PATESINGHRAO ANANDRAO NAIK Vs. R.V. DESHMUKH

JUDGEMENT

(1.) - - - - 1. This writ petition is filed by the elected members of the board of directors of the Vishwas Sahakari Sakhar Karkhana Ltd. Yeshwant Nagar, Chikmali Taluka Shirala, District Sanigli, challenging the orders passed by the Joint Director (Sugar) and Joint Registrar of the Co -operative Societies, Maharashtra State, under Section 78 of the Maharashtra Co -operative Societies Act (hereinafter referred to as the Act), removing the board of directors and consequential appointment of one Shri Desai as an administrator.

(2.) THE petitioners were elected as members of the board of directors in December 1978 and their tenure of office is for 5 years. According to the petitioners they belong to a group that owed its allegiance to congress (U). Their group has been in control of the karkhana since 1973. In the year 1978 when they were re -elected P.D.F. Government was in power in the State of Maharahtra. In January 1980 fresh elections were held to the State Legislature and congress (I) party came into power. It is the case of the petitioners that since then malicious efforts were made by the local congress (I) M.L.As and workers to bring hurdles in the smooth working and administration of the karkhana. As a result of this political manoeuvring in September 1, 1980 a show cause notice was issued by the respondent No. 1 the Joint Director (Sugar) and Joint Registrar, Co -operative Societies under Section 78 of the Act. The said notice initially contained following 10 allegations: (1) In the year 1979 -80, the karkhana worked only for 102 days and crushed only 79,327 metric tonnes of sugarcane against the capacity of 1.75 lacs of metric tonnes. Further the board did not initiate any action against the producer -members who did not supply sugarcane to the karkhana. (2) The board of directors failed to collect subscriptions in respect of shares from the karkhana's members. (3) The board of directors did not attempt to increase the number of producer -members. (4) The board of directors did not take adequate action to submit a rectification report to the registrar, clarifying the steps taken to rectify the defects of the audit reports of the years 1976 -77 and 1977 -78. They thereby committed an offence under Section 82 of the Act read with bye -law 43 (S) of the karkhana. (5) From December 1978, when the board assumed control of the karkhana till December, 1979, the board of directors met only twice to approve the expenditure incurred by the karkhana. On these occasions all expenses were not approved. Certain expenditures were only approved by the executive committee of the board and expenses since January ] 980 had not been approved by the board. - - - - (6) The board of directors sanctioned advances to the truck and crop harvesting contractors in excess of the amounts payable under the rules. (7) That illegal advances were advanced to three karkhana employees, (a) Shri S.A. Patil, (b) Shri B.D. Patil, (c) Shri D.H. Patanekar, for work conducted by them for the karkhana, (8) The board of directors did not utilise the correct method and system in the appointment and confirmation of their employees. (9) The board of directors sanctioned excess expenditure for the construction of a mud and stone bridge over Varna river. (10) That the karkhana purchased materials at rates exceeding the corresponding purchase of the Varana and Panchaganga karkhana.

(3.) SHRI Rane, the learned Counsel, appearing for the petitioners contended before us that the order passed under Section 78 of the Act is vitiated because of the mala -fide exercise of power. He also contended that the said order is bad in law because before issuing the said order, the federal society was not consulted as required by Section 78 of the Act. Shri Rane further contended that orders passed by the 1st and 2nd respondents are passed without any application ,of mind and are based on flimsy grounds. The respondents Nos. 1 and 2 never applied their judicial mind to the explanation given by the petitioners and the power has been exercised for the purpose which is beyond the scope and contemplation of Section 78 of the Act. He also contended that no reasonable man exercising his power bonafide could have passed such an order of removal of the committee. In substance it is contended by Shri Rane that the action taken constitutes fraud on the power granted by the statute. He has also contended that apart from the fact that the order is issued in malafide exercise of the power and the grounds incorporated in the show cause notice were not only vague but were not also germane for exercising the power under Section 78 of the Act, some of the grounds which find place in the order issued under Section 78, were not even the subject -matter of the show cause notice. Further some of the grounds relate to the period prior to 1978 when the present board of directors was not in office. Therefore, according to Shri Rane the order passed by the respondent No. 1, and confirmed by respondent No. 2 removing the committee i.e. the board of directors is void ab -initio. So far as the appellate order is concerned it is contended by Shri Rane that the appellate authority has confirmed the order passed by the respondent No. 1 without any application of mind and mechanically. The order passed in appeal is not a speaking order nor the appellate authority has dealt with the submissions made by the petitioners either in the memorandum of appeal or argued at the time of hearing of the appeal, Shri Rane also contended that action has been taken on the grounds totally non -existing and irrelevant to the purpose and intention of the statute and the grounds stated are also such that no one can reasonably arrive at the opinion or satisfaction requisite under the provision.