http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 8

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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 8

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.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 8

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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 8

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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 8

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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 8

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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 8

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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 8

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