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TMI Blog2020 (8) TMI 854X X X X Extracts X X X X X X X X Extracts X X X X ..... strar must suo motu form an opinion that a society should be wound up because it has ceased working or it has ceased to comply with any conditions as to registration and management as provided under the Act or the rules and bye-laws framed thereunder then he may issue an 'interim order' directing the society to be wound up. The show cause notice was issued on 19.05.2020 to which petitioner submitted reply on 15.06.2020. Immediately on the next day, i.e., on 16.06.2020, the impugned order was passed. Impugned order says that though the petitioner had submitted its reply, no documents were annexed with it. It is stated that though reference was made to an affidavit regarding payment of dues to the workmen, neither copy of such affidavit nor any other evidence were produced. Regarding agreement entered into with Amul, again it is stated that no evidence to that effect was produced. On that basis, it was held that the written reply was not at all satisfactory and that liquidation process should be initiated. Having regard to the stand taken by the petitioner society in its show cause reply, if respondent No. 1 wanted or desired further materials to be considered in suppor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Indapur in the district of Pune i.e., respondent No. 2 as the liquidator of Dughganga Sahakari Dudh Utpadak Sangh Maryadit. 3. We have heard Mr. Surel Shah, learned counsel for the petitioner and Mr. A. Kumbhakoni, learned Advocate General, Maharashtra assisted by Mr. Kulkarni and Mr. Pabale, learned AGPs for the respondents-State. 4. Dughganga Sahakari Dudh Utpadak Sangh Maryadit is the petitioner in this case and is a co-operative society dealing with dairy and dairy products. It is registered under the provisions of Maharashtra Co-operative Societies Act, 1960. It will hereinafter be referred to as the 'petitioner society'. 5. According to the petitioner society, it has been complying with the terms and conditions of its registration which it continues to do till date. On an earlier occasion, respondent No. 1 had passed an order on 24.08.2016 for winding up of the petitioner society. Against the aforesaid order, petitioner society preferred appeal under section 104 of the Maharashtra Co-operative Societies Act, 1960 (briefly the Act hereinafter) before the State Government. The departmental minister acting as the appellate authority had allowed the appeal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reement entered into with Amul. 10. However, before the submission of documents as above on 17.06.2020, respondent No. 1 had already passed the impugned interim order dated 16.06.2020 holding that petitioner society was liable for liquidation and therefore, in exercise of powers conferred under section 102(1)(c)(ii) and (iv) of the Act, initiated the process for liquidation of the petitioner society and further in exercise of powers under section 103(1) of the Act appointed respondent No. 2 as the liquidator of petitioner society. By the said order, petitioner society was directed to file its reply to the interim order within one month. 11. Aggrieved by the aforesaid order dated 16.06.2020, petitioner society has preferred the present writ petition assailing the legality and validity thereof. 12. It is contended that there is no provision for appeal under the Act against the impugned order. Impugned order is ex-facie illegal since none of the conditions contemplated by section 102(1)(c)(ii) and (iv) of the Act have been infringed. Impugned order has been passed in breach of the principles of natural justice and for extraneous reasons in as much as the present departmental ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the petitioner society way back in the year 2017 when the appeal of the petitioner society was heard and allowed by setting aside the order of appointing liquidator subject to fulfillment of the conditions mentioned therein. 14.2. Referring to the document relating to compromise between petitioner society and the workmen, it is stated that it does not show any payment made by the petitioner society. Mentioning that petitioner society had not complied with a single direction in terms of the appellate order dated 12.05.2017, it is stated that petitioner society was not at all functional during the last three years. Though petitioner society has come up with the version that milk collection again started in the year 2017, no document to that effect has been submitted. Verification report dated 10.06.2019 consequent upon joint inspection carried out by District Dairy Development Officer, Pune and Assistant Registrar of Cooperative Societies (Dairy), Pune falsifies the claim of collection of milk by the petitioner society in the year 2019. Allegation of the petitioner society that impugned action is motivated being carried out under the diktat of the present Minister for Dairy De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same. 16. Mr. Shah, learned counsel for the petitioner submits that the impugned order is in violation of the principles of natural justice. Referring to the provisions contained in section 102(1)(c) of the Act, he submits that even though an order passed thereunder is termed as an 'interim order', the same entails adverse civil consequences on the society concerned. Though the section does not provide for any notice or hearing prior to passing of such order termed and styled as 'interim order', a Division Bench of this Court in Chandrapur Zilla Sahakari Krushi and Gramin Bahuudeshiya Development Bank Limited Vs. State of Maharashtra, 2004 (1) Mh. L.J. 232 has held that principles of natural justice are implicit and must be read into the aforesaid provision. Further contention of Mr. Shah is that the conditions precedent for invocation of power under section 102(1)(c)(ii) and (iv) are totally absent in the present case. Had an opportunity of hearing been granted to the petitioner society, it would have satisfied respondent No. 1 that the basic jurisdictional facts are absent in the present case. Therefore, the impugned order has been passed without jurisdiction. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the parties have been considered. Also perused the materials on record. 20. Before proceeding further, it would be apposite to examine section 102 of the Act. Section 102 finds place in Chapter X which deals with liquidation. For proper appreciation, section 102 is extracted hereunder in its entirety: 102. Winding up-(1) If the Registrar: (a) after an inquiry has been held under section 83 or an inspection has been made under section 84 or on the report of the auditor auditing the accounts of the society, or (b) on receipt of an application made upon a resolution carried by three-fourths of the members of a society present at a special general meeting called for the purpose, or (c) of his own motion, in the case of a society which- (i) has not commenced working, or (ii) has ceased working, or (iii) possesses shares or members deposits not exceeding five hundred rupees, or (iv) has ceased to comply with any conditions as to registration and management in this Act or the rules or the bye laws, is of the opinion that a society ought to be wound up, he may issue an interim order directing it to be wound up. (2) A copy of such order made under sub-secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the prescribed manner giving it an opportunity to submit its explanation within one month and thereafter on hearing the society and its creditors, if any, Registrar may pass the final order which may either vacate the interim order passed under sub-section (1) or confirm the same. Therefore, while no pre-decisional notice or hearing is provided in sub-section (1), the same is specifically provided in sub-section (2). 21. Before proceeding further, we may also refer to section 103 of the Act. Section 103 is extracted hereunder: 103. (1) When an interim order is passed under the last preceding section or a final order is passed under that section, for the winding up of a society, the Registrar may in accordance with rules, appoint a person to be Liquidator of the society, and fix his remuneration. (2) On issue of the interim order, the officers of the society shall hand over to the Liquidator the custody and control of all the property, effects and actionable claims to which the society is or appears to be entitled and, of all books, records and other documents pertaining to the business of the society and, shall have no access to any of them. (3) When a final order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 102(1) is subsequently vacated, the liquidator shall handover the property, effects and actionable claims and books, records and other documents of the society to the officers who had delivered the same to him, the acts done and the proceedings taken by the liquidator shall be binding on the society and even if the interim order is cancelled, the same shall be continued by the officers of the society. 22. Though section 104 provides for filing of appeal against final order of winding up made under section 102(2), there is no provision for filing of appeal against an interim order passed under section 102(1). 23. Section 102 was examined in detail by a Division Bench of this Court in Chandrapur (supra). In that case, certain categories of cooperative banks were ordered to be liquidated vide interim order passed under section 102(1)(c)(iv) of the Act. When this was challenged before a Single Bench, the writ petitions were dismissed whereafter the matter was taken up in appeal. Division Bench noticed that there was no statutory provision which would require the Registrar to hear a society before passing of an interim order under section 102(1) of the Act though it was statuto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) and (b) on the one hand and clause (c) on the other hand of sub-section (1) of section 102. Under section 102(1)(a) and (b), Registrar has tangible material collected from the society itself under an enquiry in terms of section 83 or section 84 of the Act which sections provide for full-fledged hearing. Coming to clause (c) which empowers the Registrar to take suo moto action, Division Bench held that all the fact situations mentioned therein from the very nature do warrant hearing the society before passing of 'interim order' to wind up. Principles of natural justice are implicit in the provisions of section 102, particularly in section 102(1)(c) of the Act. 24. Upon thorough consideration of the provisions contained in section 102(1)(c) read in conjunction with section 103 of the Act, we are in respectful agreement with the views expressed in Chandrapur (supra). Though an order passed under sub-section (1) of section 102 is termed as an 'interim order', considering the consequences that would befall a society against which such an order has been passed having regard to the mandate of section 103 of the Act there can be no manner of doubt that principles of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner had submitted its reply, no documents were annexed with it. It is stated that though reference was made to an affidavit regarding payment of dues to the workmen, neither copy of such affidavit nor any other evidence were produced. Regarding agreement entered into with Amul, again it is stated that no evidence to that effect was produced. On that basis, it was held that the written reply was not at all satisfactory and that liquidation process should be initiated. 28. On due consideration, we are of the view that having regard to the stand taken by the petitioner society in its show cause reply, if respondent No. 1 wanted or desired further materials to be considered in support of the contentions, it could have very well sought for the same from the petitioner society. After all directing liquidation of a society is a drastic measure and ordinarily should be taken only as the last option. Non-seeking of materials/evidence from the petitioner society more so in the context of the petitioner society seeking a hearing does not appear to be justified; rather it appears that impugned action has been taken in undue haste without calling for and examining the related materials. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et aside by a superior authority, the consequence thereof is that it becomes inoperative; it is rendered null and void; it is erased from the record book as if it was never passed. Advanced Law Lexicon, 3rd Edition, Reprint 2007 defines the expression 'set-aside' to mean to annul, quash, render void or nugatory. Similarly, in Supreme Court on Words and Phrases, Second Edition, it is stated that the ordinary meaning of the words 'set-aside' is to revoke or quash, the effect of which is to make the interim order inoperative or non-existent. 33. Therefore, to contend that the impugned order dated 16.06.2020 is a continuation of the previous proceeding which led to passing of final order dated 24.08.2016 is clearly an untenable proposition and certainly does not stand to reason. When respondent No. 1 says that the terms and conditions of the appellate order dated 12.05.2017 have not been complied with and for that reason he seeks to invoke the suo motu jurisdiction under section 102(1)(c), he has firstly to clearly state and point out as to what are the non-compliances and to what extent. Only after the non-compliances or the extent thereof are put forward by the Reg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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