Case Note & Summary
The dispute arose when 83 former employees of the Amravati Growers’ Cooperative Spinning Mills Ltd. sought permission under Section 107 of the Maharashtra Cooperative Societies Act, 1970, to sue the liquidator for recovery of wages and other dues. The mill had gone into liquidation and an agreement for its sale to respondent No.4 was made but later failed, leading to termination of the employees’ services without proper procedure and non-payment of dues. The employees initially filed a complaint before the Industrial Court under the MRTU & PULP Act, 1971, but it was dismissed on 31/1/2004 for want of Section 107 permission. They then applied to the Registrar for such permission, who by order dated 20/8/2003 rejected the applications on the ground of the earlier order and the supposed lack of tenability of the claim. The petitioners challenged this rejection in a writ petition before the Bombay High Court, arguing that the Registrar had no authority to examine the merits and that the permission should have been granted as a formality. The respondent’s liquidator contended that the Registrar could consider tenability to avoid unnecessary litigation. The High Court, after hearing both sides, held that the Registrar committed a material irregularity by rejecting the application on irrelevant considerations and by delving into the merits. It observed that the language of Section 107 does not empower the Registrar to conduct a merit-based inquiry at that stage and that the permission is intended to be a liberal procedural step. Consequently, the writ petition was allowed, the impugned order was quashed, and the permission under Section 107 was granted, enabling the employees to pursue their claims before the appropriate forum.
Headnote
A) Cooperative Societies - Permission to Sue Liquidator - Scope of Registrar’s Inquiry under Section 107, Maharashtra Cooperative Societies Act, 1970 - The Registrar while dealing with an application under Section 107 is not required to enter into the merits of the claim and the grant of permission is merely a formality; the refusal on the ground of tenability of the claim or on the basis of an earlier order dated 20/8/2003 was erroneous. Held that the impugned order is quashed and permission is to be granted. (Paras 4, 6)
Issue of Consideration
Whether the Registrar, while considering an application under Section 107 of the Maharashtra Cooperative Societies Act, 1970, can reject the application on the ground of the tenability or merits of the claim, or whether the grant of permission is a formality
Final Decision
Writ petition allowed; rule made absolute. The impugned order dated 20/8/2003 passed by respondent No.2 is quashed and set aside. Permission under Section 107 of the Maharashtra Cooperative Societies Act, 1970 is granted to the petitioners to initiate appropriate proceedings against the liquidator for recovery of their wages and dues.
Law Points
- Registrar's power under Section 107 is limited
- permission to sue liquidator is a formality
- Registrar cannot go into merits of the claim
- application must be granted as a matter of course
- refusal on irrelevant grounds is invalid
Case Details
2010 LawText (BOM) (08) 149
Writ Petition No. 4823 of 2009
Shri S. D. Thakur, Smt. I. L. Bodade, Shri A. C. Dharmadhikari
Narayan s/o Arjunji Vighne & 82 Others
State of Maharashtra through Secretary, Department of Cooperation; Joint Director (Administration), Handlooms, Powerlooms & Textiles Directorate; Amravati Growers’ Cooperative Spinning Mills Ltd. through Liquidator; M/s Navalji Cotspin Limited
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Nature of Litigation
Writ petition challenging the order of the Joint Director (Administration) rejecting applications filed by former employees under Section 107 of the Maharashtra Cooperative Societies Act, 1970, seeking permission to implead the liquidator and recover wages and other dues.
Remedy Sought
Quashing of the impugned rejection order dated 20/8/2003 and a direction to grant the permission under Section 107.
Filing Reason
The petitioners’ earlier complaint before the Industrial Court under the MRTU & PULP Act was dismissed on 31/1/2004 for want of Section 107 permission, and the Registrar thereafter rejected their application for such permission on the ground of the order dated 20/8/2003 and the merits of the claim.
Previous Decisions
The Industrial Court, Amravati, dismissed the employees’ complaint on 31/1/2004. The Joint Director (Administration) as Registrar rejected the Section 107 applications by order dated 20/8/2003.
Issues
Whether the Registrar under the Maharashtra Cooperative Societies Act, 1970 can reject an application for permission under Section 107 by entering into the merits of the claim.
Whether the Registrar’s order was vitiated by non-application of mind and reliance on irrelevant considerations.
Submissions/Arguments
Petitioners argued that the grant of permission under Section 107 is a formality and the Registrar cannot go into the merits of the claim; the rejection was based on wholly irrelevant considerations.
Respondent No.3 contended that the Registrar is not expected to act mechanically and can consider the tenability of the claim to avoid unnecessary litigation against the liquidator.
Ratio Decidendi
The Registrar, while dealing with an application under Section 107 of the Maharashtra Cooperative Societies Act, 1970, is not required to go into the merits of the claim or its tenability; the grant of permission is a formality and must be liberally granted to avoid obstruction to legitimate claims. Refusal on the ground of an earlier order or consideration of the merits amounts to an error of jurisdiction.
Judgment Excerpts
the Registrar dealing with the application is not suppose to enter into the merits of the claim and the grant of permission is merely a formality and as a matter of course, the application tendered by the employees should have been allowed.
I am of the view that the Registrar has committed error in rejecting the application tendered by the employees seeking permission as contemplated by Section 107
Procedural History
The petitioners, former employees of respondent No.3 society in various capacities, had their services terminated without proper procedure after the mill’s liquidation and a failed sale agreement with respondent No.4. They filed a complaint before the Industrial Court, Amravati under the MRTU & PULP Act, 1971, which was dismissed on 31/1/2004 for want of permission under Section 107 of the Maharashtra Cooperative Societies Act, 1970. Thereafter, they applied to the Registrar for such permission; the Registrar by order dated 20/8/2003 rejected the applications. Aggrieved, the petitioners filed Writ Petition No. 4823 of 2009 before the High Court.
Acts & Sections
- Maharashtra Cooperative Societies Act, 1970: Section 107
- Industrial Disputes Act, 1947: Section 25(O)
- Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971:
