Whether the invalidation of membership of appellants and the impleaded appellants1 (and two others), solely on the ground that the then Managing Committee on its way out and facing no confidence motion before the Special General Body Meeting2 demanded by the majority of existing members of the Society ought not to have hastened admission of new members, is just and proper and the appropriate direction necessary in that regard?
1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 412 OF 2021
(Arising out of S.L.P. (Civil) No. 8138 of 2020)
Swati Ulhas Kerkar and Ors. … Appellants
versus
Sanjay Walavalkar and Ors. …Respondents
J U D G M E N T
A. M. KHANWILKAR, J.
1. The central question in this appeal is: Whether the
invalidation of membership of appellants and the impleaded
appellants1
(and two others), solely on the ground that the then
Managing Committee on its way out and facing no confidence
motion before the Special General Body Meeting2
demanded by the
majority of existing members of the Society ought not to have
hastened admission of new members, is just and proper and the
appropriate direction necessary in that regard?
1
For short, “the appellants”
2
For short, “SGBM”
2
FACTUAL MATRIX
2. Briefly stated, Prabodhan Education Society3
is a registered
society under the Societies Registration Act, 18604
. The Society
consisted of 32 members – before induction of 22 persons
(including the appellants) as members on 17.09.2017 and their
subsequent removal in terms of the impugned decision.
3. The byelaws of the Society mandate that the elections to the
Karyakari Samiti (Managing Committee) be held every three years.
The elections to the Managing Committee were due in September
2013, however, there was a delay in conducting elections, which
ultimately came to be held on 05.10.2014. While the Managing
Committee elected in 2014 was at the helm of affairs of the
Society, it was served with a requisition dated 07.11.2016 signed
by 18 of the 32 existing members of the Society, to convene a
SGBM for removal of the Chairman, Secretary and Treasurer and
for conducting elections therefor. The removal of the Managing
Committee was sought on various grounds of abuse of power and
mismanagement, resulting in loss of confidence.
4. In furtherance of the said requisition, the Secretary vide
letter dated 22.11.2016, scheduled a SGBM on 07.12.2016.
3 For short, “the Society”.
4 For short, “the 1860 Act”.
3
However, upon objections raised by the members of the Managing
Committee to hold such SGBM, the said decision came to be
reviewed and the SGBM stood cancelled. That decision was
communicated to the members of the general body vide letter
dated 03.12.2016.
5. Aggrieved by the cancellation of the SGBM by the Managing
Committee, Sanjay Walavalkar (respondent No. 1 herein and one
other member of the Society) approached the High Court of
Bombay, Bench at Goa5
vide Writ Petition No. 1195 of 2016 for the
following reliefs:
“(a) This Honourable Court be pleased to issue a writ of
mandamus or a writ in the nature of mandamus or any
other appropriate writ, order or direction commanding
the Respondent No.4 to convene a Special General Body
Meeting to transact the agenda as requisitioned by the
18 requisitioning members vide their letter dated
07.11.2016 addressed to the Chairman/Secretary of the
said society and to hold the same under the supervision
and control of the Respondent Nos.2 and/or 3 as the
observers to oversee such meeting.
(b) This Honourable Court be pleased to issue a writ of
mandamus or a writ in the nature of mandamus or any
other appropriate writ, order or direction commanding
the Respondent Nos. 2 and/or Respondent No.3 to
direct the Respondent No.4 to convene a Special
General Body Meeting to transact the agenda as
requisitioned by the 18 requisitioning members vide
their letter dated 07.11.2016 addressed to the
Chairman/Secretary of the said society and to hold the
same under the supervision and control of the
Respondent Nos.2 and/or 3 as the observers to oversee
such meeting.”
5 For short, “the High Court”
4
6. Indisputably, 22 persons (including the appellants – vide
letters dated 12.09.2016, 19.09.2016, 22.09.2016, 18.10.2016,
12.12.2016 and 19.12.2016) had filed applications for being
enrolled as a member of the Society. The Secretary issued notice
dated 29.12.2016 proposing to convene a meeting of the Managing
Committee on 02.01.2017 to induct new members. The induction
was, however, deferred. The Secretary issued another notice on
16.09.2017 for convening a meeting of the Managing Committee
on 17.09.2017, to consider induction of new members. In that
meeting, the Managing Committee went on to induct the aforesaid
22 persons (including the appellants) as members, despite
objections raised by the Treasurer. In the same meeting, it was
decided to convene an Annual General Body Meeting6
on
08.10.2017 for conducting elections to constitute new Managing
Committee. The relevant portion of the minutes of meeting dated
17.09.2017 is as under:
“3. It was decided that the 34th General Body Meeting be
convened on Sunday, 8th October 2017 at 10:00 AM, in
the school premises. Notices be sent 15 days in
advance.
4. Following new 22 (Twenty two) members were
inducted today as members of Prabhodhan Education
Society (General Body). (Their applications were pending
since Sept/Oct 2016). It was done to complete the
pending work/task of the present committee before
expiry of the term.
6 For short, “AGM”
5
...
Shri Vithal G.P. Parrikar, the Treasurer, raised his
objection to induction of new members. He said he
would not mind their induction after General Body and
expressed fear that this act may invite contempt of
court.”
7. Respondent No. 1, aggrieved by the said development, sought
additional reliefs in the above writ petition as under:
“(a) This Hon'ble Court be pleased to declare that the
Notice dated 29/12/2016 addressed by the Secretary of
the Respondent No.4, thereby proposing to convene the
meeting of the Managing Committee interalia to induct
new members to the General Body of the Respondent
No.4 is illegal and bad in law and the same be quashed
and set aside.
(b) This Hon'ble Court be pleased to declare that the
holding of the Meetings of the Managing Committee of
the Prabodhan Education Society on 17/09/2017 and
18/09/2017 and the decisions taken thereat (including
in respect of induction of Respondent No.5 to 26) are
illegal and nonest and the same be quashed and set
aside and the Respondent No.5 to 26 be restrained from
acting as members of the Respondent No.4 for all
intents and purposes.
(c) This Honourable Court be pleased to restrain the
Managing Committee of the Respondent No.4 from
admitting or inducting any new members to the General
Body of the Respondent No.4, pending holding of the
Special General Body Meeting as requisitioned by 18
members of the Respondent No.4 vide their letter dated
07.11.2016.”
8. As the decision of the Managing Committee dated 17.09.2017
came to be assailed before the Court, the Managing Committee
deferred elections.
9. The High Court vide interim order dated 05.10.2017
permitted respondent No. 1, to bring on record the 22 newly
6
inducted members, as they were likely to be affected by the
outcome of the further reliefs claimed in the stated writ petition.
The relevant portion of the interim order is extracted hereunder:
“1. The matter is moved urgently at the instance of the
Petitioner. It could not be taken up yesterday.
2. Mr Kantak, learned Senior Advocate on behalf of the
4th Respondent, states, on instructions, that the
elections scheduled on 8th October 2017 will be
deferred till 5th November 2017.
3. However, it is pointed out that the term of the
current Managing Committee and its office bearers
ends by 7th October 2017. In view of the statement
made, the present Managing Committee will continue
as a pro tem or caretaker Managing Committee till the
next elections but will not take any major financial,
policy or other decisions until that time. It may attend
to routine management and administrative issues
alone.
4. List the Petition high on the supplementary board
on 31st October 2017.
5. In the meantime, leave to amend to join the newly
inducted members. Amendment to be carried out
without need of verification by 10th October 2017.
Notice to be issued to the newly added Respondents
returnable on 31st October 2017. An amendment is
also permitted to add an additional prayer. Liberty to
file an additional affidavit after the amendment is
carried out.”
10. The above writ petition was ultimately disposed of vide order
dated 08.11.2017, directing the Inspector General of
Societies/District Registrar7
to decide the dispute on its merits as
per law, in the following words:
“8. ..... Since the Petitioner has already approached the
Inspector General under Section 20(A) and the
Inspector General is considering the complaint and that
7 For short, “the Authority”
7
it is the grievance of the Petitioner that certain
developments have taken place pending the decision of
the complaint, even the subsequent grievance of the
Petitioner can be considered by the Inspector General
on its own merits. Since the Inspector General is an
authority under the Act, it will be appropriate that the
matter is first looked into by the Authority under the
Act, before this Court is called upon to decide the issue
of internal management of the society at first instance.
.....
10. Accordingly, we dispose of the Writ Petition by
directing Respondent No.3 i.e. the Inspector General,
before whom the complaint is made by the Petitioner is
pending, to consider the additional grievance made by
the Petitioner as well. The Inspector General will decide
the matter on its own merits as per law. All contentions
of all parties are kept open, including the one
mentioned above.
11. The adinterim order passed in this petition, in the
form of statement recorded will continue till disposal of
the complaint and two weeks thereafter.”
11. Pursuant to the aforesaid order, respondent No. 1 filed a
consolidated complaint dated 16.11.2017 before the Authority.
The Authority registered Case No. DRN/RDS/794/2017 wherein it
adjudged three original complaints dated 13.10.2016, 04.11.2016
and 05.12.2016 along with the consolidated complaint.
12. The Authority, after having heard the parties to the
complaint as well as the newly inducted 22 members, vide
judgment and order dated 09.03.2018, was pleased to issue
directions and also set aside the decision of the Managing
Committee dated 17.09.2017 giving membership to 22 persons
(including the appellants) on the ground that the same was illegal
8
and arbitrary. The operative order of the Authority is reproduced
hereunder:
“A) I hereby declare that the induction of Shri.
Gajanan Harishchandra Mandrekar, Shri Subhash
Vinayak Desai, Adv. Sau. Swati Ulhas Kerkar, Dr.
Sitaram V. Korgaonkar, Shri Pandharinath
Lakshman Mapari, Dr. Bhiva Ladu Malik, Shri
Milind Vaman Karkhanis, Shri Krishnaraj Narcinha
Sukerkar, Shri. Atmaram Vaman Gaonkar, Shri.
Pravin Punaji Neswankar, Shri. Sandeep V. Palni,
Shri. Kiran Ramchandra Naik, Shri. Datta
Purushottam Naik, Shri. Shashank Gokuldas
Kamat, Shri. Audhut Ramchandra Kamat, Sau.
Medha R. Prabhudessai, Shri. Devidas J. Saraf,
Shri. Abhai Bhamaikar, Shri. Ashish Sarvottam
Prabhudessai, Shri. Vivek P. Navare, Shri. Vasudev
Subrai Naik Khaunte and Dr. Kedareshwar P.S.
Narvekar, as members of the Prabodhan Education
Society, by virtue of the decision taken by the
majority members of the managing committee at
its meeting held on 17.09.2017, is illegal, arbitrary
and is hereby setaside;
B) I hereby declare that the decision of the majority
members of the managing committee of the Prabodhan
Education Society not to hold the SGM as
requisitioned by 18 members vide their letter dated
07.11.2016, is illegal, arbitrary, dehors the power of
the managing committee and malafide;
C) For the detailed stated in the foregoing part of
this Order, I hereby declare and hold the act of
managing committee as guilty of mismanagement of
affairs of the Prabodhan Education Society and breach
of their fiduciary obligations towards the general body
of the society;
D) I hereby direct the managing committee of the
Prabodhan Education Society and particularly its
Secretary Shri Velingkar to take step to convene an
Annual General Body Meeting of the Society, within a
period of 7 days from the date of receipt of this Order,
with due procedure laid there in under the Societies
Registration Act for the specific purpose of holding
elections to the various posts of the managing
9
committee of the Prabodhan Education Society for the
period 20182021;
E) with the view to ensure free, fair and impartial
conduct of elections, I hereby direct that the aforesaid
proposed AGM shall be held under the supervision,
direction and control of Shri Suraj Vernekar, Civil
RegistrarcumSub Registrar as the observer; and that
the agenda concerning elections of managing
committee members shall be transacted first, before
any other item/business is taken up for consideration;
F) I hereby direct the managing committee elected
after the forthcoming elections (subject to the approval
of the general body) may frame necessary rules
concerning regulation of its affairs. Considering the
situation in which the society is placed presently and
considering the fact that there are certain gaps in the
byelaws of the society concerning certain aspects, the
managing committee may consider formulating rules
on the following amongst other issues:
i. Rules giving further details on the manner in
which the managing committee shall act after receiving
requisitions by members directing it to convene a
SGM.
ii. Rules stipulating whether any other item (such
as induction of new members or change to the
constitution of the society etc. shall be permitted
during the pendency and consideration of a requisition
under Clause 3(V) of the Society byelaws;
iii. Rules whether there should be any cap/outer
limit on the maximum number of members that can be
inducted at any given point of time and further
whether such induction of new members can be done
on the eve elections (if not, up till what time can such
induction be done);
iv. Rules dealing with the manner and prescribing
further details as to how meetings of the managing
committee and the general body shall be held
(including prescribing notice period for meetings,
mode/manner of intimation etc.),
v. Rules dealing with procedural aspects of
conduction meetings and recording of minutes etc.”
(emphasis supplied)
10
13. Assailing the said judgment and order, the Society
represented through Secretary, Chairman and Secretary (in
individual capacity) filed Writ Petition No. 373 of 2018 before the
High Court, wherein, the stay granted in the previous proceedings
was extended until disposal of the writ petition by an interim order
dated 22.03.2018.
14. The High Court vide final judgment and order dated
28.05.2020, framed and adjudged five issues. The issues read as
under:
“1. Can a Society, on its own, maintain a writ petition
against an order passed by a statutory authority
concerning the resolutions its Governing Body or
Managing Committee passed?
2. Is the impugned order ultra vires of the Registrar? In
the alternative, has the Registrar got the power to rule
on the allegations of mismanagement by the Managing
Committee?
3. Has the Managing Committee committed an illegality
in not convening the Special General Body Meeting at
the request of 18 of 32 Society members?
4. In the absence of any provision in the bylaws or
under the act for bringing up a noconfidence motion or
to remove the office bearers, could the applicants have
insisted on having a Special General Body meeting for
discussing those issues?
5. Has the Managing Committee legitimately inducted
22 new members, especially, pending the writ petition
and on the eve of the elections?”
While addressing the fourth issue, the High Court placed reliance
on a decision of this Court in Vipulbhai M. Chaudhary v.
11
Gujarat Cooperative Milk Marketing Federation Limited &
Ors.8 and held that no confidence motion can be maintained even
in absence of provision therefor in the byelaws. The relevant
portion of the impugned judgment is reproduced below:
“71. Vipulbhai M. Chaudhary, I reckon, clinches the
issue. In any democratically constituted institution, the
office bearers continue to hold the office during the
pleasure of the members that have chosen those office
bearers. Sometimes the governing rules or regulations
of that institution are silent about how the governing
members must account for their misdeeds or
maladministration when their tenure is subsisting. But
it is no license for them to wreak havoc in the name of
administration and annihilate the institution. In other
words, it is institutionally inherent that the governing
members must administer the affairs of the institution
faithfully, honestly, and diligently; they should always
remain accountable to the members for their omissions
and commissions. In the same reckoning, the members'
right to unseat these governing members is equally
inherent in the scheme of the things, despite no express
provision to that effect, say, in the byelaws.
72. So we cannot hear the petitioners saying that they
were justified in not holding the SGBM. In this context,
we may reiterate what the Registrar has held: once the
majority members, especially in tune with the bylaws,
required the Managing Committee to hold a general
body meeting for whatever purpose, it is the Managing
Committee's bounden duty to abide by that demand. Let
us assume that the majority members wanted the
general body meeting to discuss frivolous or
unimportant issues; still it is not for the Managing
Committee to sit in judgement over the tenability of the
majority members' demand. Once meeting convened, it
is for the entire body of the membership to examine the
demands and decide on them. This observation, as
made by the Registrar, remains even more relevant
because, here, the allegations concerned the very
Managing Committee.
.....
8 (2015) 8 SCC 1
12
74. Nevertheless, for the reasons mentioned above, I
must confirm the findings of the Registrar that the
Managing Committee has acted with material
irregularity by refusing to abide by the majority
members' demand for an SGBM. Now, we will examine
the last issue, keeping in view our answer to this issue.”
With respect to the fifth issue, pertaining to the validity of
induction of the 22 new members, the High Court disagreed with
the findings of the Authority on material aspects. However, it held
that the same was bad being taken by the Managing Committee
pending no confidence requisition. The High Court adverted to the
dictum in Vipulbhai (supra) and observed thus:
“95. Then, what vitiates the Managing Committee’s
decision to induct new members?
96. We have already held that the Managing
Committee’s refusal to hold the SGBM even when
majority members demanded is an act of illegality. Now,
we should examine the induction of the new members
in the context of that refusal. On the converse, if there
was no demand for an SGBM by the majority and no
expression of noconfidence, then the governing body
may induct new members at any stage during its tenure
—the beginning, the middle, or the end of the tenure
making no difference.
97. Here, the majority members—18 out of 32—
demanded an SGBM; it was, among other things, to
express their no confidence against certain office
bearers, too. The case holding of Vipulbhai M.
Chaudhary dispels all doubts about whether the statute
or the byelaws should provide for unseating of an office
bearer. No need. It is a constitutionally conferred right.
98. Thus, inferentially, we may hold that once
majority members express no confidence on the
governing body or any office bearer and demand an
SGBM, until the governing body proves its majority,
it loses legitimacy to take policy decisions. And that
legitimacy includes induction of new members.
13
Otherwise, the moment a governing body, that is the
Managing Committee, faces a noconfidence motion, the
easy—and devious—way out for the governing body is
put the SGBM on hold, induct new members
indiscriminately, alter the membership equation, and
then hold the SGBM. It is abuse of power that upsets
the democratic design of any society and that
should be struck at.
99. So the inescapable conclusion is that the
Managing Committee inducting new members in the
face of no confidence and the impending SGBM is
illegal and arbitrary.”
(emphasis supplied)
Finally, the High Court concluded by holding thus:
“Under these circumstances, I refuse to interfere with
the impugned order, dated 9th March 2018, of the
District Registrar. As a result, I dismiss the writ
petition. No order on costs. Interim relief, if any, stands
vacated.”
15. In view of disposal of the Writ Petition No. 373 of 2018, the
Civil RegistrarcumSub Registrar of Societies, vide letter dated
01.06.2020, directed the Secretary to convene an AGM to conduct
elections for constituting a new Managing Committee by
04.06.2020 (within 7 days from the date of High Court’s order
dated 28.05.2020), failing which the Authority shall conduct such
elections forthwith.
16. In the meantime, aggrieved by the impugned decision of the
High Court, the Society, Chairman and Secretary approached this
Court vide SLP (Civil) No. 7352 of 2020 on 04.06.2020.
Simultaneously, the Chairman and Secretary also addressed letter
14
dated 04.06.2020 to the Authority, informing that the Managing
Committee held a meeting on 03.06.2020 wherein it had decided
to fix the AGM tentatively on 28.06.2020 for holding elections.
Further, it informed that final date of election would be fixed at a
later date, after withdrawal of Section 144 of Cr.P.C., 1973 which
was in force due to lockdown ordered on account of prevailing
pandemic situation (Covid19).
17. On the other hand, since the Managing Committee failed to
convene an AGM within 7 days, the Authority vide notice dated
09.06.2020 convened an AGM on 25.06.2020 for conducting
elections.
18. Be that as it may, the stated SLP filed by the Society was
listed before this Court on 15.06.2020, whence the same came to
be disposed of in the following terms:
“We decline to interfere in this Special Leave Petition at
the instance of the petitioners. The Special Leave
Petition is dismissed accordingly.
If the 22 person(s) who have been dismembered file
independent Special Leave Petition(s) to assail the
decision of the High Court at their instance, the
issue can be considered on its own merits.
Pending applications, if any, stand disposed of.”
(emphasis supplied)
19. Taking cue from the aforementioned observations made by
this Court, the appellants have approached this Court, by way of
15
this appeal, to impugn the order dated 28.05.2020 passed by the
High Court. With permission of this Court, 12 other persons (out
of the 22 dismembered persons) similarly placed as the original
appellants have been impleaded as appellants in this appeal.
20. During pendency of the present proceedings, in response to
the Authority’s notice dated 09.06.2020, the Secretary addressed
letter dated 22.06.2020, informing that as per the byelaws, 15
days’ notice is essential for convening an AGM and the same
cannot be convened within 7 days as directed by the Authority.
The said letter also informed that the direction vide order dated
09.03.2018 was only to start the process of elections and not to
conduct elections per se. Further, the Managing Committee had
convened a meeting on 20.06.2020 to fix the AGM on 12.07.2020
for conducting elections. On the same day, the Secretary had also
addressed a letter to the District Magistrate seeking permission to
conduct elections on 12.07.2020.
21. The appellants had addressed letters to the Authority on
24.06.2020 informing about the pendency of the present appeal
and requesting to defer the elections. Despite receiving this
intimation, the Authority proceeded to conduct the elections on
25.06.2020 and constituted the new Managing Committee. This
16
Court upon being appraised of the said development, vide order
dated 25.06.2020, clarified that any steps taken by the Authority
would be subject to the outcome of this proceedings. The order
reads thus:
“Permission to file Special Leave Petition is granted.
Heard learned counsel for the petitioner(s).
It has been brought to our notice that despite the
pendency of this Special Leave Petition and which fact
was brought to the notice of the Registrar, for reasons
best known to the Registrar, he hastened the election
process.
This factual position be placed on record by way of a
formal application, to be filed by the petitioner(s) and
for appropriate reliefs, as may be advised.
In addition, it will be open to the left over persons who
are similarly placed as the petitioner(s), to file a formal
application for impleading them as party to the
present proceedings.
Both these applications to be filed within one week
from today through email/online.
Issue notice to the respondents on this Special Leave
Petition and proposed applications, returnable within
four weeks.
Dasti, in addition, is permitted.
Any steps taken by the Registrar, including
elections allegedly conducted by him today, i.e.
25.06.2020 will be subject to the outcome of this
Special Leave Petition.”
(emphasis supplied)
22. Curiously, the District Magistrate, in response to the letter
dated 22.06.2020 of the Secretary, refused to grant permission to
conduct elections on 12.07.2020 in view of the restrictions
17
imposed under Section 144 of Cr.P.C. The same was intimated by
letter dated 10.07.2020.
23. Meanwhile, the newly elected Managing Committee
addressed letters dated 25.06.2020 and 11.07.2020 to the schools
run by the Society intimating about the change in management of
the Society as well as the schools.
24. We may now advert to the challenge before us in the present
appeal.
SUBMISSIONS
25. The thrust of the arguments of the appellants is that in terms
of clause 1(c) of the byelaws of the Society, a person automatically
gets inducted as member of the Society upon submitting
application in the prescribed form along with prescribed fees. As
such, the appellants were validly inducted as members of the
Society as they had duly submitted their applications in form
prescribed under the byelaws of the Society. Reliance was placed
upon the dictum of this Court in Zoroastrian Cooperative
Housing Society Ltd. & Anr. v. District Registrar, Cooperative
Societies (Urban) & Ors.9
to contend that the right to
9
(2005) 5 SCC 632
18
membership in any Society would have to be tested on the
touchstone of the byelaws and nothing else.
26. It was urged that in any case 5 out of the 22 persons had
submitted their applications for membership before the requisition
of no confidence had been moved. Whereas, rest of the persons
had filed their applications in December 2016. It was urged that
their applications for membership were eventually approved on
17.09.2017 after noting that each one of them was an eminent
and well acclaimed person in educational field. Moreover, the
Managing Committee had wide discretion to induct a member and
they did exercise that power bonafide whilst inducting the
appellants. Reliance was placed on the findings of the High Court
to contend that the decision taken by the Managing Committee (to
induct appellants) was during the subsistence of its tenure and
cannot be faulted with. It was also urged that the High Court had
noted that there was no illegality in admitting the members on the
eve of elections or at the end of the tenure of the Managing
Committee. Further, there was no finding by the Courts below
that the appellants did not fulfil the requirements under the byelaws.
19
27. It was submitted that reliance upon the decision of this
Court in Vipulbhai (supra) by the High Court was misplaced as
the said decision concerned a cooperative society, whereas the
Society in this case is registered under the 1860 Act. Further, it
was urged that the said decision was based on the 97th
Amendment to the Constitution of India10
, which had been struck
down by a Division Bench of Gujarat High Court in Rajendra N.
Shah v. Union of India & Anr.11. Reliance was then placed on
the dictum of this Court in Kusum Ingots & Alloys Ltd. v. Union
of India & Anr.12 to contend that though an appeal had been
preferred before this Court against the decision of Gujarat High
Court in Rajendra N. Shah (supra), the same is pending
adjudication (vide Civil Appeal Nos. 91089109 of 2014) and there
being no order suspending the operation of the said judgment, the
97th Amendment is not currently in existence. Therefore, the
decision in Vipulbhai (supra) was inapplicable. The appellants
also relied upon a decision of Delhi High Court in Mukund L.
Abhyankar v. Chief Executive Officer, National Federation of
10 For short, “the 97th Amendment”
11 2013 SCC OnLine Guj 2242
12 (2004) 6 SCC 254
20
Urban Coop. Bank and Credit Societies Ltd. & Ors.13 to urge
that the fundamental basis of the decision in Vipulbhai (supra)
stood fully eroded without the 97th Constitutional Amendment.
28. The appellants also submitted that the Authority hastened
the election despite being informed of the pendency of the present
appeal. This was done to defeat the rights of the appellants. It is
contended that mala fides of the authorities are manifest from the
fact that permission to conduct the election proposed by the
Managing Committee was refused by the District Magistrate in
view of the Covid19 protocol, while the election scheduled by the
Authority during the same time was conducted in breach of the
said protocols. Further, as on the date of elections, the electoral
college consisted of 52 members including 30 existing members
and the 22 dismembered persons. However, despite pendency of
the present appeal (wherein the rights of the 22 dismembered
persons are under consideration), the Authority conducted
elections with electoral of only 30 members. This was nothing
short of abuse of process of law.
29. Per contra, respondent no. 1 contended that the appellants
were aware of the proceedings before the Authority yet chose not
13 (2017) 241 DLT 358
21
to challenge its judgment and order. Hence, the appellants are
bound by the findings therein. Resultantly, it is not open to the
appellants to assail the order of the High Court. Further, with the
dismissal of SLP (preferred by the Society, Chairman and
Secretary), the order of the High Court stands confirmed and it
cannot be further challenged. In that, the finding that the
Managing Committee inducted 22 persons illegally and arbitrarily,
also had attained finality. Significantly, the appellants had no
right whatsoever, much less vested right on the date of election
and exconsequenti no locus to file the present appeal.
30. It was urged that the said 22 persons were intentionally
inducted by the then office bearers of the Society, so as to alter the
composition of the Society in their favour and to consolidate their
control over the Society. Further, it was submitted that the SLP
(filed by the Society, Chairman and Secretary) was dismissed on
15.06.2020 and on the same day, the appellants approached this
Court by filing fresh appeal through the same AdvocateonRecord,
which clearly shows collusion between them. Furthermore, the
controversy is about the validity of induction of the appellants and
not their removal. As such, the lis is interse between the
Managing Committee and members and the appellants being
22
outsiders had no causal connection with the Society whatsoever.
Even if the appellants had any vested right, that stood defeated by
the order of the Authority and of the High Court confirming the
same including this Court.
31. It was then contended that the High Court had rightly held
that in democratically constituted institutions, the office bearers
continue to hold office during the pleasure of the members and
they can be unseated despite any express provision in the byelaws. Reliance was placed upon a decision of this Court in T.
Varghese George v. Kora K. George & Ors.14 to urge that the
Managing Committee had no power to take any policy decision
once a no confidence motion is moved, as that would be against
their fiduciary duties towards the Society. It was submitted that
any decision taken after the no confidence motion is moved ought
to be tested on the touchstone of ‘legal malice’ or malice in fact,
whilst relying upon the decision of this Court in State of Punjab
& Anr. v. Gurdial Singh & Ors.15
.
32. It was also urged that the appellants cannot claim the
principle of open membership as envisaged in Section 22 of the
Goa Cooperative Societies Act, 2001, to apply to them. For, the
14 (2012) 1 SCC 369
15 (1980) 2 SCC 471
23
respondentSociety is not a cooperative society. At best, the
applications of the 22 members may be considered afresh.
33. The argument set forth by the Authority is that this appeal is
not maintainable as the impugned order dated 28.05.2020 has
attained finality upon dismissal of the SLP (Civil) No. 7352 of 2020
(filed by the Society, Chairman and Secretary). It is urged that
upon disposal of Writ Petition No. 373 of 2018 vide order dated
28.05.2020, the interim order therein stood vacated and the
elections were required to be conducted since there was no order
staying the elections. In fact, the High Court in its order had
observed that elections should be conducted expeditiously. It was
submitted that the Authority had to conduct elections due to
inaction of the Managing Committee in that regard. It was then
urged that the Authority conducted elections on 25.06.2020, that
too one month after the order dated 28.05.2020, by duly putting
the members on 15 days’ notice, which cannot be termed as acting
in undue haste. The learned Solicitor General, for the Authority
elaborated upon Vipulbhai (supra) to contend that the said
judgment had rightly dealt with the democratic principles, which
apply to cooperative societies and other societies alike. It was
submitted that the said judgment is binding and does not lose its
24
force as the democratic principles were in existence since a long
time and were merely given a constitutional frame by the 97th
Amendment. It was further submitted that in light of the said
decision, no confidence motion is maintainable even in absence of
express provision in that regard in the byelaws; and the silence in
the byelaws cannot be treated as a gap. Finally, it was urged that
in a democratically governed body, members can be inducted by
the Managing Committee only when it enjoys confidence of the
members. However, once the requisition of no confidence was
pending, the Managing Committee ought not to have inducted new
members into the Society and more so as many as 22 in number
which would inevitably change the constitution of the Society.
34. We have heard Mr. Huzefa Ahmadi, learned senior counsel
and Ms. Anshula Grover, learned counsel for appellants; Mr.
Tushar Mehta, learned Solicitor General, Mr. Arun R. Pedneker,
learned Standing Counsel for the State of Goa and Ms. Mukti
Chowdhary, learned counsel for the Authority; and Mr. Vinay
Navare, learned senior counsel and Mr. R.P. Gupta, learned
counsel for respondent No. 1.
CONSIDERATION
25
35. At the outset, be it noted that the scope of present appeal is
limited to the question of justness of induction of the appellants as
members of the Society by the then Managing Committee on its
way out and despite the pending requisition expressing no
confidence against it; including the correctness and sweep of the
order passed by the Registrar and as upheld by the High Court
vide impugned judgment, qua the appellants herein. No other
issue decided by the Registrar or the High Court need be
addressed in the present appeal at the instance of these
appellants.
36. The High Court, vide impugned judgment, went on to hold
against the Society due to the manner in which the requisition of
no confidence motion moved by the majority of the existing
members (18 out of 32) to convene SGBM came to be delayed and
frustrated by the stratagem adopted by the then Managing
Committee, who had allegedly indulged in mismanagement and
maladministration of the affairs of the Society. That action of the
then Managing Committee has been held to be illegal and bad in
law as it was bordering on colourable exercise of power. Having
said that, the High Court then dealt with the issue of justness of
induction of 22 new members (including appellants herein) by the
26
then Managing Committee vide decision dated 17.09.2017 and
declared the same as illegal being consequence of illegal action of
not convening the SGBM demanded by the majority of members of
the Society for removal of office bearers and instead hastening the
induction of new members. The finding of the High Court that the
decision of the then Managing Committee dated 17.09.2017
hastening the admission of 22 new members whilst no confidence
motion was pending, is illegal and bad in law has become final
with the dismissal of SLP filed by the Society vide order dated
15.06.2020.
37. Before we dwell upon the core issue involved in this appeal, it
is apposite to examine the preliminary objection raised by
respondent No. 1 regarding maintainability of the appeal at the
instance of these appellants. According to respondent No. 1, the
question whether the appellants have been legally and properly
admitted as members or not is a lis between the existing members
and the Managing Committee, to which the appellants herein are
strangers and have no locus in that regard. This argument, in our
opinion, is tenuous and cannot be sustained. For, the real
question posed at the instance of these appellants is whether they
had a right to be considered for being admitted as members of the
27
Society and further whether the order of the Registrar results in
dismembering them despite they being validly admitted as
members at the relevant point of time vide decision of the then
Managing Committee dated 17.09.2017. Indeed, it is open to the
existing members to object to any new person being admitted as
member of the Society by the outgoing Managing Committee and
that would be a lis between the existing members and the outgoing
Managing Committee. That, however, does not denude the
appellants of cause of action, who desired to be admitted as
members of the Society being eligible in all respects, to be
considered for such admission. Similarly, if a person has been
dismembered by the Society including on account of direction
issued by the competent authority, such a person will have
independent remedy to assail that decision. In either case,
therefore, being affected by such nonconsideration or by virtue of
dismembering, the aggrieved person would be competent to
pursue remedy before the concerned forum for redressal of his
grievance and for enforcement of his legal rights.
38. In the present case, the appellants were admitted by the then
Managing Committee to be members of the Society, but they have
been subsequently dismembered only because of the order passed
28
by the Registrar having become final. Further, they were made
party to the proceedings before the Registrar, who had set aside
the decisions of the then Managing Committee, dated 17.09.2017.
Thus understood, the objection regarding maintainability of
challenge to the decision of the Registrar and of the High Court by
such affected persons (appellants herein) cannot be countenanced.
39. It is then urged by respondent no.1 that these appellants had
not challenged the decision of the Registrar dated 09.03.2018
before the High Court and thus had acquiesced of the same.
Resultantly, they were not entitled to maintain this appeal. It is
true that the appellants did not file separate writ petition before
the High Court despite the unambiguous order passed by the
Registrar on 09.03.2018 directly affecting them in declaring the
decision of the then Managing Committee dated 17.09.2017 to
admit them as members of the Society, as illegal, arbitrary and to
set it aside on that count. However, undisputedly, that part of the
order of the Registrar was assailed by the Society before the High
Court by way of Writ Petition No. 373 of 2018. The reliefs claimed
in the stated writ petition by the Society were, to also espouse the
cause of the appellants herein. For, the appellants were admitted
by the then Managing Committee as members of the Society. They
29
came to be dismembered subsequently only because of the order
of the Registrar of setting aside the decision of the then Managing
Committee dated 17.09.2017 attaining finality. Indubitably, the
Society is competent to espouse the cause of its members and
more so to justify its actions in the form of decision of the then
Managing Committee in office. So understood, the appellants
herein cannot be faulted for having directly assailed the decision
of the High Court confirming the declaration and subject order of
the Registrar resulting in their being dismembered from the
membership of the Society. As a matter of fact, this Court while
dismissing SLP (Civil) No. 7352 of 2020 filed by the Society, vide
order dated 15.06.2020, had made it amply clear that if the 22
persons, who have been dismembered, were to file independent
special leave petition(s) questioning the correctness of the order of
the Registrar in setting aside the decision of the then Managing
Committee dated 17.09.2017 resulting in their being dismembered
from the Society and of the High Court confirming that part of the
Registrar’s order, that challenge could be considered on its own
merits. To put it differently, the limited issue involved in this
appeal is expressly kept open by this Court for being agitated by
the appellants. Indeed, this observation came to be made by this
30
Court whilst rejecting the challenge of the Society and the office
bearers of the then Managing Committee to the decision of the
Registrar and of the High Court vide impugned judgment.
Nevertheless, as aforesaid, the rejection of earlier special leave
petition filed by the Society and the office bearers of the then
Managing Committee will not come in the way of the appellants
herein to espouse their cause in their own rights.
40. Reverting to the merits of the issue involved in this appeal,
we must hasten to add that the appellants cannot be denuded of
their right to assail the order of the Registrar and of the High
Court denying them of their core right of being considered to be
admitted as member of the Society, being eligible in all respects.
They claim to possess the requisite qualification and had
expressed intention to abide by the byelaws of the Society. Their
right to be considered for being admitted as members of the
Society cannot be linked to the acts of commission and omission
of the office bearers of the then Managing Committee. Neither the
Registrar nor the High Court has dismembered the appellants on
the ground of being ineligible in any manner or because it has
been established that they were the henchmen of the office bearers
of the then Managing Committee. Notably, even the no confidence
31
motion does not mention that the then Managing Committee
wanted to intentionally change the constitution of the Society
(membership pattern) by admitting new members. In that sense,
until contrary is proved the appellants (and two others) must be
regarded as bonafide applicants. Only the decision of the then
Managing Committee dated 17.09.2017, stands vitiated for the
reason noted by the High Court. Admittedly, at least five
appellants had submitted their applications for being admitted as
members of the Society even before the no confidence motion was
moved on 07.11.2016. It is a different matter that upon
consideration of request for admitting as members of the Society,
the newly elected Managing Committee may accept or reject the
same on merits. Depending upon that outcome, the appellants
may even resort to further remedies permissible in law.
41. For elaborating this grievance of the appellants, we must
advert to the byelaws of the Society under which the appellants
had submitted application(s) for being admitted as member of the
respondentSociety. Byelaw 1(a) postulates that any person
irrespective of his race, caste, religion and sex, shall be entitled to
be considered for being admitted as member upon complying with
32
the conditions specified therein. The other relevant clause in the
byelaws is clause 1(c), which reads thus:
“1) MEMBERSHIP:
(c) Members shall be admitted by the Karyakari
Samiti only on an application made in the
prescribed form and on payment of the
prescribed fees. Such application form shall be
considered only when it is proposed by a
member of the Karyakari Samiti. The Karyakari
Samiti is competent to reject any application
without assigning any reason therefor.”
42. For the present, it is not necessary for us to dwell upon the
wider question of whether the membership in the respondentSociety is one of open membership concept or otherwise. Suffice it
to note that 22 persons (including appellants herein) had applied
for being admitted as member of the respondentSociety between
12.09.2016 to 19.12.2016. Notably, 5 appellants (out of 22
persons) had already submitted their application until 18.10.2016
before the stated requisition was moved by 18 out 32 existing
members of the Society on 07.11.2016 expressing no confidence in
the then Managing Committee. Indisputably, requisition/notice of
no confidence makes no reference to the apprehension about any
attempt being made by the office bearers of the then Managing
Committee to change the constitution (membership pattern) of the
Society. The membership applications were placed for
33
consideration of the Managing Committee, in its meeting convened
on 02.01.2017 for that purpose but the decision was deferred.
43. Be it noted that as per clause 1(c) of the byelaws, it is the
prerogative of the Managing Committee to admit a person as
member of the Society or to reject his application without
assigning any reason therefor. The eligibility for being enrolled as
a member of the Society is spelt out in clause 1(a). The further
condition in clause 1(c) is of being proposed by the member of the
Managing Committee and submitting application in the prescribed
form and payment of prescribed fee.
44. The problem in the present case is the manner of
consideration of stated applications of appellants (and two others)
by the outgoing Managing Committee including by unjustly
protracting the requisition for convening SGBM demanded by
majority of existing members. For, upon receipt of such
requisition, it was the bounden duty of the Secretary of the
Society, in terms of clause 3(v), to immediately issue notice to
convene SGBM within 15 days from the date of receipt of
requisition and to issue 15 days’ notice to all the members
intimating about date of such meeting. The Secretary had issued
such notice on 22.11.2016 scheduling SGBM for 07.12.2016.
34
But, before the date of meeting, the Managing Committee deferred
the SGBM on some specious objection. That meeting was not
held. Instead, the then Managing Committee hastened to take a
decision about admitting 22 new members in its meeting held on
17.09.2017 by giving a short notice of only one day. This action
did not find favour with the Registrar for the reasons recorded in
his decision dated 09.03.2018 including for setting aside the
minutes of Managing Committee meeting dated 17.09.2017, some
of which commended to the High Court as is discerned from the
impugned judgment.
45. The High Court had adverted to each of the findings of the
Registrar regarding factual aspects. It is unnecessary to analyse
the same in the present appeal, considering the cause propounded
by the appellants. What is relevant is the view taken by the High
Court that the then Managing Committee was amiss in admitting
the 22 new members. The High Court agreed with the view of the
Registrar that only after the outgoing Managing Committee had
secured the trust vote and confidence of the majority of SGBM, it
could have proceeded to admit new members. For, with the issue
of no confidence requisition by the majority (18 out of 32), it had
lost legitimacy to take any policy decision regarding the
35
management and administration of the Society, which included
induction of new members. The High Court expounded about the
danger of resorting to such stratagem — as it was likely to upset
the constitution (membership pattern) of the Society and inevitably
strengthen the hands of the office bearers of the outgoing
Managing Committee and enable them to clung to the power,
despite being under a cloud due to expression of no confidence
against them by majority of members vide letter dated 07.11.2016.
46. The view so taken by the High Court in the impugned
judgment has been assailed by the appellants. According to them,
at least 5 appellants had submitted applications for being
inducted as member of the Society, much before the majority of
existing members (18 out of 32) had moved requisition on
07.11.2016. Even the remaining applicants (17 out of 22
including appellant herein) had submitted applications in
December 2016 itself, which were placed for consideration before
the then Managing Committee on 02.01.2017 and finally on
17.09.2017. Until that date, there was no restrictive order issued
by any Court or competent forum against the then Managing
Committee prohibiting it from admitting new members. Further,
no case has been made out that the appellants were ineligible to
36
become member of the Society or that they had not submitted the
prescribed form or failed to pay prescribed fees therefor.
Furthermore, there is no finding by the Registrar or in particular
by the High Court that the appellants were the henchmen of the
office bearers of the then Managing Committee. The Registrar as
well as the High Court have proceeded on the basis of surmise and
hypothesis that the appellants were being inducted as new
members to strengthen the hands of office bearers of the then
Managing Committee and to defuse the threat of removal from the
office due to the pending no confidence motion against them.
47. We find force in the argument of the appellants that for some
acts of commission or omission of the then Managing Committee,
the appellants who are otherwise eligible to be enrolled as
members of the Society in their own rights need not be denied of
the same. They have a right to be considered for being admitted
as members of the Society by the newly elected Managing
Committee.
48. Be that as it may, we now proceed to examine the argument
of the appellants that at least the case of 5 appellants, who had
applied for grant of membership before the majority of the existing
members had moved no confidence motion on 07.11.2016 be
37
treated differently. After cogitating over all facets, we are of the
considered opinion that it would be unwise to accede to this
submission. We say so because as noted earlier, at the instance of
these appellants it is not permissible to reopen the findings and
conclusion reached by the High Court, as regards illegality
committed by the then Managing Committee in deferring the
SGBM despite the mandate in that regard in terms of clause 3(v) of
the byelaws and instead hastening the process of admitting 22
new members thereby changing the constitution of the Society of
only 32 existing members. That finding and conclusion has
become final with the rejection of the SLP filed by the Society and
the office bearers of the then Managing Committee on 15.06.2020.
Resultantly, it must follow that the decision of the then Managing
Committee dated 17.09.2017 admitting 22 new members has been
rendered nonest. This logic uniformly applies to all the 22
persons enrolled as new members of the respondentSociety.
There is no legal basis to segregate the claim of 5 appellants on
the basis of date of (prior) applications. Indubitably, merely upon
making an application it does not follow that he/she would stand
admitted as a member of the Society. The applicant must fulfil
other eligibility and procedural conditions and eventually, the
38
Managing Committee must find the candidature fit and deserving
for being admitted as a member of the Society. In other words, the
decision of the then Managing Committee dated 17.09.2017, “as a
whole”, suffers from the vice of unseemly haste, and thus
colourable exercise of power and nonest in the eyes of law. It
cannot be viewed differently for 5 appellants just because of prior
date of application.
49. This is precisely the effect of the decision of the Registrar in
his operative order [paragraph (A)] as applicable to the appellants
and similarly placed two other persons, who are not before us.
The High Court has rightly upheld that conclusion of the Registrar
vide impugned judgment dismissing the writ petition of the
Society.
50. In our opinion, however, the Registrar as well as the High
Court, after so observing, ought to have clarified the position that
the parties (appellants and Society) are relegated to the situation
as it obtained prior to 17.09.2017. That would have been a just
and proper order. That means the applications filed by the
appellants and similarly placed two other persons between
September 2016 to December 2016, ought to be regarded as
pending for scrutiny and for being processed by the newly
39
constituted Managing Committee after conducting elections, which
were due since October 2016. To this limited extent, the
appellants ought to succeed in the present appeal. We say so
because the Registrar as well as the High Court has not given any
finding regarding ineligibility of the appellants to be member of the
Society. In any case, that would be a matter to be considered by
the newly constituted Managing Committee in the first instance,
on casetocase basis, on its own merits in accordance with law
uninfluenced by any observation made by the Registrar, the High
Court or for that matter in this judgment. If the decision is
adverse to any applicant, he would be free to pursue further
remedies as may be permissible in law.
51. To conclude, we uphold the view taken by the High Court
that the decision of the Managing Committee dated 17.09.2017
suffers from the vice of colourable exercise of power and thus,
illegal and bad in law. The same is nonest in the eyes of law.
However, the parties (appellants and Society) need to be relegated
to the stage before 17.09.2017, meaning thereby the applications
submitted by the appellants and two other similarly placed
persons for grant of membership, be regarded as pending and/or
deemed to be revived in terms of this judgment. Their applications
40
for grant of membership be considered by the newly constituted
Managing Committee on its own merits in accordance with law.
All contentions available to the parties in that regard are left open.
52. While parting and for the completion of record, we may
advert to the challenge of the appellants to the continuation of
election process and having been taken forward to constitute the
newly elected Managing Committee despite pendency of this
appeal. In light of our above analysis, this grievance cannot be
maintained at the instance of these appellants as the status of
these appellants is merely that of the applicants for grant of
membership. Until they are admitted as members of the Society,
they would have no right whatsoever to participate in the election
process culminated in June 2020.
53. Accordingly, this appeal partly succeeds to the extent of
clarifying/modifying the order passed by the Registrar (paragraph
(A) of his operative order) as affirmed by the High Court, to mean
that the applications made by the appellants and similarly placed
two other persons for grant of membership of the Society, are
deemed to be pending and/or revived and be considered by the
newly constituted Managing Committee on its own merits in
41
accordance with law, keeping in mind the observations made in
this judgment.
54. The appeal is disposed of in the above terms. Pending
applications, if any, also stand disposed of. No order as to costs.
..................................J.
(A.M. Khanwilkar)
...................................J.
(S. Ravindra Bhat)
New Delhi;
February 10, 2021.
