ZEESHAN MEHDI v. THE UNION OF INDIA AND 2 ORS. AND ALLAMA ZAMEER NAQVI (APPLICANT)

General Standing Order issued by the Hon'ble the Chief Justice, this Petition is required to be heard by this Bench.

3 The controversy is very limited. By the impugned Order dated 16^thMay, 2018, the Joint Secretary to the Government of India, who is the Central Registrar of Co-operative Societies under the provisions of the Multi-State Co-operative Societies Act, 2002 (for short, "the MSCS Act, 2002") passed an Order restraining the Petitioner from exercising any powers of the Chairman/Director including attending any board meetings in the capacity of the Chairman/Director of the Bombay Mercantile Co-operative Bank Limited, Mumbai (for short "the said Bank") till further Orders. Thus, the impugned Order is of a very drastic nature.

4 The Order also directs that during the said period, the Vice- Chairman of the said Bank shall act as the Chairman. During the course of last hearing, we had called upon the learned counsel appearing for the first and second Respondents to point out the statutory power, if any, which was exercised for passing the impugned Order, especially when the impugned Order does not refer to any statutory provisions.

5 Today, the learned counsel appearing for the first and

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second Respondents relied upon the provisions of Section 29(d), Section 122 and Section 123 of the MSCS Act, 2002. The learned counsel appearing for the Applicants in Notice of Motion (Stamp) No. 562 of 2018 opposes the Petition by pointing out the conduct of the Petitioner. He also submits that on his own showing, the tenure of the Petitioner as the Chairman of the said Bank has come to an end. The learned counsel appearing for the Applicant in Notice of Motion No. 587 of 2018 pointed out the conduct of the Petitioner and the proceedings pending against him.

6 The impugned Order is a very drastic Order. It completely restrains the Petitioner who was admittedly at the relevant time, the Chairman and a Director of the said Bank from exercising powers as the Chairman/Director and from attending Board meetings in the capacity as the Chairman/Director. There cannot be any dispute that such a drastic Order has to be supported by the statutory provisions.

7 Section 29 of the MSCS Act, 2002 provides for disqualifications for membership of a Multi State Co-operative Society. The impugned Order does not record even a prima facie opinion that any of the disqualifications under Section 29 are attracted. Section 122 is a power of the Central Government to issue the directions to

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specified Multi State Co-operative Societies in public interest. The impugned Order is not passed by the Central Government. It is passed by the Central Registrar of the Co-operative Societies who is empowered to exercise various powers under the the MSCS Act, 2002. Moreover, the power under Section 122 does not extend to preventing the lawfully elected Chairman/Director from exercising his power.

8 As regards Section 123 of the MSCS Act, 2002, it is a power vesting in the Central Government of supersession of the board of a specified Multi State Co-operative Society. It is a drastic power of removing the Board of Directors of such a Society and appointing an Administrator. Careful perusal of Section 123 shows that there is no power to pass such interim Order of preventing the Chairman and Director of a Multi State Co-operative Society from exercising his powers as such.

9 Therefore, the impugned Order dated 16^thMay, 2018 is completely illegal. Neither the Central Government nor the Central Registrar had a statutory power to pass such a drastic order. Only on this ground, the said Order deserves to be set aside.

10 It is true that in the letter dated 11^thJune, 2018 (Exhibit-

M) addressed by the Petitioner to the Central Registrar, he has stated

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that his remaining tenure of the post of the Chairman is of three months. In this Petition, we cannot go into the question as to what is the tenure of the Petitioner. Even assuming that the tenure has expired, the impugned Order restrains him from acting as a Director as well. We make it clear that though we are setting aside the impugned Order, if the tenure of the Petitioner as the Chairman has already expired, only on the basis of this Order, he will be dis-entitled to act as the Chairman. We also make it clear that the proceedings initiated on the basis of the show cause notice dated 1^stAugust, 2017 will continue which shall be taken to its logical conclusion in accordance with law.

11 Accordingly, we pass the following Order:-

a) Subject to what is observed above, the impugned Order dated 16^thMay, 2018 is hereby quashed and set aside;

b) We make it clear that we have made no adjudication on the question whether the term of the Petitioner as the Chairman of the said Bank has expired. We also make it clear that on the basis of this Order, he will not be entitled to act as the Chairman, if his tenure is already over;

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c) We also make it clear that further proceedings on the basis of the show cause notice dated 1^stAugust, 2017 shall continue and the first and second Respondents shall take the said notice to its logical conclusion, as expeditiously as possible;

d) We also make it clear that we have made no adjudication on the allegations made by the third parties against the Petitioner;

e) Rule is made partly absolute on the above terms;

f) All the pending Notice of Motions are disposed of.

(A.S. GADKARI, J.) (A.S. OKA, J.)

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