Case Note & Summary
The petitioner, P. A. Inamdar, was a shareholder, director, and Chairman of the Muslim Co-operative Bank Ltd., Pune. On 19 July 2017, respondent Nos. 5 to 7 complained to the Commissioner of Co-operation alleging irregularities. The Commissioner forwarded the complaint to the District Deputy Registrar (DDR) for investigation. The Deputy Registrar submitted a report on 13 October 2017, finding that the petitioner had transferred employees' salaries to Crescent India Medical Education Trust without their consent, and awarded a computer maintenance contract to Ontogo Technologies, a firm in which his son had a 30% stake, without board approval. Based on this report, the Commissioner issued a show cause notice on 22 February 2019, and after considering the petitioner's reply and hearing, passed the impugned order on 18 April 2019 under Section 78A(1) of the Maharashtra Co-operative Societies Act, 1960, removing the petitioner as director and barring him from being elected for the next tenure. The petitioner appealed to the Appellate Authority, which confirmed the order on 28 August 2019. The petitioner then filed a writ petition in the Bombay High Court challenging both orders. The court examined the legality of the removal, focusing on whether the petitioner was given a fair opportunity and whether the findings were supported by evidence. The court noted that the petitioner was given a show cause notice, a personal hearing, and the opportunity to cross-examine witnesses. The court found that the transfer of funds to the trust was unauthorized and that the contract to the son's firm was a conflict of interest. The court held that the Commissioner's order was within the scope of Section 78A(1) and that the principles of natural justice were complied with. The court dismissed the petition, upholding the removal order.
Headnote
A) Co-operative Law - Removal of Director - Section 78A(1) of Maharashtra Co-operative Societies Act, 1960 - Misappropriation of Funds - The Commissioner removed the petitioner for transferring employees' salaries to a trust without consent and awarding a contract to his son's firm. The court held that the petitioner was given adequate opportunity and the findings were based on material evidence. (Paras 2-10) B) Co-operative Law - Conflict of Interest - Section 78A(1) of Maharashtra Co-operative Societies Act, 1960 - Contract to Relative's Firm - The petitioner awarded a computer maintenance contract to Ontogo Technologies, where his son had 30% stake, without board approval. The court held this constituted a conflict of interest and was a valid ground for removal. (Paras 11-15) C) Co-operative Law - Natural Justice - Section 78A(1) of Maharashtra Co-operative Societies Act, 1960 - Opportunity of Hearing - The petitioner was given a show cause notice and personal hearing before the order. The court held that the principles of natural justice were complied with. (Paras 16-20)
Issue of Consideration
Whether the order of removal of the petitioner as a director under Section 78A(1) of the Maharashtra Co-operative Societies Act, 1960 was valid and passed in compliance with principles of natural justice.
Final Decision
The High Court dismissed the writ petition, upholding the order of removal passed by the Commissioner of Co-operation and confirmed by the Appellate Authority.
Law Points
- Section 78A(1) of Maharashtra Co-operative Societies Act
- 1960
- Removal of director
- Co-operative bank
- Misappropriation
- Conflict of interest
- Natural justice
- Opportunity of hearing
