws No.10(cha) and No.11. The petitioner challenged these orders by way of a writ petition under Article 32 of the Constitution. Before the Supreme Court, the petitioner argued that the outstanding amounts were not loans but commercial debts arising from supplies of goods, and that the meeting was conducted properly because the Chairman had appointed an elected Director to record minutes due to the Secretary's willful absence, which was protected by Section 188 of the Act. The respondent Deputy Registrar contended that the unions were defaulters and the delegates were disqualified, and that the minutes were not recorded as required by the bye-laws. The Supreme Court held that the Federation was not a credit society and had no loan transactions with the unions; the dues were for supplies of goods and were commercial debts, not loans, so bye-law No.1(Ta) did not apply. The Court further held that the meeting of 15 March 1971 was properly conducted, as the Chairman rightly appointed an elected Director to record minutes in view of the Secretary's willful absence, and Section 188 protected the proceedings. The Deputy Registrar had acted illegally in annulling the resolutions. Accordingly, the writ petition was allowed, and the orders dated 2 May 1972 were quashed.
Headnote
A) Co-operative Societies - Disqualification of Directors - Default and Loan - Uttar Pradesh Co-operative Societies Act, 1965, Section 38 and Bye-law No.1(Ta) - The Deputy Registrar removed the petitioner and two other delegates from the Board of Directors of District Co-operative Federation on the ground that their constituent unions were defaulters within meaning of bye-law No.1(Ta) because of outstanding dues for supplies of goods. Held that the Federation was not a credit society, had no loan transactions with the unions, and dues were commercial debts for goods supplied, not loans; therefore the order was based on illegal interpretation and was quashed.
B) Co-operative Societies - Annulment of Resolutions - Minutes Recording and Chairman's Authority - Uttar Pradesh Co-operative Societies Act, 1965, Sections 128 and 188 and Bye-laws No.10(cha) and No.11 - The Deputy Registrar annulled resolutions of the Committee of Management dated 15 March 1971 on ground that minutes were not recorded by the Secretary, violating bye-laws. Held that the Chairman rightly appointed an elected Director to record minutes due to willful absence of Secretary, and Section 188 protected the proceedings; therefore annulment was illegal and was quashed.
Issue of Consideration
Whether delegates from member unions owing dues for supplies of goods were disqualified under bye-law No.1(Ta) read with Section 38 of U.P. Co-operative Societies Act, 1965; whether Deputy Registrar could annul resolutions under Section 128 for non-compliance with bye-laws No.10(cha) and No.11 when Chairman appointed a Director to record minutes due to Secretary's willful absence
Final Decision
Petition allowed. Orders of Deputy Registrar dated 2 May, 1972 quashed. Held that dues for supplies of goods are commercial debts, not loans, so not grounds for disqualification under bye-law No.1(Ta); meeting of 15 March 1971 properly conducted, Chairman rightly appointed director to record minutes due to Secretary's willful absence, protected by Section 188. Deputy Registrar acted illegally in annulling resolutions.
Law Points
- Commercial debts for supplies of goods do not constitute loans under bye-law No.1(Ta)
- dues for goods supplied are not grounds for disqualification under Section 38
- Chairman may appoint an elected Director to record minutes when Secretary willfully absent
- Section 188 protects proceedings
- annulment under Section 128 on defective minutes illegal
Case Details
Writ Petition No. 214 of 1972
A.N. Ray, S.M. Sikri (CJ), D.G. Palekar, M. Hameedullah Beg, S.N. Dwivedi
1973 AIR 1052, 1973 SCR (3) 430, 1973 SCC (1) 593
A.P. Singh Chauhan, N. N. Sharma, A. K. Sen, O. P. Rana
Deputy Registrar, Co-operative Societies, Meerut & Ors.
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Nature of Litigation
Writ petition under Article 32 of the Constitution challenging orders of Deputy Registrar, Co-operative Societies removing petitioner from Board of Directors and annulling resolutions of Committee of Management.
Remedy Sought
Petitioner sought quashing of orders dated 2 May, 1972 passed by Deputy Registrar removing him and two other delegates and disqualifying them for three years, and annulling resolutions of Committee of Management dated 15 March, 1971.
Filing Reason
Petitioner contended Deputy Registrar misconstrued bye-law No.1(Ta) treating commercial dues as loan, and improperly annulled resolutions on ground of minutes recording when Chairman lawfully appointed another director due to Secretary's willful absence.
Previous Decisions
Allahabad High Court in Yograj Singh's writ petition quashed similar removal order dated 10/15 July 1971 for lack of individual notice; Deputy Registrar then passed fresh order dated 2 May 1972.
Issues
Whether delegates from member unions that owed dues to the Federation for supplies of goods were disqualified under bye-law No.1(Ta) read with Section 38 of U.P. Co-operative Societies Act, 1965, treating such dues as loans.
Whether the Deputy Registrar was justified in annulling resolutions of the Committee of Management under Section 128 on the ground that minutes were not recorded by the Secretary, when the Chairman had appointed an elected Director to record minutes due to Secretary's willful absence, and whether Section 188 protected the proceedings.
Submissions/Arguments
Petitioner argued that the outstanding dues were for supplies of goods and constituted commercial debts, not loans; therefore they were not disqualified under bye-law No.1(Ta). The meeting was properly conducted because the Chairman rightly appointed an elected Director to record minutes due to the Secretary's willful absence, and Section 188 protected the proceedings.
Respondent Deputy Registrar contended that the constituent unions were defaulters, making the delegates disqualified; the non-recording of minutes by the Secretary violated bye-laws No.10(cha) and No.11, justifying annulment of resolutions under Section 128.
Ratio Decidendi
Commercial debts for supplies of goods do not constitute 'loan' under bye-law No.1(Ta) of the Federation; therefore, delegates from member unions with outstanding dues for such supplies are not disqualified under Section 38 of U.P. Co-operative Societies Act, 1965. Where the Secretary of a co-operative society willfully absents himself, the Chairman may lawfully appoint an elected Director to record minutes, and such proceedings are protected under Section 188; annulment of resolutions on that ground is illegal.
Judgment Excerpts
The Deputy Registrar could not rely on bye-law No. 1 (Ta) to justify the removal of the petitioner and the two other delegates from the membership of the Board of Directors. The Federation was not a credit society. The Federation did not have any loan transaction with the co-operative unions. The co-operative unions did not have any loan transactions with the petitioner. The dues of the co-operative unions were in respect of supplies of goods by the Federation to the Co-operative unions. These were commercial transactions. These were commercial debts. Price of goods supplied if outstanding does not constitute loan within the meaning of the bye-law.
The meeting of the Federation on 15th March, 1971 was properly conducted. The Chairman rightly appointed an elected Director to record the minutes of the meeting in view of the willful absence of the Secretary. Section 188 of the Act also protects the proceedings of the meeting. The Deputy Registrar acted illegally in annulling the resolutions of the Federation held on 15th March 1971.
Procedural History
Inspection by Deputy Registrar in February 1971 found three constituent unions defaulters. Annual general meeting of Federation on 20 March 1970 elected committee; petitioner elected Director and later Chairman. Committee meeting on 3 April 1971 resolved that members were not defaulters; appointed enquiry committee. Deputy Registrar passed order dated 10/15 July 1971 removing petitioner and Yograj under Section 38 for arrears. Yograj Singh filed writ petition under Article 226 before Allahabad High Court; High Court on 21 February 1972 quashed order for lack of individual notice. Deputy Registrar passed fresh order dated 2 May 1972 removing petitioner, Rajendra Singh, and Yograj Singh and annulling resolutions of Committee of Management dated 15 March 1971. Petitioner filed present writ petition under Article 32 challenging order dated 2 May 1972. Supreme Court allowed petition and quashed order.
Acts & Sections
- Uttar Pradesh Co-operative Societies Act, 1965: 38, 38(2), 128, 188
- Constitution of India: Article 32, Article 226
