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Krishnanath A. Prabhu Desai v. State Of Goa And Others
Factual and Procedural Background
The petitioner is a member of the “Sanjivani Bagayatdar Sahakari Saunstha,” a society registered under the Maharashtra Co-operative Societies Act, 1960, as applicable to the then Union Territories of Goa, Daman and Diu. Respondent No. 3 passed an interim order on 24th March 1994 under section 102(1)(a)(iv) of the Act, read with Rule 84 of the Maharashtra Co-operative Societies Rules, 1962, for winding up the society and called upon it to show cause why its affairs should not be wound up. The society's Chairman filed objections, but the interim order was confirmed on 28th April 1994 under section 102(2) of the Act, and respondent No. 4 was appointed as liquidator.
The petitioner contends that under section 109 of the Maharashtra Co-operative Societies Act, winding up proceedings must be concluded within three years from the order of winding up, with possible extensions granted by the Registrar—each extension not exceeding one year and four years in aggregate. After seven years from the winding up order, liquidation proceedings are deemed terminated. The petitioner asserts that the liquidation proceedings were deemed terminated on 27th April 2001, but the Registrar failed to pass the termination order, thereby not closing the proceedings.
Respondent No. 4, the liquidator (a bank), opposed termination on grounds that allowing it would obstruct recovery of significant dues from defaulting members, including the petitioner himself, who allegedly owes Rs. 62,352.50 in interest. The liquidator highlighted mismanagement in the society's affairs and ongoing recovery difficulties, including deceased members and unknown whereabouts of defaulters, justifying continuation of liquidation efforts.
Legal Issues Presented
- Whether the winding up proceedings of the Sanjivani Bagayatdar Sahakari Saunstha Ltd. are deemed terminated under section 109 of the Maharashtra Co-operative Societies Act after the lapse of seven years from the order of winding up.
- Whether the Registrar is obliged to pass an order terminating the liquidation proceedings upon expiry of the statutory period.
- Whether continuation of the winding up proceedings beyond the prescribed period is permissible under the Act.
Arguments of the Parties
Petitioner's Arguments
- Section 109 mandates conclusion of winding up proceedings within three years, with extensions limited to one year at a time and four years in aggregate.
- After seven years from the winding up order, liquidation proceedings are deemed terminated by operation of law.
- The Registrar failed to pass the termination order despite expiry of the statutory period, violating the provisions of section 109.
Respondent No. 4's Arguments
- Allowing the petition would prevent recovery of substantial monies owed by defaulting members, including the petitioner.
- The petitioner is himself a defaulter with dues exceeding Rs. 62,000.
- The society's affairs were mismanaged, warranting winding up and continued liquidation.
- Complexities such as deceased members and unknown whereabouts of defaulters justify continuation of liquidation proceedings.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The court analyzed the statutory framework under section 109 of the Maharashtra Co-operative Societies Act, which requires winding up proceedings to be concluded within a prescribed period—three years from the order of winding up, with extensions limited to one year at a time and four years in aggregate, and deems liquidation proceedings terminated after seven years. The court observed that the Registrar has no discretion to extend beyond these limits and must close the proceedings upon expiry of the statutory period.
The court noted that the Registrar is required to obtain a final report from the liquidator and take appropriate steps such as convening a general body meeting to record findings. Since the seven-year period had elapsed, the court found no legal basis for continuation of the winding up proceedings.
Holding and Implications
DISPOSED OF
The court allowed the petition, declaring that the winding up of the Sanjivani Bagayatdar Sahakari Saunstha Ltd. is deemed terminated retrospectively from 27th April 2001. It restrained the respondents from continuing the winding up proceedings and directed the Assistant Registrar of Co-operative Societies to pass an order terminating the liquidation proceedings under section 109 of the Act.
The decision directly affects the parties by mandating closure of the liquidation proceedings and does not establish any new legal precedent or broader implications beyond the statutory interpretation and enforcement of section 109.
Heard learned Counsel for the parties.
2. The petitioner is a member of “Sanjivani Bagayatdar Sahakari Saunstha” a society registered under the Maharashtra Co-operative Societies Act, 1960, (as applicable to the then Union Territories of Goa, Daman and Diu). It is the case of the petitioner that respondent No. 3 had passed an interim order dated 24th March, 1994 under section 102(1)(a)(iv) of Maharashtra Co-operative Societies Act read with Rule 84 of the Maharashtra Co-operative Societies Rules, 1962 for winding up of the said society and further calling upon the society” as to why its affairs should not be wound up. In response to the show cause notice the Chairman of the said Society filed its objections but respondent No. 3 by its Order dated 28th April, 1994 passed under section 102(2) of the said Act, confirmed the interim order dated 24th March, 1994 and appointed respondent No. 4 as liquidator of the society.
3. It is the case of the petitioner that under section 109 of the Maharashtra Co-operative Societies Act the winding up proceedings of the society has to be concluded within a period of three years from the date of the order of winding up, unless the said period is extended by the Registrar and that he shall not grant extension for a period of one year at a time and four years in aggregate and after expiry of 7 years from the date of order for winding up of society, and it is deemed that the liquidation proceedings have been terminated.
4. Therefore, according to the petitioner the liquidation proceedings by virtue of section 109 of the Maharashtra Co-operative Societies Act is deemed to have been terminated on 27th April, 2001 and the Asst. Registrar was bound to pass the order of termination and thereby closing the liquidation proceedings but in spite of lapse of period of 7 years, the Registrar of Co-operative Societies has failed to act in accordance with the provisions of section 109.
5. On the other hand, it is the case of respondent No. 4 that is the Bank which came to be appointed as Liquidator that in case the petition is allowed then the Bank which is the Liquidator would not be able to recover huge amount of monies from the defaulting members and that the whole purpose of filing this petition is to avoid recovery proceedings pending against the members of the Society and if the said amount is not recovered from them, it will directly affect the financial condition of the Bank.
6. It is submitted that the petitioner has suppressed the fact that he himself is a defaulter member and the amount due from him is to the tune of Rs. 62,352.50 towards interest. It is further submitted that the affairs of the petitioner/society of which the petitioner was a member was not conducted properly and there was lot of mismanagement resulting in the Registrar passing the Order of liquidation and winding up. It is further contended by the respondent No. 4.liquidator that in some cases the original member to whom loan was granted has expired and proceedings are to be initiated to bring their LRs on record. In some cases the whereabouts of such defaulters is-also not known and therefore the Liquidator has continued to act in the interest of the said Bank and to enable the Society to recover its dues.
7. Section 109 of the Societies Act of 1960 clearly provides that the winding up proceedings has to be closed as soon as practicable within six years from the date the liquidator takes control of all the property, to which the society is or appears to be entitled and of all books, records and other documents pertaining to the business of the society, under sub-section (2) of section 103 unless the period is extended by the Registrar. The proviso to sub-section (1) of section 109 provides for extension for winding up proceedings by the Registrar which cannot be extended for more than one year at a time and four years in the aggregate and after the expiry of three years from the date on which the liquidator took control it will be deemed that the liquidation proceedings have been terminated and pass an order terminating the liquidation proceedings.
8. Therefore there is no choice left with the Registrar, but to obtain a final report from the liquidator and take appropriate steps in the matter like directing the liquidator to convene a general body meeting for recording its finding and other general steps towards affairs of the society.
9. In view of this position in law, the Registrar has no option but to close the winding up proceedings as period of seven years has lapsed and there is no provision under the law to continue with the winding up proceedings.
10. Therefore, the petition is allowed in terms of prayer Clauses (a) and (b) which read as under:
(a) Issue a declaratory writ declaring that the winding up of the Sanjivani Bagayatdar Sahakari Saunstha Ltd. is deemed to have been terminated with retrospective effect from 27-4-2001 and further restraining the respondent from in any manner continuing with said winding up of the society namely Sanjivani Bagayatdar Sahakari Saunstha Ltd.
(b) Issue writ in the nature of mandamus directing the respondent No. 3, the Asst. Registrar of Co-operative Societies to pass the order under section 109 of the Co-operative Societies Act terminating the liquidation proceedings of the Sanjivani Bagayatdar Sahakari Saunstha Ltd. Rule is made absolute in the aforesaid terms.
Petition allowed.
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