BABASAHEB DNYANU PATIL Vs. SRIPATRAO SHANKARRAO BONDRE

JUDGEMENT

(1.) This is a petition under Arts. 226 and 227 of the Constitution of India, challenging the order dated 21-11-1975 passed by the Commissioner, Poona Division, in Election Petition No. COP-81(44). The Election to the Board of Directors of Respondent No. 2---Kolhapur District Central Co-operative Bank Ltd., was to be held on 20-11-1973 and the results thereof were to be declared on 30-11-1973. The nomination papers were to be filed on or before 20-10-1973. The petitioner and respondent No. 1 were the two contesting candidates for one of the posts of Directors from the constituency known as Gat No. 1 Vibhag No. 9 of Karvir which was the constituency composed of the Co-operative Societies in the Karvir Taluka. Respondent No. 1 having secured larger number of votes than the petitioner, he was declared elected on 30-11-1973. Thereafter the petitioner filed an election petition under section 144-E of the Maharashtra Co-operative Societies Act, 1960 (hereinafter referred to as the said Act) before the Divisional Commissioner, Poona. The petitioner challenged the election of respondent No. 1 on the ground that respondent No. 1 was disqualified for being elected as a Director of respondent No. 2-Bank since he was a defaulter in the payment of dues to the respondent No. 2-Bank within the meaning of Rule 58 of the Maharashtra Co-operative Societies Rules, 1961 (hereinafter referred to as the said Rules) made under the said Act. The case of the petitioner in this connection was that respondent No. 1 was one of the Directors of Mahatma Jotirao Gul and Khandsari Sahakari Utpadak Co-operative Society Ltd., (hereinafter referred to as the Khandsari Society). The said society had taken loans from respondent No. 2-Bank as follows :

(2.) Neither the loan of Rs. 1,00,000/- which was to be paid on or before 31-1-1970 nor the instalments of the other two loans which were due and had become payable before the date of nomination, viz., 23-10-1973 were admittedly paid by the said Khandsari Society to respondent No. 2-Bank. It was further the case of the petitioner that respondent No. 1 along with other Directors had executed two documents viz., a continuing guarantee bond and a promissory note giving their personal security for the repayment of each of the said loans. That being so, respondent No. 1 was personally liable jointly and severally along with other Directors as well as the Khandsari Society to repay the said loans and the instalments thereof as the case may be to respondent No. 2-Bank. The said loans or the instalments thereof having informed unpaid, respondent No. 1 had become personally defaulter within the meaning of Rule 58 of the said Rules. It may be mentioned that in this connection the petitioner had also referred to the arbitration proceedings being ABN/838 of 1972-73 adopted by respondent No. 2-Bank on 3-5-1973 against Khandsari Society and the Director of the said society including respondent No. 1 for the recovery of the amount due under the said three loans. The total amount sought to be recovered from the defendants in those proceedings was Rs. 6,97,813.30. The Arbitrator had passed his award in those proceedings on 10-2-1974 which is (Ex. B) to the present petition. Against the said award there were three appeals filed, one by the Society, another by the Directors including respondent No. 1 and the third by respondent No. 2-Bank. All the said appeals were heard together and a consent order was passed by the Appellate Court viz. the Maharashtra State Co-operative Tribunal on 22-9-1975. As per award passed by the Arbitrator on 10-2-1974, the Arbitrator had come to the conclusion that the defendants-Directors of the Khandsari Society were jointly and several by liable for the suit claim. However, while passing the operative order, the Arbitrator had directed respondent No. 2-Bank to recover the amount due by way of attachment and sale of the mortgaged property of the said Khandsari Society and if any arrears still remained due, then the same were to be recovered from the Directors of the said Society including respondent No. 1. The consent order passed by the Tribunal on 22-9-1975 in terms stated that the Directors including respondent No. 1 conceded the claim of respondent No. 2-Bank. They also accepted their liability to pay the amount due to the Bank. However, it was further provided that the said amount which came to Rs. 8.26 lakhs, would be paid to the respondent No. 2-Bank by five instalments mentioned in the consent order. It was also provided in the said consent terms that the Directors would be individually liable to the respondent No. 1 to the extent of Rs. 2,00,000/- out of the total amount of Rs. 8.26 lakhs and that they would be absolved from their individual liability on satisfaction by the Khandsari Society of the first instalment of Rs. 2,00,000/- due and payable under the earlier terms of the consent order on 31-12-1975. Relying on the original liability as evidenced by the two documents of the continuing guarantee bond and the promissory note as confirmed by the aforesaid orders passed in the arbitration proceedings, it was contended before the Divisional Commissioner that respondent No. 1 was disqualified to be the Director of respondent No. 2-Bank. The Divisional Commissioner, however, came to the conclusion that the liability of respondent No. 1 would arise only if there was a failure on the part of the said Khandsari Society to make the payments of the first instalment before 31.12.1975 due under the award as directed by the final consent terms passed by the Co-operative Tribunal on 22-9-1975. In that view of the matter, he held that respondent No. 1 was not a defaulter within the meaning or Rule 58 of the said Rules. He, therefore, dismissed the election petition of the petitioner by his order dated 21-11-1975 which is the subject-matter of challenge in the present petition.

(3.) Before we proceed to deal with the contention raised by Mr. Rane appearing for respondent No. 1, it will be necessary to re-produce here the relevant portions of section 144-E of the said Act and of Rule 58 of the said Rules.