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PETITIONER: PUNDALIK

       Vs.

RESPONDENT: DISTRICT DEPUTY REGISTRAR, CO-OPERATIVESOCIETIES, CHANDRAPUR

DATE OF JUDGMENT22/02/1991

BENCH: SAIKIA, K.N. (J) BENCH: SAIKIA, K.N. (J) PUNCHHI, M.M.

CITATION:  1991 SCR  (1) 675        1991 SCC  (2) 423  JT 1991 (1)   576        1991 SCALE  (1)299

ACT:      Maharashtra  Co-operative Societies Act, 1960:  Section 78(1)  and  73FF-Power  of  removal  of  members/committees- Default in repayment of loan installments- Disqualifications for being member of a committee.

HEADNOTE:      The  appellant was elected on 18.8.1986 as one  of  the Directors   of  the  District  Central  Co-operative   Bank, Chandrapur,  Maharashtra  from the  Brehmapuri  Agricultural Sales and Purchase Society.  On 8.1.1987 the District Deputy Registrar of the Co-operative Societies, Chandrapur issued a notice  to him under section 78(1) of the Act to show  cause as  to  why  he  should not be removed  from  the  Board  of Directors  of the Bank and from the Executive Committees  of other  Co-operative  Societies in the  District  for  having remained in arrears of the loan instalments due from him  on the date of filing of nomination papers for election to  the post of Director of the Bank and thereafter till  21.10.1986 when  he  actually  repaid the dues  thereby  incurring  the disqualification as contemplated by section 73FF of the Act. The appellant showed cause and by additional reply took  the stand  that  he  had not committed  any  default  after  the amended section 73FF came into existence.  This was rejected and  by  Order  dated  7.12.1987  passed  by  the  Assistant Registrar Co-operative Societies, Chandrapur he was  removed from  the  post of Director holding him to  be  a  defaulter under  section 73FF of the Act.  Appeal against  that  order was  dismissed  by  the District  Joint  Registrar  and  his revision therefrom made under section 154 of the Act too met the  same  fate at the hands of the  Cooperative  &  Textile Department, State of Maharashtra, Bombay Dismissing his Writ Petition  filed  thereafter, the High Court of  Bombay  held that  when  the appellant contested the election  he  was  a defaulter  and  even  though he had paid all  the  debts  on 21.10.1986   yet   he   could  not  be   absolved   of   the disqualification on the day he contested the election.      In the appeal before this Court it was argued on behalf of  the appellant that the impugned order of  the  Assistant Registrar  removing  him  from the Board  of  Directors  was without jurisdiction in as-much-as                                                        676

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the  Act  prescribes  separate  procedure  for  calling   in question  the  election and that procedure having  not  been followed the Assistant Registrar could not have acted  under section  78(1) of the Act; that the entire loan having  been repaid before the issue of notice under section 78(1) he was not  a defaulter in presenti and lastly even  assuming  that the disqualification on the ground of default is common both for election and continuation as Director in the  Committee, the  special provision for calling in question  an  election mut  prevail over section 78. Rejecting the contentions  and dismissing the appeal, the Court.      HELD:  If  the  impugned order is found  to  have  been passed  by  way  of  setting  aside  the  election  of   the appellant,  it  would be bad as his election  had  not  been called   in  question  in  accordance  with  the   procedure prescribed by the Act. However, the notice has ex facie been issued  under  section  78 of the Act.  No  doubt  there  is reference  to his having been a defaulter  and  disqualified for  being  elected  but it has been  addressed  to  him  as Director  on the Board of Directors. It also refers  to  his being disqualified "to be elected or to continue as Director or  Executive Committee member of the  Executive  Committee" under  section  73FF of the Act and about ceasing  to  be  a Director  by committing default.  From the  above  contents, there  is no room for holding that the appellant’s  election has  been  set aside by the impugned order.   On  the  other hand, the emphasis is on his being disqualified to  continue as  Director  or ceasing to be Director on  account  of  his having committed default. [682F-683A]      The  day  an  instalment  falls due on  its  due  date, failure to pay results in default and this default continues day after day until it is repaid.  The appellant can be said to  have made default on the first day of  his  directorship and on every subsequent day till instalments were paid.  The appellant  was  a defaulter immediately on the  coming  into force of section 73FF and so long that default continued  he must  be taken to have made default until repayment.  [683G- 684A]      Sub-section (2) of Section 73FF says that a member  who has  incurred  any disqualification  under  sub-section  (1) shall  cease  to be a member of the committee and  his  seat shall  thereupon  be deemed to be  vacant.   Therefore,  the moment  the  appellant  after election continued  to  be  in default  and  must  be taken to  have  made  default,  stood disqualified  and  thereby  ceased to be  a  member  of  the Committee  and  his seat deemed to have fallen  vacant.   In this  view of the matter the notice of the Deputy  Registrar was  in effect to say that the appellant had already  ceased to  be  a  director and his seat already  fell  vacant.   In Keshaorao                                                        677 Narayanrao  Patil v. District Deputy Registrar, reported  in 1987  Maharashtra  Law Journal 709, Bombay High  Court  held that section 73FF(2) did not operate automatically and  that passing  of an order of removal was necessary.  This has  to be  interpreted  in  the context of the  provisions  in  the section. [684B-D]      Hundraj  Kanayalal  Sajnani v. Union of  India,  A.I.R. 1990  S.C. 1106 at 1121; Zaverbhai Amaidas v. The  State  of Bombay,  [1955]  1 S.C.R. 799; Maharashtra  State  Board  of Education   v.   Paritosh  Sheoth,  [1985]  1   S.C.R.   29, distinguished.      Keshaorao   Narayanrao   Patil   v.   District   Deputy Registrar, [1987] Maharashtra Law Journal 709, approved.

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JUDGMENT:      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4974  of 1990.      From  the  Judgment and Order dated  20.6.1990  of  the Bombay High Court in W.P. 2403 of 1989.      G.L.  Sanghi,  Mrs. Jayshree Wad, Dhruv Mehta  and  Ms. Tamali Das Gupta for the Appellant      S.V.  Deshpande, V.N. Patil and A. S. Bhasme (NP),  for the Respondents.      The Judgment of the Court was delivered by      K.N. SAIKIA, J. Pursuant to the Notification issued  in June 1986 the elections of Directors to the District Central Cooperative  Bank,  Chandrapur, hereinafter referred  to  as ’the Bank’ the appellant filed his nomination papers in July 1986,  and  he  was  elected on  18.8.1986  as  one  of  the Directors of the Bank from the Brehmapuri Agricultral  Sales and  Purchase  Society.   His election  was  not  called  in question  according  to  the  procedure  prescribed  by  the Maharashtra  Cooperative  Societies Act,  1960,  hereinafter referred to as ’the Act’.      On  8.1.1987,  the  District Deputy  Registrar  of  the Cooperative  Societies, Chandrapur, hereinafter referred  to as ’the Deputy Registrar’, issued a notice to the  appellant under section 78(1)  of the Act to show cause within 15 days as  to  why  he  should not be removed  from  the  Board  of Directors of the Bank as per the provisions of section 73FF, and directed him to remain present on 2.2.1987 at 11                                                        678 A.M.  in  the Deputy Director’s office.  The  notice  stated that  the appellant had borrowed a loan of total Rs.  10,000 (Rs. 7,000 as debt and Rs. 3,000 subsidy) from the Bank  and he  kept the loan constanty in arrears till 21.10.1986,  and being  elected  as Director of the Bank on  18.8.1986.  till then he was working as the Director of the Bank.  The notice further said:          "Because  you have remained in arrars of  the  loan          instalments  as referred above to  the  Maharashtra          State  Cooperative  Land  Development  Bank,  under          Section   73FF(i)(b)  of  the   Maharashtra   State          Cooperative   Societies   Act,   1960,   you    are          disqualified  to  be  elected  or  to  continue  as          Director  or  Executive  Committee  Member  of  the          Executive  Committee of a Cooperative  Society  and          u/s   73FF(2)  of  Maharashtra  State   Cooperative          Societies  Act, 1960 a person  committing  defaults          ceased  to be the Executive Committee  (member)  or          Director.          From  the information above given because the  loan          instalments  of Maharashtra State Cooperative  Land          Development Bank remained due from you on the  date          of  filing  nomination papers for the  election  of          post  of  Director of Chandrapur  District  Central          Cooperative  Bank  and  also on the  date  of  your          election  and thereafter, you are  disqualified  to          contest  the  election to the post of  Director  of          Chandrapur  District  Central Cooperative  Bank  as          also to be elected and to continue as Director.          And  therefore under powers given to me by  Section          78(1)  of Maharashtra State  Cooperative  Societies          Act,  1960  and order  No.  CSL/1481/24982/15-C(87)          dated   1.7.81  of  Agriculture   and   Cooperation          Department of Maharashtra State Government. I, K.M.          Deshpande,  District  Dy,  Registrar,   Cooperative

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        Societies, Chandrapur hereby ask you to show  cause          in writing as to why you should not be removed from          the  Board  of  Directors  of  Chandrapur  District          Central  Cooperative  Bank and from  the  Executive          Committees  of the other cooperative  societies  in          the  District.  Your explanation in writing  should          be submitted to this office within 15 days from the          receipt of this notice."      The appellant showed cause and also filed an additional reply  on  10.11.87 stating that he "had not  committed  any default after the                                                        679 amended section 73FF came into existence."      The   Assistant   Regisrar,   Cooperative    Societies, Chandrapur   by  his  order  dated  7.12.1987  removed   the appellant  from  the  Committee of  Directors  of  the  Bank holding  that  appellant  was  defaulter  on  31.1.1986,  on 31.3.1986  and he became defaulter under the  provisions  of section  73FF(1)  of the Act, and rejected  the  appellant’s contention that section 73FF became applicable from 6.8.1986 as  per the Government Notification issued on 18.4.1986  and that as he had accepted that he paid the dues on 21.10.1986, on  18.8.1986  when  he  was elected  as  Director,  he  was defaulter under section 73FF(1) of the Act.      The  order of the Assistant Registrar  dated  7.12.1987 was  served  on the appellant on 8.12.87.   The  appellant’s appeal  against that order was dismissed by  the  Divisional Joint  Registrar  of the Cooperative  Societies,  Nagpur  on 15.2.1988, holding, inter alia, that section 73FF of the Act came  into  force on 12.5.1986 and the  appellant  could  be treated  as  a defaulter under that section;  and  the  mere making  of  payment  on  21.10.86  did  not  mean  that  the disqualification  on  account of his being  defaulter  which continued from 18.8.1986 to 21.10.1986 was extinguished  and hence  the appellant was not at all eligible to contest  the election.  The appellant’s revision petition therefrom under section  154  of  the Act was dismissed on  30.8.89  by  the Cooperation  and textile Department, State  of  Maharashtra, Bombay  holding  that  the  appellant  was  defaulter  under section 73FF of the said Act on 18.8.1986 i.e. the date when he was declared elected as Director.      The  appellant’s writ petition in the High Court  filed on  1.9.1989 challenging the above order dated  30.8.89  was dismissed by the impugned Judgment and Order dated  20.6.90, holding that the dues calculated on 31.1.86 became recurring dues every following day and on 12.5.1986 when section  73FF came  into  force  the outstanding dues  continued  even  on 18.8.1986  when  the appellant contested the  election;  and that  the  question of giving retrospective  effect  to  the section did not arise because the appellant was a  defaulter when  he contested the election and though he paid  all  the debts  on  21.10.1986 yet he could not be "absolved  of  the disqualification  on  the day he  contested  the  election". Hence this appeal by special leave.      Mr. G. L. Sanghi, the learned counsel for the appellant submits,  inter  alia,  that  the  impugned  order  of   the Assistant   Registrar  removing  the  appellant   from   the Committee of the Directors is without jurisdiction  inasmuch as the Act prescribes a separate procedure for calling in                                                        680 question the appellant’s election as a Director of the  Bank and  that procedure having not been followed  the  Assistant Registrar  could not have acted under section 78(1)  of  the Act which did not envisage the setting aside of an  election as  has been done by the impugned order;that  the  appellant

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having  repaid  the entire loan before the  impugned  notice under section 78(1) of the Act was issued, he was surely not a  defaulter in presenti on the date of the notice  and  the provisions  of  section 78(1) were not attracted;  and  that even  assuming  that the disqualification on the  ground  of default is common both for election and for continuation  as a  Director  in  the Committee, the  special  provision  for setting  aside an election must prevail over section  78  as there  would  be apparent conflict between the two  and  the maxim  generalia specialibus non derogant general  words  do not derogate from special, would apply,      Mr.  V. N. Patil, the learned counsel for the State  of Maharashtra, submits that the disqualification as  defaulter continued after the election of the appellant and section 78 envisaged such a default and the appellant having  continued to be a defaulter was lawfully removed and the fact that  he repaid  the loan before the notice was issued would  not  be material for the purpose of taking action under section 78.      Chapter  XI-A  of  the  Act  deals  with  election   of committees  and  officers of certain  societies.  Admittedly this  Chapter applies to the Bank. Section 144E  deals  with disqualification  for  membership.   Under  sub-section  (1) thereof a person shall be disqualified for being elected as, and  for being a member, of the committee of  any  specified society,  ....(e) if he is so disqualified by or  under  any other  provision  of  this Act.   Section  144T  deals  with desputes  relating to election and provides  in  sub-section (1) that notwithstanding anything contained in section 91 or any other provisions of this Act, any dispute relating to an election  shall  be  referred to  the  Commissioner  of  the Division in which such election is held or to an officer not below  the  rank  of  Additional  Commissioner  of  division authorised  by  the State Government in  this  behalf.   The procedure  for  an election petition is  prescribed  by  the subsequent   section  of  that  Chapter.    Admittedly   the appellant’s  election was not called in question  under  the above  provision.   Section 144E, as have  noted,  over  and above  the other specified disqualifications in  sub-section (e)  included  disqualifications  by  or  under  any   other provisions  of  the  Act.  Section 78(1)  which  deals  with powers  of removal of committees or member thereof  provides as follows:                                                        681          "78(1)  If,  in the opinion of the  Registrar,  the          committee  of  any society or any  member  of  such          committee  makes  default, or is negligent  in  the          performance  of the duties imposed on it or him  by          this  Act or the rules or the bye-laws, or  commits          any  act which is prejudicial to the  interests  of          the  society or its members, or  wilfully  disobeys          interests  of  the  society  or  its  members,   or          wilfully  disobeys directions issued by  the  State          Government, or by the Registrar for the purposes of          securing   proper  implementation  of   cooperative          policy   and  development  programme  approved   or          undertaken by the State Government or is  otherwise          not  discharging its or his functions properly  and          diligently  and the business of the society has  or          is  likely  to come to a standstill, or  where  any          member of such committee stands disqualified by  or          under  this Act for being a member,  the  Registrar          may,  after giving the committee or the member,  as          the  case may be, an opportunity of stating its  or          his  objections,  if any, within 15 days  from  the          date  of receipt of notice, and after  consultation

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        with  the federal society to which the  society  is          affiliated, by order-          (a) (i) remove the committee, and          (ii)  appoint  a committee consisting of  three  or          more  members (who shall not be the members of  the          committee so removed) of the society in its  place,          or appoint one or more Administrators who need  not          be the members of the society, but who shall not be          the members of the committee so removed, to  manage          the  affairs  of  the  society  for  a  period  not          exceeding   six  months,  which  period,   at   the          discretion  of  the  Registrar, be  extended  by  a          further  period  not  exceeding  three  months  so,          however, that the total period does not exceed nine          months in the aggregate:          Provided  that, the Registrar shall have the  power          to  change the committee or any member  thereof  or          the Administrator or Administrators appointed under          paragraph  (ii) at his discretion even  before  the          expiry  of  the period secified in the  order  made          under this sub-section;          (b)               xxx                           xxx          xxx" Section 78(1) empowers the Registrar to remove a member of a committee  who "makes default" or where any member  of  such committee                                                        682 "stands  disqualified  by  or under this  Act  for  being  a member".   Section  73FF  deals  with  disqualification  for membership of committee.  Sub-section (1) provides:          "Without prejudice to the other provisions of  this          Act or the rules made thereunder in relation to the          disqualification of being a member of a  committee,          no  person shall be eligible for  being  appointed,          nominated, elected, co-opted or, for being a member          of a committee, if he-          (i) is a defaulter of any society;          Explanation-For  the purposes of this  clause,  the          term "defaulter" includes-          (a)  in the case of a primary  agricultural  credit          society, a member who defaults the repayment of the          crop loan on the due date;          (b)  in the case of term lending society, a  member          who  defaults the payment of any instalment of  the          loan granted to him;          xxx        xxx       xxx       xxx       xxx    xxx Sub-section  (2)  says:  "A  member  who  has  incurred  any disqualification under sub-section (1), shall cease to be  a member  of  the committee and his seat  shall  thereupon  be deemed to be vacant."      This  section  was inserted by Maharashtra Act,  XX  of 1986  with  effect from 12.5.86.  If the impugned  order  is found  to  have  been passed by way  of  setting  aside  the election  of  the appellant the order would be  bad  as  the appellant’s  election  had not been called  in  question  in accordance  with  the  procedure  prescribad  by  the   Act. However,  the notice has ex facie been issued under  section 78  of  the  Act.   No  doubt  there  is  reference  to  the appellant’s  having  been a defaulter and  disqualified  for being elected but it has been addressed to the appellant  as Director of the Bank and also stated: "You have been elected as Director on the Board of Directors of Chandrapur District Central Cooperative Bank on 18.8.1986 and today on this date you are working as the Director of the said Bank."  It  also refers to the appellant’s being disqualified or to  continue

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as  Director or Executive Committee member of the  Executive Committee’ under                                                        683 section 73FF of the Act and about ceasing too be a  Director by committing default.  From the above contents, there is no room for holding that the appellant’s election has been  set aside by the impugned order; on the other hand, the emphasis is  on  the appellant’s being disqualified  to  continue  as Director or creasing to be Director on account of his having committed  default.  The question of  generalibus  specialia derogant-special  things  take  from  general  or  generalia specialibus non derogant general words do not derogate  from special, therefore, does not arise.  What was stated in para 36  of the report in Hundraj Kanayalal Sajnani v.  Union  of India,  AIR 1990 SC 1106 at 1121 will not be relevant.   The question of repugnancy involved in Zaverbhai Amaidas. v. The State  of Bombay,  [1955] 1 SCR 799 does not arise  in  this case.  The decision in Maharashtra State Board of  Education v.  Paritosh  Sheth, [1985] 1 SCR 29 is also  not  apposite. The  provisions relating to election have to be  interpreted harmoniously  with  other provisions of the Act such  as  in section  78(1). Interpretare   concordare leges legibus  est optimus interpretendi modus.  To interpret and in such a way as  to  harmonize  laws  with  laws  is  the  best  mode  of interpretation.      Mr.  Sanghi does not dispute that the appellant was  in arrear in respect of instalments on the date of his election and  till  21.10.1986 i.e. both prior and posterior  to  his election  on 18.8.1986.  Admittedly the  instalment was  not paid  on due date.  There was of course some dispute  as  to the  amount  of interest payable and  appropriation  of  the amount paid against interest instead of capital but all this would  not exonerate the appellant from being in default  on non-payment of instalment on due date.      Mr.  Sanghi,  however,  submits  that  the  expression, "makes  default" or "stands disqualified" being  in  present the  default must have been committed after the coming  into force of section 73FF and that his default even, if any, was prior  to that date and not after that date.  We are  unable to persuade ourselves to accept this submission.  The day an instalment  falls due on its due date failure to pay results in default and that default continues from day to day  until it is repaid.  Every day thereafter until payment results in making of default and, therefore, it could not be said  that default  could  be on the due date only and  thereafter   no default  but only liability.  Considered by  this  principle the appellant can be said to have made default on the  first day of his directorship and on every subsequent day till the instalment  or  instalments were paid.  The submission,  has therefore, to be rejected.                                                        684      Similarly  the submission that the defalult  must  have been one committed after the Act came into force has also to be  rejected on the same ground that immediately on the  Act coming into force the appellant was a defaulter and so  long that default continued he must be taken to have made default until repayment.      What  then would be the consequence of such a  default. Sub-section  (2) of section 73FF says that a member who  has incurred  any disqualification under sub-section  (1)  shall cease  to  be a member of the Committee and his  seat  shall thereupon be deemed to be vacant.  Therefore, the moment the appellant  after election continued to be in  default,  and, therefore,  must  be  taken  to  have  made  default,  stood disqualified  and  thereby  ceased to be  a  member  of  the

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committee  and  his seat deemed to have fallen  vacant.   In this  view of the matter the notice of the Deputy  Registrar was  in effect to say that the appellant had already  ceased to  be  a  Director and his seat already  fell  vacant.   In Keshaorao  Narayanrao  Patil v.  District  Deputy  Registrar reported  in  1987 Maharashtra Law Journal 709  Bombay  High Court held that s. 73FF(2) did not operate automatically and that passing of an order of removal was necessary.  This has to  be interpreted in the context of the provisions  in  the section.      In  this  view  of the matter there could  not  be  any infirmity  either in the notice or in the impugned order  of removal.      The result is that this appeal fails and is  dismissed. The interim orders, if any, stand vacated.  No. costs. R.N.J.                                  Appeal dismissed.                                                        685