Case Note & Summary
The petitioner, Zeeshan Mehdi, was elected as a director of Bombay Mercantile Co-operative Bank Ltd. (respondent no.3) in 2012. In January 2013, the chairman of the bank issued a show cause notice alleging that the petitioner was a defaulter and liable to be dismissed under bye-law 51. Subsequently, the petitioner was removed as a director based on an RBI inspection report dated 24th December 2012. The petitioner challenged his removal by filing arbitration proceedings on 4th August 2014. Meanwhile, the Central Registrar of Co-operative Societies passed two orders: one on 19th December 2019 and another on 23rd September 2020, under Section 88 of the Multi-State Co-operative Societies Act, 2002, directing the bank to take action against the petitioner. The petitioner filed a writ petition under Article 226 of the Constitution of India impugning these orders. The main legal issue was whether the Registrar's orders, passed without affording any opportunity of hearing to the petitioner, were valid. The petitioner argued that the orders were passed in gross violation of natural justice as no notice or hearing was given before issuing the directions. The respondents, including the Union of India and the bank, did not seriously contest the petition. The court analyzed the provisions of Section 88 of the Multi-State Co-operative Societies Act, 2002, and held that the Registrar's power under that section must be exercised in accordance with principles of natural justice. Since the petitioner was not heard before the orders were passed, the orders were quashed and set aside. The court directed the Registrar to decide the matter afresh after giving a reasonable opportunity of hearing to the petitioner. The petition was allowed, and the interim application was disposed of.
Headnote
A) Administrative Law - Natural Justice - Right to be Heard - Multi-State Co-operative Societies Act, 2002, Section 88 - The Central Registrar passed orders under Section 88 directing the bank to take action against the petitioner without issuing any notice or hearing to the petitioner. The court held that such orders are in gross violation of principles of natural justice and cannot be sustained. (Paras 6-10) B) Co-operative Law - Removal of Director - Defaulter Status - Multi-State Co-operative Societies Act, 2002, Section 88 - The petitioner was removed as director based on an RBI inspection report declaring him a defaulter. The court noted that the petitioner had challenged his removal in arbitration proceedings and that the Registrar's orders were passed without considering the pending arbitration. (Paras 2-5) C) Constitutional Law - Writ Jurisdiction - Article 226 of the Constitution of India - The court exercised its writ jurisdiction to quash the Registrar's orders as they were passed without jurisdiction and in violation of natural justice. The court directed the Registrar to decide the matter afresh after hearing the petitioner. (Paras 11-12)
Issue of Consideration
Whether the orders dated 19th December, 2019 and 23rd September, 2020 passed by the Central Registrar of Co-operative Societies under Section 88 of the Multi-State Co-operative Societies Act, 2002, without affording an opportunity of hearing to the petitioner, are sustainable in law.
Final Decision
The petition is allowed. The impugned orders dated 19th December, 2019 and 23rd September, 2020 are quashed and set aside. The Central Registrar is directed to decide the matter afresh after giving a reasonable opportunity of hearing to the petitioner. The interim application is disposed of.
Law Points
- Natural justice
- Right to be heard
- Co-operative societies
- Multi-State Co-operative Societies Act
- 2002
- Section 88
- Section 123
- Bye-laws
- RBI inspection report
- Defaulter
- Removal of director
- Arbitration
- Show cause notice
- Writ jurisdiction under Article 226
