Case Note & Summary
The petitioner, Umesh Mukundrao Apte, filed a writ petition under Article 227 of the Constitution of India challenging two orders: (1) an order dated 16 February 2017 passed by the Regional Joint Director (Sugar) and Joint Registrar, Co-operative Societies, Kolhapur, disqualifying him under Section 73(CA)(1)(i) and Section 78(A)(1)(b) of the Maharashtra Co-operative Societies Act, 1960 (MCS Act), and (2) an order dated 7 June 2017 passed by the Minister of Co-operation, Marketing and Textile, Maharashtra State, dismissing his revision application. The petitioner was a director of Respondent No. 3, a sugar factory registered under the MCS Act. Elections for office bearers were held in May 2016 for a term of five years (2016-2021). The petitioner had taken two loans from Bhudargad Nagri Sahakari Pathsanstha Maryadit, Gargoti, a cooperative society that was subsequently placed in liquidation. The loans were taken on 19 February 1995 (Rs. 4,25,000) and 19 October 1995 (Rs. 2,25,000). The petitioner claimed that he deposited certain amounts in 2003 and later cleared all arrears. The disqualification was based on an alleged default in repayment of these loans. The petitioner argued that the loans were not from the sugar factory but from a different society, and that he had cleared all arrears. The respondents contended that the petitioner was a defaulter and thus disqualified. The court examined the provisions of Sections 73(CA)(1)(i) and 78(A)(1)(b) of the MCS Act, which disqualify a person who is a defaulter of a loan from any cooperative society. The court noted that the disqualification requires a wilful default and not mere default. The court found that the petitioner had cleared all arrears and that the loans were old, from 1995. The court also held that the impugned orders were passed without giving any notice or opportunity of hearing to the petitioner, violating principles of natural justice. The court quashed both impugned orders and allowed the petition.
Headnote
A) Cooperative Law - Disqualification of Director - Wilful Default - Sections 73(CA)(1)(i) and 78(A)(1)(b) Maharashtra Co-operative Societies Act, 1960 - The petitioner was disqualified as a director of a sugar factory for allegedly being a defaulter of a loan from another cooperative society. The court held that the disqualification provisions require a wilful default and not mere default, and that the petitioner had cleared all arrears. The impugned orders were set aside as the authority failed to prove wilful default and did not provide notice or opportunity of hearing. (Paras 1-21) B) Natural Justice - Disqualification Without Hearing - Violation of Principles of Natural Justice - The court held that the order of disqualification was passed without giving any notice or opportunity of hearing to the petitioner, which is a clear violation of principles of natural justice. The impugned orders were quashed on this ground as well. (Paras 18-21)
Issue of Consideration
Whether the petitioner was disqualified under Section 73(CA)(1)(i) and Section 78(A)(1)(b) of the Maharashtra Co-operative Societies Act, 1960 for being a defaulter of a loan from a cooperative society, and whether the impugned orders were passed in violation of principles of natural justice.
Final Decision
The court quashed and set aside the order dated 16 February 2017 passed by the Regional Joint Director (Sugar) and Joint Registrar, Co-operative Societies, Kolhapur, and the order dated 7 June 2017 passed by the Minister of Co-operation, Marketing and Textile, Maharashtra State. The writ petition was allowed.
Law Points
- Disqualification under MCS Act requires wilful default
- not mere default
- natural justice must be observed before disqualification
- loan default must be subsisting on date of election
- burden of proof on authority to show wilful default
