DR. RAJU @ RAMCHANDRA S/O NARENDRA DEOGHARE v. GOVERNMENT OF INDIA, THR. SECY. NEW DELHI and ORS.

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The petitioner, an Orthopedic Surgeon, is the son of late Narendra Deoghare, who according to the petitioner was a pioneer in establishing and starting the first Sut Girni for the weavers community. According to the petitioner, the society was first Sut Girni of Vidarbha region started on account of the efforts of his father late Narendra Deoghare. In the year 1964 an area of 102.17 acres of land, which was acquired under the Land Acquisition Act was allotted to the society but actually 88.03 acres of land was handed over to the Society. The Society had leased out 43.5 acres of land to different institutions during the period 1971 to 1993. On account of mis-management and irregularities of Board of Directors, the Board was superseded and Administrator was appointed. The Board of Directors was dismissed on 31.3.1995. On 9.5.1996 the society went in liquidation and the Liquidator was appointed on 24.6.1996. At the relevant time, the society had 714 shareholders and 1100 workers. It is further case of the petitioner that respondent no.5 took possession of two acres of land of the society before appointment

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of the Liquidator since an amount of Rs. 6.5 crores was due to respondent no.5. According to the petitioner, respondent no.5 has not paid any amount in respect of the said two acres of land to the society. Thereafter attempts were made to reconstruct the society but the same failed. Even a Committee of Expert was appointed in the year 1999 to rehabilitate the society but the same did not yield any result.

The petitioner further averred that an area of 22 acres of land of the society was sold to respondent no.6 for a meager amount, which was less than the market price and the sale to respondent no. 6 is patently illegal and malafide. It is further case of the petitioner that taking into consideration the social and economic factors of weavers community the land belonging to the society should be allotted for public utility purpose for weavers community to uplift the economic position. According to the petitioner, if the remaining property of the society is disposed of then the shareholders and the weaver community

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would be deprived of their rights. By an amendment to the petition, the petitioner has pleaded that land admeasuring 3100 square feet has been taken in possession by respondent no.8 for construction of tar road. According to the petitioner, respondent no.3 has illegally sold 21 acres of land to respondent no.6 for a meager amount of Rs. 12.50 crore in the year 2004, out of which an amount of Rs. 888.79 lakhs were paid to the workers of the society. The petitioner has further pleaded that respondent no.7 has illegally occupied an excess area of 6.09 acres of the land. The petitioner by amendment also challenged notice inviting tender dated 17.12.2007 issued by respondent no.3 for the sale of 20.20 acres and the allotment of 20.20 acres of land to respondent no.9, primarily on the ground that in terms of Section 109 of the Co-operative Societies Act, 1960 ("the Act"

for short) the action taken by respondent no.3 is without jurisdiction in view of the fact that the sale was effected after 10 years from the date of appointment of the Liquidator that too without any extension having been granted by the Registrar.

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The petitioner has also submitted that notification dated 15.1.2008 issued under Section 157 of the Act is ultra virus and illegal.

3] On the basis of aforesaid pleadings, the petitioner has sought the following reliefs:-

(i) By an appropriate writ, order or direction direct respondent no.1 to restore, rehabilitate and renovate the Nagpur Vinkar Sahakari Sut Girni Limited under the Scheme Technology Up gradation Fund (TUF) Government of India or any other scheme of the Government, in the interest of justice.

(ii) By an appropriate order direct respondent no.3 comply with the provision of Sections 109 and 110 of the Cooperative Society Act and terminate the liquidation proceedings and submit the final report in pursuance of the Act as the liabilities are over.

(iii) By an appropriate writ, order and direction

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quash and set aside the notice inviting Tender dated 17.1.2008 issued by respondent no.3 as illegal and without jurisdiction.

(iv) By an appropriate writ, order or direction quash and set aside the Notification dated 15.1.2008 issued by respondent no.2 as ultra virus and bad in law

(v)by an appropriate writ, order or direction quash and set aside the sale and allotment of

20.20 acres of land of the girni to respondent nos.9, 10 and 6 whom ever the same may be allotted as bad in law.

(vi)In the alternative the Hon'ble Court be pleased to direct respondent nos. 1 to 4 to divide, distribute and transfer the surplus land of 25 acres amongst its shareholders, members and workers for the betterment and upliftment of the weaver community in the interest of justice.

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(vii) direct respondent nos.1 to 4 to cancel the sale of 21 acres of land to respondent non.6 as the sale being in fragrant violation of law and is sold much below the market price without following due procedure of law and calling the government valuation.

(viii) By an interim orders restrain the respondent no.6 from carrying out any construction activity on the land bearing Kh. Nos. 20, 18/2, 18/1, 16/1 mouza Nagpur, Umred road, Nagpur as the sale of land is much below the market price.

(ix) By an appropriate order direct respondent nos.1 to 4 to take necessary steps to investigate the irregularity in the transfer of the Sut Girni land to respondent nos. 5 to 8 and submit the report thereof before this Hon'ble Court in the interest of justice. (x)By an ad-interim order restrain respondents 1 to 4 from transferring, alienating and selling

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the remaining 25 acres surplus land to any other person during the pendency of the writ petition in the interest of justice.

4] Writ Petition No.12/2008 has been filed by the petitioners, who are members of the society. The petitioners have challenged the sale of 22 acres of land of the society to respondent no.6. The petitioners have also challenged notice inviting tender dated 17.12.2007, and allotment of 20.20 acres of the society to the respondents pursuant to the said notice. The case set up by the petitioners in this petition in respect of the above referred transactions is almost similar to the case set up in Writ Petition No. 1625/2006. The petitioners have sought the following reliefs:-

(i) quash and set aside the notice inviting tender dated 17.12.2007 issued by respondent no.3 at Annexure `D' declaring the same as null and void and against the principle of law and want of authority.

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(ii) by an appropriate writ, order or direction quash and set aside the notification dated 15.1.2008 issued by respondent no.2 as ultra virus and bad in law

(iii) by an appropriate writ, order or direction quash and set aside the sale and allotment of

20.20 acres of land of the girni to respondent nos.5 and 6 whom ever the same may be allotted as bad in law.

(iv) declare the liquidation proceeding initiated by respondent no.3 as null and void and deem to be terminated in pursuance of Section 109 of the Act.

5] In Writ Petition No. 1625/2006 affidavit was filed by the Assistant Director, Director of Textiles, Nagpur on behalf of respondent no.2 in which it has been stated that the Liquidator had sold 21 acres of land by adopting transparent procedure and after

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obtaining requisite permission of Town Planning and State Government to Nirmal Ujjwal Sahakari Pat Sanstha Marayadit, Nagpur. It has been further stated that the State Government has fixed up-set price of the said land at Rs. 14,54,32,496/- by the Town Planning Department and thereafter tenders were invited by giving wide publicity through local newspapers. M/s. Swaraj Developers offered 7.50 crores. However, in order to get market price, negotiations were held with four tenderers in which M/s. Nirmal UjJwal Credit Cooperative Society, Nagpur offered Rs. 12.50 crores which was the highest and the same was accepted. The State Government had also accorded sanction on 3.3.2004 to the offer of Rs. 12.50 crores.

6] Respondent no.3 also filed reply dated 16.7.2007. According to the said affidavit, net loss of the society for the year ended on 31.3.1995 was Rs. 2,58,50,191 and the accumulated loss as on 31.3.1995 was at Rs.

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7,76,93,506/-. There was overdue payment of Rs. 3.59 crores of M.S.E.B. at the time of appointment of Administrator. It has been further stated that an area of 70327 square feet was acquired by M.S.E.B. in the year 1986 and no amount towards price of the land was paid to the mill. It has been further stated that interim order dated 9.5.1996 was passed under Section 102 (1) of the Act. By the said order, the Liquidator in terms of Section 103(1) of the Act was appointed. The said order was confirmed by order dated 24.6.1996 passed by Additional Registrar, Cooperative Societies. On 8.10.1996 M.S.E.B. discontinued the power supply to the mill as such working of the mill was stand-still. Thereafter the steps were taken for restoration of the power supply in the spinning mill but the same did not materialise.

7] Further reply has been filed by respondent no.3 on 18.11.2008, in which it has been stated that the statement made by the petitioner that the lease of the land was granted

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to the society was not correct but actually the land was acquired for the society in the year 1964 and respondent no.3 had paid compensation of Rs. 4,96,772/- to the Government. It has been stated that in the year 1986 the land admeasuring 1.60 acres was handed over to M.S.E.B., Nagpur for erection of Sub Station and compensation of the land was to be decided by the State Government. It has been further stated that at the relevant time, the liability of respondent no.3 was approximately to the extent of Rs. 57 crores. Therefore, respondent no.3 sought permission of the Director, Textile Maharashtra State for sale of land of 20.20 acres by inviting tenders in which the highest offer was given by respondent no.9 and after negotiations respondent no.9 had offered price at Rs. 67.77 crores. Respondent no.10 offered highest offer at Rs. 81.00 crores.

8] Pursuant to the order dated 22.10.2008 passed by this Court direction was given to the Collector, Nagpur to file an affidavit

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regarding ownership of the entire land of respondent no.3. The Collector, Nagpur has filed affidavit on 8.9.2008. The said affidavit discloses that pursuant to the land acquisition proceedings, land admeasuring an area of 88.03 acres was acquired and was handed over to Nagpur Vinkar Sahakari Sut Girni Maryadit, Nagpur for consideration of Rs. 4,96,772.12 ps. In the year 1974 land admeasuring 7.34 hectares was transferred to Maharashtra State Handloom Corporation Ltd. for consideration of Rs. 1,52,072.06 ps. Thereafter an area of 2.47 hectares was also surrendered to the Government by the Society on payment of Rs. 34,804.35ps. Subsequently, the said land was allotted to Lokmanya Tilak Jankalyan Shikshan Sanstha, Nagpur by the Revenue & Forest Department vide order dated 26.3.1993. In the year 2003 the Liquidator appointed for the society after inviting tenders sold land admeasuring 21 acres to Nirmal UjJwal Sahakari Pat Sanstha for consideration of 12,50,000/- by sale deed dated 26^thOctober 2004. Again on

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17.1.2008 the tenders were invited in respect of 20.20 hectors in which KSL Industries And Limited, Mumbai offered highest amount of Rs.

81.10 crores. After negotiations the said land was handed over to KSL And Industries Limited on 17.6.2008 but the sale deed has not yet been executed.

9] On behalf of respondent no.6 submissions have been filed on 7.9.2006 which discloses that pursuant to the tender process an area of 85000 square meters was sold to respondent no.6 by sale deed dated 26.10.2004 for consideration of Rs. 12.50 crores. It has been further stated that respondent no.6 carried out development by taking steps in accordance with the provisions of the Act, bye-laws of the society and permission was granted for construction of houses and shops by registered cooperative societies. It has been further stated that towards development till date of filing of reply substantial amount was spent by respondent no.6.

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10] In Writ Petition No.12/2008 affidavit in reply on behalf of respondent no.2 has been filed by the Joint Director, Textiles, Nagpur in which it has been stated that since liquidation process in respect of the society could not be completed during the period stipulated under Section 109 of the Act due to various cases pending in various Courts of law in order to culminate the liquidation proceedings to its logical end, State Government by notification dated 15.1.2008 extended time limit by two years after completion of the stipulated period, in exercise of the power conferred on the State Government under Section 157 of the Act. It has been further stated since liquidation proceedings were not completed during the period prescribed in the statute, it cannot be deemed to have been terminated, if the purpose for which the liquidation proceedings are initiated is not served. The State Government by invoking power under Section 157 of the Act has given retrospective effect to the extension of liquidation proceedings and, therefore, the

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action taken to sale assets of the society in oder to satisfy the liabilities is within the parameters of law. It has been further stated that the State Government has further extended period of liquidation by Notifications dated 23.5.2008 and 8.5.2009. In the affidavit, a reference to proceedings before the Industrial Court initiated by the workers of the society has been made and the reference has also been made to the writ petition filed in this Court against the order passed by the Industrial Court. It has been stated that certain amounts were due to the workers in terms of the orders passed by the Industrial Court and unless the dues are settled and crystalised, other dues cannot be finalised and final report of the Liquidator cannot be submitted to the Registrar and in this factual back ground, the Government had to resort to Section 157 of the Act.

11] On behalf of respondent no.3, reply has been filed in which it has been stated that at the time of appointment of administrator

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on 31.3.1995 the society has incurred huge losses and on account of losses, day to day working of the society was not possible. It has been further stated that on 9^thMay, 1996 the State Government passed order under Sections 102 and 103 of the Act for appointment of Liquidator. It has been denied that the property of the society was sold much before the market price. It has been further stated that total liability of the society as on the date of filing of the reply on 16.7.2008 was Rs. 6778.43 lakhs. It has been further denied that Liquidator had become functus officio and had no authority to issue notice inviting tender dated 17.12.2007. It had been further stated that notification dated 15.1.2008 has been issued in the interest of the society.

12] In further submission filed on behalf of respondent no.3 on 27.8.2008, it has been stated that although the Liquidator was appointed in the year 1996 he could not function from 8.10.1996 since M.S.E.B. discontinued

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power supply for non-payment of electricity bills and although Liquidator had taken over the charge of the society, he did not get the complete information as the records of the society were in disarray. The accounts of the society were required to be audited in order to ascertain the effects, actionable claims of the society and liabilities, the Liquidator requested the Special Auditor to conduct audit of respondent no.3 society vide communication dated 13/4/2005. Pursuant to which, the Special Auditor prepared audit report dated 30/8/2005. After receipt of the said report, exact liability of respondent no. 3 except liability of the employees which had bearing on the matters pending before the Industrial Court could be ascertained. It has been further stated that the effective functioning of the Liquidator commenced from 31.12.2005. It has been further stated that on 22.8.2007 the Liquidator of the society submitted proposal for sale of

20.20 acres of land, building, plant and machinery of the society to discharge the liability

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of the society. The Additional Registrar (Cooperative Societies and Director Textile) vide his letter dated 12^thDecember, 2007 granted permission to issue tender and accordingly, notice inviting tender was issued on 17.12.2007. On 20/2/2008 the Additional Registrar accepted his offer of respondent no.9. Thereafter respondent no.9 deposited the entire amount of Rs. 81.10 crores and the Additional Registrar directed respondent no.3 to hand over possession of the land, building, plant and machinery to respondent no.9, which was handed over to respondent no.9, subject to condition that entire tender process would be subject to the result of final order that may be passed in Writ Petition No.12/2008. It has been further stated by the liquidator that sale deed would be executed after obtaining orders from the Additional Registrar. It is the contention of Liquidator that in terms of Section 109 of the Act, the Registrar has to pass an order of termination of liquidation proceedings unless such an order is passed, the Liquidator does not

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cease to be in office and since no order was passed by the Registrar terminating the liquidation proceedings, the Liquidator continues to be in the office and, therefore, all actions taken by the Liquidator cannot be said to be illegal.

13] Respondent no.3 has filed pursis dated 21.6.2008 stating therein that respondent no.5 KSL & Industries Limited has deposited entire amount of Rs. 81.10 crores with respondent no.3 pursuant to which respondent no.3 has handed over possession of the land, building, plant and machineries agreed to be sold on 17.6.2008.

14] At this stage, it is pertinent to note that respondent no.6 in Writ Petition No. 1625/2006 filed Special Leave Petition against the order of status quo passed by this Court on 22.10.2008 and the Apex Court by order dated 13.4.2009 refused to interfere with the same. However, requested this Court to decide the

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matter by an early date. Since hearing on interim application would cover all the issues involved in the petitions, with the consent of learned counsel appearing in both the petitions, both the petitions were heard finally, subject to the objections taken by learned counsel for the respondents regarding maintainability of the petitions. We have heard learned counsel for the parties at length.

15] Mr. Chandurkar, Learned counsel for the petitioner further submitted that the petitioner in Writ Petition No.1625/2006 has locus to file the present petition since his father late Narendra Deoghare was responsible for establishing the Society for the benefit of weavers community and since the land of the society has been mis-utilised, he is entitled to canvass the grievances by way of public interest litigation. Insofar as the petitioners in Writ Petition No.12/2008 are concerned, the petitioners are members of the society and as such they have every right to challenge the

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illegal action of the Liquidator in selling the property of the society without any authority and in contravention of the provisions of the Act. Mr. Chandurkar, learned Senior Counsel submitted that in terms of Section 109 of the Act the liquidation proceedings came to an end after six years from the date of appointment of the Liquidator i. e. 24^thJune 1996 and, therefore, action taken by the Liquidator for sale of the property to respondents 6 and 9 in Writ Petition No. 1625/2006 is without jurisdiction and illegal. According to learned counsel, after six years the Liquidator became functus officio and he had no authority to deal with the property of the society. In any case, after period of 10 years from 24^th June 1996 the liquidation proceedings come to an end and, therefore, the sale of 20.20 acres to respondent no.9 is patently without jurisdiction. Placing reliance upon the provisions of the Act, more particularly, Sections 102, 103, 105, 108 and 109 of the Act learned counsel submitted that the action of the liquidator in inviting

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tenders and selling the property of the society to the respondents 6 and 9 is patently illegal and without jurisdiction. Learned counsel further submitted that the period of six years stipulated under Section 109 of the Act was not extended by the Registrar after period of six years. Learned counsel further submitted that allotment of land to respondent no.7 was not for any public purpose and in the said land without any permission and contrary to the terms and conditions of the allotment, educational institution is being run and, therefore, the said land is required to be restored to the society. Learned counsel further submitted that the wife of a politician is in the management and therefore, no action is being taken against illegalities committed by the respondent no.7. Learned counsel further submitted that insofar as notification dated 15.1.2008 is concerned, the same is patently illegal inasmuch as by the said notification continuation of Liquidator contrary to the provisions of the Act has been validated retrospectively which exercise is patently

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unsustainable in law. In support of his submissions, learned counsel relied upon the following authorities:-

(i) Jagannath Maruti Pisal and others Vs. District Deputy Registrar and others :1997 C.T.J. 369;

(ii) Krishnanath A. Prabhu Desai Vs. State of Goa :2007 (6) Mh.L.J. 106;

(iii) Baban Naik and others Vs. Union of India, New Delhi and others : AIR 1979 Goa, Daman & Diu 9;

(iv) Shivamrut Dudh Utpadak Sahakari Sangh Maryadit and others Vs. State of Maharashtra and others :2004 (3) Mh.L.J. 668;

(v) Yeshwant Gajanan Joshi and others Vs. The Hindustan Petroleum Corporation Ltd. Bombay and another : 1988 Mh.L.J. 455;

(vi) The Collecting Farming Society Ltd and others Vs. State of Madhya Pradesh and others :

AIR 1974 MP 59;

(vii) India Sugars and Refineries Ltd. Vs. State of Mysore and others :AIR 1960 Mysure 326;

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(viii) The Income-tax Officer, Alleppey Vs. M.C. Ponnoose :AIR 1970 SC 385.

16] Mr. Haq, learned Special Counsel appearing on behalf of respondents 2 and 4 submitted that the petitioners in both the petitions have no locus standi to file the petitions and in any case, the petitioner in Writ Petition No. 1625/2006 is not a good relater inasmuch as neither he is the member nor in any way directly concerned with the society. According to Mr. Haq, the petitioner in Writ Petition No. 1625/2006 has no locus standi to file the present petition, more particularly, having regard to the fact that the cause espoused by the petitioner is in conflict with the shareholders and the workers. According to Mr. Haq, it was not necessary for the State Government to issue notification dated 15.1.2008 inasmuch as the Liquidator took control over the society in terms of Section 109 of the Act in December 2005 and as such the period of 10 years commences from the said

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date. In any case, Mr. Haq submitted that notification dated 15.1.2008 has been issued so as to complete liquidation proceedings in the interest of members and the workers of the society. He further submitted that in absence of any extension by the Registrar, at the most, continuation of liquidation proceedings after 2002 would at the most irregularity and not illegality. In support of his submissions, Mr. Haq relied upon the following authorities:-

(i) Shivnarayan Motilal Darak Vs. R. A. Zubairy : 1971 Mh.L.J. 742;

(ii) Vinoy Kumar Vs. State of U.P. :AIR 2001 SC 1739, and

(iii) Anand Sharadchandra Oka V. University of Mumbai & ors. AIR 2008 SC 1289;

17] Mr. Kaptan, learned counsel for respondent no.3 - Liquidator submitted that action taken by the Liquidator cannot be faulted inasmuch as in terms of Section 109 of the Act the Liquidator took over the custody or control

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of all the property, effects and actionable claims to which the society was entitled and on 31.12.2005 and such the period of 10 years commenced from the said date. According to Mr. Kaptan, sale of land to respondent no.9 was with the concurrence of the Additional Registrar and the Government, therefore, in any case, sale of land to respondent no.9 is not vitiated. In support of his submissions, Mr. Kaptan also placed reliance upon the following judgments:-

(i) Shivnarayan Motilal Darak Vs. R.A. Zubairy :

1971 Mh.L.J. 742;

(ii) State of Mysore Vs. Allum Karibasappa and others :(1974) 2 SCC 498, and

(iii) Corporation of the City of Nagpur and another Vs. Ramchandra G. Modak : AIR 1984 SC

636.

18] Mr. Purohit, learned counsel for respondent no.5 submitted that the petitioner is not entitled for any relief sought for as against respondent no.5 since the petitioner is guilty of

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gross latches.

19] Mr. Voditel, learned counsel for respondent no.6 submitted that the petitioner in Writ Petition No.1625/2006 has no locus to file the petition and the same cannot be treated as public interest litigation. Mr. Voditel submitted that by this petition the petitioner is espousing his personal interest and what is sought is judicial review of the entire liquidation proceedings. According to Mr. Voditel, judgment in the case of Jagannath Maruti Pisal and others Vs. District Deputy Registrar and others : 1997 C.T. J. 369 is not applicable since it relates to Section 109 of the Act as it stood prior to the Amendment of 1986. Learned counsel further submitted that the sale in favour of respondent no.6 in respect of area of 21 acres was pursuant to the tender process in which pursuant to the negotiations held respondent no.6 offered Rs.

12.50 crores which consideration was accepted by the Liquidator and the sale deed was executed. He further submitted that respondent

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no.6 has spent substantial amount to carry out development pursuant to the permission granted and the constructions have been partly carried out. He, therefore, submitted that no interference is called for with the sale of the property in favour of respondent no.6 at this stage on account of gross latches on the part of the petitioners in filing the petitions. He further submitted that although no upset price was fixed in the notice inviting tender since the market rate of the land sold to respondent no.6 was fixed by the Government at Rs. 14,54,32,496/- and since the land was sold to respondent no. 6 for Rs. 12.50 crores. Respondent no.6 is ready and willing to deposit balance amount within such time as this Court may direct. He further submitted that he was making submission on the instructions and consent given by his client. In support of his submissions, the learned counsel relied upon the following authorities:

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(i) Haribhau Dagdu Tandale Vs. Industrial Cooperative Assoication Ltd. and others : (1996)

10 SCC 714;

(ii) Chairman & MD. BPL Ltd. Vs. S.P. Gururaja and others : 2003 (8)_(SCC) 567;

(iii) R & M Trust Vs. Koramangala Residents Vigilance Group and others :2005 (3) SCC 91; (iv)Chairman M.D., B.P.L. Ltd. Vs. S.P. Gururaja and others : (2003)8 SCC 567, and

(v) M/s. Rajshila Vs. State of U.P. and others :

1993 suppl (1) SCC 477.

20] Mr. Deshpande, learned counsel appearing for respondent no.7 invited our attention to the pleadings and submitted that the arguments advanced by learned counsel for the petitioner are not based upon the pleadings and, therefore, the same has no merit. He further submitted that the pleadings as against respondent no.7 are vague. He further urged that in view of the affidavit filed by the Collector pursuant to the directions given by this Court, it

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is evident that the land allotted to respondent no.7 was not sold by the society but it was acquired by the Government and allotted to respondent no.7 in the year 1993 and therefore, the present petition as against respondent no.7 is totally misconceived. '

21] Mr. Chhabra, learned counsel for respondent no.8 submitted that no relief has been sought as against respondent no.8 and, therefore, the petition is liable to be dismissed as against respondent no.8.

22] Mr. Dharmadhikari, learned Senior Counsel appearing submitted that the petitioner has no locus to file the writ petition challenging the allotment of the land to respondent no.9. Learned counsel further submitted that Writ Petition No. 1625/2006 cannot be treated as public interest litigation inasmuch as no public cause is espoused by filing the said petition. He further submitted that the petition lacks of basic details which even a

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public interest litigation must contain. He further submitted that even the petitioners in Writ Petition No.12/2008 have no locus to file the petition seeking reliefs prayed therein. Learned counsel further submitted that period of six years contemplated under Section 109 (1) of the Act would being from the date of Liquidator takes custody and control of all the property, effects and actionable claims to which the society is or appears to be entitled and all books, records and other documents pertaining to business of the society under sub-Section (2) and Section 109 of the Act.

Learned counsel further

submitted that period of six years would not begin from the date of appointment of the Liquidator but the period would begin only after the Liquidator takes over the control of the property effects etc., of the society. He, therefore, submitted that the period would start from December 2005 after auditor of the society submitted audited statement of accounts and

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the liquidator took control of the property, effects etc. of the Society. He further submitted that no public purpose would be served by setting aside the allotment in favour of respondent no.9 since the same has been done by adopting transparent process by respondent no.3. He further submitted that notification dated 15.1.2008 is perfectly valid and there is nothing wrong in exercise of power by the State Government pursuant to which said notification has been issued exempting the society from the provisions of the Act. Learned counsel placing reliance upon the judgment of this Court in Shivnarayan Motilal Darak Vs. R.A. Zubairy :

1971 Mh.L.J. 742 further submitted that in the judgment reported Jagannath Maruti Pisal and others Vs. District Deputy Registrar and others :

1997 C.T.J. 369 the issue as to from which date period of six years would begin was not considered and, therefore, the same would not serve as binding precedent. He further cited several authorities dealing with the aspect as to what constitutes precedent. We do not deem it

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necessary to make reference to them at this stage for the reasons stated hereinafter.

23] Mr. Kulkarni, learned counsel appearing for the intervenors submitted that petitioners in both the petitions have no locus to file the petitions and the cause espoused by the petitioners is against the interest of the workers/intervenors. According to Mr. Kulkarni, the sale in favour of respondents 6 and 9 is in the interest of workers since huge amount is due to the workers.

24] In rejoinder, Mr. Chandurkar, learned Senior Counsel for the petitioners reiterated that the petitioner has locus to file the present petition and the petitioner is not guilty of latches in seeking reliefs against the respondent. In any case, learned counsel further submitted that insofar as respondent no.9 is concerned, transfer of the land in favour of respondent no.9 is during pendency of Writ Petition No. 1625/2006 and as such the petition is not liable

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to dismissed on account of latches.

25] We have carefully considered the rival submissions, perused the record and judgments relied upon on behalf of rival parties.

26] We will not be referring to all the authorities cited but we shall make reference only to the authorities relevant for deciding the issues involved in two petitions.

27] We shall first decide whether the petitioner in Writ Petition No.1625/2006 has locus to file the writ petition and whether he is guilty of latches in seeking reliefs against respondents 5 to 8. We shall also deal with the issue as to whether the petitioners in Writ Petition No.12/2008 have locus to file the petition.

28) Insofar as Writ Petition No.1625/2006 is concerned, the same has been filed by the petitioner Dr. Raju Deoghare on the ground that

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his father late Narendra Deoghare was a pioneer in starting the first Sut Girni for the weavers community and he was instrumental in starting Nagpur Vinkar Sahakari Sut Girni Maryadit, Nagpur (' the society" for short).

29] The locus of the petitioner has to be decided in the light of the tests laid down by the Apex Court in various Judgments. In the case of Balco Employees' Union (Regd.) Vs. Union of India and others (2002) 2 SCC 333, the Apex Court in paragraphs 80 to 85 observed thus:-

80. PIL is not a pill or a panacea for all wrongs. It was essentially meant to protect basic human rights of the weak and the disadvantaged and was a procedure which was innovated where a public-spirited person files a petition in effect on behalf of such persons who on account of poverty, helplessness or economic and social disabilities could not approach the court

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for relief. There have been, in recent times, increasingly instances of abuse of PIL. Therefore, there is a need to re- emphasize the parameters within which PIL can be resorted to by a petitioner and entertained by the court. This aspect has come up for consideration before this Court and all we need to do is to recapitulate and re-emphasize the same.

81. What public interest litigation is meant to be has been explained at length in S.P. Gupta v. Union of India, Public interest litigation in that case was filed relating to the

appointment and transfer of Judges and it is in this connection that the question arose with regard to the locus standi of the petitioner to file the writ petition. While deciding this aspect, this Court examined as to what is the nature of the public interest litigation and who can initiate the same. At p. 215, Bhagwati, J.

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observed as follows: (SCC para 20)

"It is for this reason that in public interest litigation - litigation undertaken for the purpose of redressing public injury, enforcing public duty, protecting social, collective, `diffused' rights and interests or vindicating public interest, any citizen who is acting bona fide and who has sufficient interest has to be accorded standing."

82. The limitation within which the Court must act, and the caution against the abuse of the same is referred to by Bhagwati, J. at p. 219-20 as follows:

(SCC para 24)

"24. But we must be careful to see that the member of the public, who approaches the court in cases of this kind, is acting bona fide and not for personal gain or private profit or political

46

motivation or other oblique consideration. The court must not allow its process to be abused by politicians and others to delay legitimate administrative action or to gain a political objective. Andre Rabie has warned that `political pressure groups who could not achieve their aims through the

administrative process' and we might add, through the political process, `may try to use the courts to further their aims'. These are some of the dangers in public interest litigation which the court has to be careful to avoid. It is also necessary for the court to bear in mind that there is a vital distinction between locus standi and justiciability and it is not every default on the part of the State or a public authority that is justiciable. The court must take care to see that it does not overstep the limits of its judicial function and trespass into areas which are reserved to the executive and the

47

legislature by the Constitution. It is a fascinating exercise for the court to deal with public interest litigation because it is a new jurisprudence which the court is evolving, a jurisprudence which

demands judicial statesmanship and high creative ability. The frontiers of public law are expanding far and wide and new concepts and doctrines which will change the complexion of the law and which were so far as embedded in the womb of the future, are beginning to be born.

83. In Sachidanand Pandey v. State of W.B. V. Khalid, J. observed as follows :

(SCC pp.334-35, para 61)

"61. It is only when courts are apprised of gross violation of fundamental rights by a group or a class action or when basic human rights are invaded or when there are complaints of such acts as shock the judicial conscience that the courts, especially

48

this Court, should leave aside procedural shackles and hear such petitions and extend its jurisdiction under all available provisions for remedying the hardships and miseries of the needy, the underdog and the neglected. I will be second to none in extending help when such help is required. But this does not mean that the doors of this Court are always open for anyone to walk in. It is necessary to have some self-imposed restraint on public interest litigants."

84. After referring to the decision in Subhash Kumar V. State of Bihar and other cases on the point, in Janata Dal v. H.S. Chowdhary it was observed at p. 348 as follows: (SCC para

109)

"109. It is thus clear that only a person acting bona fide and having sufficient interest in the proceeding of PIL will

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alone have a locus standi and can approach the court to wipe out the tears of the poor and needy, suffering from violation of their fundamental rights, but not a person for personal gain or private profit or political motive or any oblique consideration. Similarly, a vexatious petition under the colour of PIL brought before the court for vindicating any personal grievance, deserves rejection at the threshold."

85. Referring to the litigants standing in queues waiting for the cases to be listed in courts at p. 349, Pandian, J. had observed as follows: (SCC para

110)

"[The busybodies, meddlesome interlopers, wayfarers or officious interveners having absolutely no public interest except for personal gain or private profit either for themselves or as

50

proxy of others or for any other extraneous motivation or for glare of publicity break the queue muffling their faces by wearing the mask of public interest litigation, and get into the courts by filing vexatious and frivolous petitions and thus criminally waste the valuable time of the courts and as a result of which the queue standing outside the doors of the court never moves which piquant situation creates a frustration in the minds of the genuine litigants and resultantly they lose faith in the administration of our judicial system."

Before we part with this general discussion in regard to locus standi, there is one point we would like to emphasis and it is, that cases may arise where there is undoubtedly public injury by the act or omission of the State or a public authority but such act or omission also causes a specific legal injury to an individual or to a specific class or group of individuals. In such

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cases a member of the public having sufficient interest can certainly maintain an action challenging the legality of such act or omissions, but if the person or specific class or group of persons who are primarily injured as a result of such act or omission, do not wish to claim any relief and accept such act or omission willingly and without protest, the member of the public who complains of a secondary public injury cannot maintain the action, for the effect of entertaining the action at the instance of such member of the public would be to foist a relief on the person or specific class or group of persons primarily injured, which they do not want."

(emphasis added).

30] In Dattaraj Nathuji Thaware Vs. State of Maharashtra and others : (2005)1 SCC 590, the Apex Court in paragraphs 4 to 17 observed thus:

4. When there is material to show that a petition styled as a public interest litigation is nothing but a camouflage to foster

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personal disputes, the said petition is to be thrown out. Before we grapple with the issue involved in the present case, we feel it necessary to consider the issue regarding public interest aspect. Public interest litigation which has now come to occupy an important field in the administration of law should not be "publicity interest litigation'' or "private interest litigation"

or "politics interest litigation" or the latest trend

"paise income litigation". The High Court has found that the case at hand belongs to the last category. If not properly regulated and abuse averted, it becomes also a tool in unscrupulous hands to release vendetta and wreak vengeance, as well. There must be real and genuine public interest involved in the litigation and not merely an adventure of a knight errant borne out of wishful thinking. It cannot also be invoked by a person or a body of persons to further his or their personal causes or satisfy his or their personal grudge and enmity. Courts of justice should not be allowed to be polluted by unscrupulous litigants by resorting to the

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extraordinary jurisdiction. A person acting bona fide and having sufficient interest in the proceeding of public interest litigation will alone have a locus standi and can approach the court to wipe out violation of fundamental rights and genuine infraction of statutory provisions, but not for personal gain or private profit or political motive or any oblique consideration. These aspects were highlighted by this Court in Janata Dal v. H.S. Chowdhary and Kazi Lhendup Dorji v. CBF. A writ petitioner who comes to the court for relief in public interest must come not only with clean hands like any other writ petitioner but also with a clean heart, clean mind and clean objective. (See Ramjas Foundation v. Union of India and K.R. Srinivas v. R.M. Premchand.).

5. It is necessary to take note of the meaning of the expression "public interest litigation" . In Stroud's Judicial Dictionary, Vol 4 (4^thEdn.), public interest is defined thus:

Public Interest- (1) A matter of public or general

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interest `does not mean that which is interesting as gratifying curiosity or a love of information or amusement; but that in which a class of the community have a pecuniary interest, or some interest by which their legal rights or liabilities are affected'..."

6. In Black's Law Dictionary (6^th Edn.), "public interest" is defined as follows:

"Public Interest- Something in which the public, the community at large, has some pecuniary interest, or some interest by which their legal rights or liabilities are affected. it does not mean anything so narrow as mere curiosity, or as the interests of the particular localities, which may be affected by the matters in question. Interest shared by citizens generally in affairs of local, State or national Government."

7. In Janata Dal case this Court considered the scope of public interest litigation. In para 53 of the said judgment, after

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considering what is public interest, has laid down as follows: (SCC p. 331)

"53. The expression `litigation' means a legal action including all proceedings therein, initiated in a court of law with the purpose of enforcing a right or seeking a remedy. Therefore, lexically the expression `PIL' means a legal action initiated in a court of law for the enforcement of public interest or general interest in which the public or a class of the community have pecuniary interest or some interest by which their legal rights or liabilities are affected."

8. In paras 60, 61 and 62 of the said judgment, it was pointed out as follows: (SCC p.

334)

"62. Be that as it may, it is needless to emphasis that the requirement of locus standi of a party to a litigation is mandatory; because the legal capacity of the party to any litigation whether in private or public action in relation to

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any specific remedy sought for has to be primarily ascertained at the threshold."

9. In para 98 of the said judgment, it has further been pointed out as follows: (SCC pp. 345-46)

"98. While this Court had laid down a chain of notable decisions with all emphasis at their command about the importance and significance of this newly-developed doctrine of PIL, it has also hastened to sound a red alert and a note of severe warning that courts should not allow its process to be abused by a mere busybody or a meddlesome interloper or wayfarer or officious intervener without any interest or concern except for personal gain or private profit or other oblique consideration."

10. In subsequent paras of the said judgment, it was observed as follows: (SCC p. 348, para 109)

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"109. It is thus clear that only a person acting bona fide and having sufficient interest in the proceeding of PIL will alone have a locus standi and can approach the court to wipe out the tears of the poor and needy suffering from violation of their fundamental rights, but not a person for personal gain or private profit or political motive or any oblique consideration. Similarly, a vexatious petition under the colour of PIL brought before the court for vindicating any personal grievance, deserves rejection at the threshold."

11. It is depressing to note that on account of such trumpery proceedings initiated before the courts, innumerable days are wasted, which time otherwise could have been spent for the disposal of cases of genuine litigants. Though we spare no efforts in fostering and developing the laudable concept of PIL and extending our long arm of sympathy to the poor, the ignorant, the oppressed and the needy whose fundamental rights are infringed and

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violated and whose grievances go unnoticed, unrepresented and unheard; yet we cannot avoid but express our opinion that while genuine litigants with legitimate grievances relating to civil matters involving properties worth hundreds of millions of rupees and criminal cases in which persons sentenced to death facing the fallows under untold agony and persons sentenced to life imprisonment and kept in incarceration for long years, persons suffering from undue delay in service matters - government or private, persons awaiting the disposal of cases wherein huge amounts of public avenue or unauthorised collection of tax amounts are locked up, detenus expecting their release from detention orders etc. etc. are all standing in a long serpentine queue for years with the fond hope of getting into the courts and having their grievances redressed, busybodies, meddlesome interlopers, wayfarers or officious interveners having absolutely no public interest except for personal gain or private profit either of themselves or as a proxy of others or for any other extraneous

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motivation or for glare of publicity, break the queue muffling their faces by wearing the mask of public interest litigation and get into the courts by filing vexatious and frivolous petitions and thus criminally waste the valuable time of the courts and as a result of which the queue standing outside the doors of the courts never moves, which piquant situation creates frustration in the minds of genuine litigants and resultantly they loss faith in the administration of our judicial system.

12. Public interest litigation is a weapon which has to be used with great care and circumspection and the judiciary has to be extremely careful to see that behind the beautiful veil of public interest, an ugly private malice, vested interest and/or publicity-seeking is not lurking. It is to be used as an effective weapon in the armoury of law for delivering social justice to citizens. The attractive brand name of public interest litigation should not be used for suspicious products of mischief. It

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should be aimed at redressal of genuine public wrong or public injury and not be publicity- oriented or founded on personal vendetta. As indicated above, court must be careful to see that a body of persons or member of the public, who approaches the court is acting bona fide and not for personal gain or private motive or political motivation or other oblique considerations. The court must not allow its process to be abused for oblique considerations by masked phantoms who monitor at times from behind. Some persons with vested interest indulge in the pastime of meddling with judicial process either by force of habit or from improper motives, and try to bargain for a good deal as well as to enrich themselves. Often they are actuated by a desire to win notoriety or cheap popularity. The petitions of such busybodies deserve to be thrown out by rejection at the threshold, and in appropriate cases with exemplary costs.

13. The Council for Public Interest

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Law set up by the Ford Foundation in USA defined "public interest litigation' in its Report of Public Interest Law, USA, 1976, as follows,

"Public interest law is the name that has recently been given to efforts to provide legal representation to previously unrepresented groups and interests. Such efforts have been undertaken in the recognition that ordinary marketplace for legal services fails to provide such services to significant segments of the population and to significant interests. Such groups and interests include the proper environmentalists, consumers, recial and ethinic minorities and others."

14. The court has to be satisfied about (a) the credentials of the applicant;(b) the prima facie correctness or nature of information given by him; (c) the information being not vague and indefinite. The information should show gravity and seriousness involved. Court has to strike a balance between two conflicting

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interests: (i) nobody should be allowed to indulge in wild and reckless allegations besmirching the character of others; and (ii) avoidance of public mischief and to avoid mischievous petitions seeking to assail, for oblique motives, justifiable executive actions. In such case, however, the court cannot afford to be liberal. It has to be extremely careful to see that under the guise of redressing a public grievance, it does not encroach upon the sphere reserved by the Constitution to the executive and the legislature. The court has to act ruthlessly while dealing with impostors and busybodies or meddlesome interlopers impersonating as public-spirited holy men. They masquerade as crusaders of justice. They pretend to act in the name of pro bono publico, though they have no interest of the pubic or even of their own to protect.

15. Courts must do justice by promotion of good faith, and prevent law from crafty invasions. Courts must maintain the social balance by interfering where necessary for the

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sake of justice and refuse to interfere where it is against the social interest and public good. (See State of Maharashtra v. Prabhu and A.P. State Financial Corpn. V. GAR Re-Rolling Mills.) No litigant has a right to unlimited draught on the court time and public money in order to get his affairs settled in the manner as he wishes. Easy access to justice should not be misused as a licence to file misconceived and frivolous petitions. (See Buddhi Kota Subbarao (Dr) v. K. Parasaran.] Today people rush to courts to file cases in profusion under this attractive name of public interest. They must inspire confidence in courts and among the public.

16. As noted supra, a time has come to weed out the petitions, which though titled as public interest litigations are in essence something else. It is shocking to note that courts are flooded with a large number of so-called public interest litigations where even a minuscule percentage can legitimately be called as public interest litigations. Though the

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parameters of public interest litigation have been indicated by this Court in a large number of cases, yet unmindful of the real intentions and objectives, courts are entertaining such petitions and wasting valuable judicial time which, as noted above, could be otherwise utilised for disposal of genuine cases. Though in Duryodhan Sahu (Dr.) v. Jitendra Kumar Mishra this Court held that in service matters PIls should not be entertained, the inflow of so-called PILs involving service matters continues unabated in the courts and strangely are entertained. The least the High Courts could do is to throw them out on the basis of the said decision. The other interesting aspect is that in the PIls, official documents are being annexed without even indicating as to how the petitioner came to posses them. In one case, it was noticed that an interesting answer was given as to its possession. It was stated that a packet was lying on the road and when out of curiosity the petitioner opened it, he found copies of the official documents. Apart from the sinister manner, if any, of getting such copies,

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the real brain or force behind such cases would get exposed to find out the truth and motive behind the petition. Whenever such frivolous pleas, as noted, are taken to explain possession, the court should do well not only to dismiss the petitions but also to impose exemplary costs. It would be desirable for the courts to filter out the frivolous petitions and dismiss them with costs as aforestated so that the message goes in the right direction that petitions filed with oblique motive do not have the approval of the courts.

17. In S.P. Gupta v. Union of India it was emphatically pointed out that the relaxation of the rule of locus standi in the field of PIL does not given any right to a busybody or meddlesome interloper to approach the court under the guise of a public interest litigant. It has also left the following note of caution :(SCC p. 219, para 24).

24. But we must be careful to see that the member of the public, who approaches the court

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in cases of this kind, is acting bona fide and not for personal gain or private profit or political motivation or other oblique consideration. The court must not allow its process to be abused by politicians and others to delay legitimate administrative action or to gain a political objective."

31. If the locus of the petitioner to file public interest litigation is tested on the touchstone of the principles laid down by the Apex Court in the above two cases it is evident that the petition filed by the petitioner cannot be said to be in public interest. We fail to understand as to how the petitioner can espouse the cause of the workers or members of the Society on the ground that his father was instrumental in establishing the society which has gone in liquidation. Merely because the father of the petitioner was instrumental in establishing the society, by itself, would not give locus to the petitioner to file the petitioner seeking reliefs as sought for by him.

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We find that the petitioner has no locus to espouse the cause either of the members or the workers of the society, who are themselves capable of taking appropriate action in the matter if they are aggrieved by the action of the Liquidator. Having regard to the tests laid down by the Apex Court in the cases of Balco Employees' Union (Regd) (supra) and Dattaraj Thaware (supra) after considering several earlier judgments of the Apex Court in relation to public interest litigation, we are of the considered opinion that the petitioner has no locus to file the present petition by way of public interest litigation. Moreover, the petitioner is guilty of gross latches insofar as the reliefs against respondents 5, 7 and 8 are concerned. Admittedly, allotment/transfer of the lands of the society in favour of respondents 5, 7 and 8 were done during the period 1986 to 1993 much before the Liquidator was appointed. There is absolutely no reason as to why the petitioner chose to file the petition in the year 2006.

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Moreover, the affidavit filed on behalf of the Collector, Nagpur pursuant to the directions given by this Court discloses that an area of

2.47 hectors was surrendered by the society to the Government on payment of Rs. 34,804/- and subsequently the land was allotted to Lokmanya Tilak Jankalyan Sikshan Sanstha, Nagpur - respondent no.7 by the Revenue and Forest Department vide order dated 26.3.1993. Thus, the petitioner is guilty of gross latches in approaching this Court.

32. Insofar as respondent no.6 is concerned, affidavit filed by the Collector and the Liquidator discloses that an area admeasuring 21 acres was sold to respondent no.6 by sale deed dated 26^thOctober, 2004 for consideration of Rs. 12.50 crores.

33] In the case of Chairman & MD. BPL Ltd. Vs. S.P. Gururaja and others (2003) 8 SCC 567 the Apex Court set aside the judgment of Kerla High Court by which the petition

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challenging allotment made in the year 1980 was set aside. The Apex Court in paragraph 32 held that the High Court has committed a manifest error by not taking into consideration that the delay had defeated equity since the allotment was made in the year 1995 and the writ petition was filed after one year by which time the Company had not only taken possession of the land but also made sufficient investment and, therefore, delay should have been considered of vital importance.

In the case of R & M Trust Vs. Kohra 2005

(3) SCC 91 the Apex Court set aside the judgment of Karnataka High Court on the ground of delay and locus. In the said case dealing with the aspect of delay and locus of the respondent the Apex Court observed thus in paragraphs 34, 35 and 37:

"34. There is no doubt that delay is a very important factor while exercising jurisdiction under Article 226 of the Constitution. We cannot

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disturb the third-party interest created on account of delay. Even otherwise also why should the Court come to the rescue of a person who is not vigilant of his rights?

35. We are of the opinion that delay in the case is equally fatal, the construction already started by the appellant in 1987 and building had come up to three floors. Thereafter it was stopped in 1988 and in March 1991 it resumed after permission was granted. The writ petition was filed in November 1991 meanwhile construction was almost complete. Therefore, delay was fatal in the present case and learned Single Judge rightly held it to be so. It was also brought to our notice that 46 multi-storey buildings have come up in this area. Learned counsel has produced photographs to show that buildings more than three and four floors have been constructed in and around this area.

37. It was also contended by learned counsel for the appellant that the appellant had no locus standi to file this petition as the present association is neither a representative

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association nor a registered body. Therefore, the Court should not have entertained the PIL on behalf of such unregistered and unrecognised body. It is true that locus in such public interest litigation is a very relevant factor and the Court should always inquire into the locus of person before entertaining such petition. We have already observed above that public interest litigation should be entertained in very rare cases. "

34] In the present case, the affidavit filed on behalf of respondent no.6 discloses that after sale deed was executed in its favour, it has spent substantial amount towards development. It is the contention of respondent no.6 that the buildings have already been partly constructed on the land sold to it when the order of status quo was passed on 26.10.2008 although the buildings are not ready for occupation. It is the contention of respondent no.6 that substantial amount has been spent in the construction of the buildings. This being the position, we are of the

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considered opinion that the petitioner is also guilty of gross latches in filing the petition challenging the sale in favour of respondent no.

6. Pursuant to the sale in favour of respondent no.6, respondent no.6 has carried out substantial development in the property sold and as such it would not be proper exercise of jurisdiction by this Court to interfere with the sale at this stage. Moreover, as held by the Division Bench of this Court in the case of Shivnarayan Vs. R.A. Zuberi 1971 Mh. L. J. 742. Even in the absence of an order passed by the Registrar extending the period the liquidation proceedings shall be deemed to be terminated only on expiry of 10 years from the date of winding of order in the year 1996 in the present case and as such the sale of the year 2004 in favour of respondent no.6 was within a period of 10 years. On this ground also the sale in favour of respondent no.6 can not be faulted. However, the issue regarding sale of the land for Rs. 12.50 crores, at the rate lower than that fixed by the Government shall be considered when we deal

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with Writ Petition No.12/2008.

35] Insofar as the allotment of land admeasuring 20.20 acres in favour of respondent no.9 by respondent no.3 pursuant to the notice dated 17.12.2007 is concerned no doubt, the same has been challenged by way of an amendment to the petition since it was done after filing of the petition. As such the petitioner cannot be said to be guilty of latches. But, we have already held that the petitioner has no locus to file the petition as public interest litigation. Hence, we would not go into this aspect at the instance of the petitioner.

36] We, therefore, hold that the petitioner in Writ Petition No. 1625/2006 has no locus to file the petition. Having regard to the reliefs sought by the petitioner, the petition cannot be said to be a good relator for filing the petition by way of public interest litigation.

37] Insofar as the petitioners in Writ

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Petition No.12/2008 are concerned, their locus has also been challenged by learned counsel appearing on behalf of the respondents and the intervenors. There is no dispute that the petitioners are the members of the society. By this petition, the petitioners have primarily challenged the sale of lands to respondent no.5 KSL Industries Limited and respondent no.7 Nirmal Ujjawal Pat Sanstha Maryadit.

38] Section 110 of Maharashtra Cooperative Societies Act, 1960 reads thus:-

"110. Disposal of surplus assets :

The surplus assets, as shown in the final report of the Liquidator of a society which has been wound up, may either be divided by the Registrar, with the previous sanction of the State Government, amongst its members in such manner as may be prescribed or be devoted to any object or objects provided in the bye-laws of the society, if they specify that such a surplus shall be utilised for the

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particular purpose or may be utilised for both the purpose. Where the surplus is not so divided amongst the members and the society has no such by-laws, the surplus shall vest in the Registrar, who shall hold it in trust and shall transfer it to the reserve fund of a new society registered with a similar object, and serving more or less an area which the society, to which the surplus belonged was serving :

Provided that, where no such society exists or is registered within three years of the cancellation of the society whose surplus is vested in the Registrar, Registrar may distribute the surplus, in the manner he thinks best, amongst any or all of the following:-

(a) an object of public utility and of local interest as may be recommended by the members in general meeting held under the preceding section;

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(b) a federal society with similar objects to which the cancelled society was eligible for affiliation or, where no federal society exists, the State federal society which may be notified in this behalf by the State Government ; and

(c) any charitable purpose as defined in section 2of the Charitable Endownments Act,

1890.

39] A bare perusal of Section 110 of the Act discloses that the Registrar may divide surplus assets as shown in the report of Liquidator in the society which is wound up amongst its members in such manner as may be prescribed with the previous sanction of the State Government. Registrar may also devote the surplus assets to any

object/objects provided in the bye-laws of the society. If the bye-laws specify that such a surplus shall be utilised for the particular purpose. Thus, it is clear that in case the society is wound up and final report is

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submitted by the Liquidator of a society, the Registrar may divide surplus assets amongst its members. Therefore, in our considered opinion, Section 110 of the Act gives locus to the petitioners, who are members to the society to file the present petition challenging the action of the Liquidator in selling the property of the Society on the ground that the property has been sold by the Liquidator in violation of the provisions of the Act. We are, therefore, unable to accept the submissions made by learned counsel for the respondents that the petitioners have no locus to file the present petition.

40] Insofar as the sale of 21 acres of land to respondent no.6 by the sale deed dated 26.10.2004 is concerned, it is not in dispute that the market rate of the land admeasuring 21 acres sold to the petitioner was assessed @ Rs. 14,54,32,496/- by the Town Planning Department of State Government but the land was sold for Rs.

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12.50 crores to respondent no.6 after holding negotiations with all the bidders.

41] As stated above, during the course of arguments Mr. Voditel, learned counsel for respondent no.6 upon taking instructions from his client fairly stated that respondent no.6 is ready and willing to deposit difference between the market value and the consideration for which the land was sold to the society. We find no difficulty in accepting the statement made by Mr. Voditel, more particularly, having regard to the fact that the sale was in favour of respondent no.6 was effected on 26.10.2004 and respondent no.7 has invested substantial amount in carrying out development on the property. Therefore, we are not inclined to grant any relief in favour of the petitioners against respondent no.6 at this stage on the ground of latches. We accept the statement of Mr. Voditel made on behalf of his client - respondent no.6 that it is ready to deposit

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balance amount of Rs. 2,04,32,496/- (Rupees two crores four lacs thirty two thousand four hundred and ninety six only) within a reasonable time.

42] The issues which arises for consideration is whether the transfer of the property in favour of respondent no.5 pursuant to the notice dated 17.12.2007 inviting tenders for consideration of Rs. 81.20 crores is legal and whether the notification dated 15.1.2008 issued by the State Government in exercise of powers under Section 157 of the Act is legal. Since two issues are inter-connected, we shall deal with them together.

43] In order to appreciate the rival contentions in connection with the two issues referred to above, it would be appropriate to quote the relevant sections namely Sections 109 as amended in the year 1986 and prior to 1986 and Section 157 of the Act.

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Section 109 as amended in 1986 reads thus:

"109. Termination of liquidation proceedings:

(1) The winding up proceedings of a society shall be closed [as soon as practicable within six years] from the date [the Liquidator takes over the custody or control of all the property, effects and actionable claims 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:

Provided that, the Registrar shall not grant any extension for a period exceeding one year at a time and four years in the aggregate, and shall, immediately after the expiry of [ten years] from the date [aforesaid], deem that the liquidation

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proceedings have been terminated, and pass an order terminating the liquidator proceedings.

Explanation - In the case of a society which is under liquidation at the commencement of the Maharashtra Co-operative Societies (Second Amendment) Act, 1985 the period of six years shall be deemed to have commenced from the date on which the Liquidator took over the custody or control as aforesaid].

(2) Notwithstanding anything contained in the foregoing sub-section, the Registrar shall terminate the liquidation proceedings on receipt of the final report from the Liquidator. The final report of the Liquidator shall state that the liquidation proceedings of the society have been closed, and how the winding up has been conducted and the property of and the claims of the society have been disposed of, and shall include a statement showing a

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summary of the account of the winding up including the cost of liquidation, the amount of any), standing to the credit of the society in liquidation, after paying of its liabilities including the share or interest of members, and suggest how the surplus should be utilised.

(3) The Registrar, on receipt of the final report from the Liquidator, shall direct the Liquidator to convene a general meeting of the members of the society for recording his final report.

Section 109 prior to amendment in 1986 read thus:

"109 (1) The winding up proceedings of a society shall be closed [as soon as practicable within six years] from the date of the order of the winding up, unless the period is extended by the Registrar:

Provided that, the Registrar shall not grant any extension for a period exceeding one

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year at a time and four years in the aggregate, and shall, immediately after the expiry of [ten years] from the date of the order for winding up of the society, deem that the liquidation proceedings have been terminated, and pass an order terminating the liquidation proceedings.

Explanation : In the case of a society which is under liquidation at the commencement of this Act, an order for the winding up of the society shall be deemed for the purpose of this section to have been passed on the date of such commencement:

(2) Notwithstanding anything contained in the foregoing sub-section, the Registrar shall terminate the liquidation proceedings on receipt of the final report from the Liquidator. The final report of the Liquidator shall state that the liquidation proceedings of the society have been closed, and how the winding up has been conducted and the property of and the

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claims of the society have been disposed of, and shall include a statement showing a summary of the account of the winding up including the cost of liquidation, the amount of any), standing to the credit of the society in liquidation, after paying of its liabilities including the share or interest of members, and suggest how the surplus should be utilised.

(3) The Registrar, on receipt of the final report from the Liquidator, shall direct the Liquidator to convene a general meeting of the members of the society for recording his final report.

Section 157 of the Act read thus;:

Power to exempt societies from provisions of Act.

The State Government may, by general or special order [****] exempt any society or class of societies from any of the provisions of this Act. [or of the rules made

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thereunder.] or may direct that such provisions shall apply to such society or class of societies with such modifications not affecting the substance thereof as may be specified in the order:

Provided that, no order to the prejudice of any society shall be passed without an opportunity being given to such society to represent its case.

44] We shall now deal with the challenge to notification dated 15.1.2008 issued by respondent no.2 in exercise of power under Section 157 of the Act. The challenge to the said notification is on two grounds, firstly on the ground that the State Government has no jurisdiction to issue notification retrospectively validating the continuation of the Liquidator after the period of 10 years and secondly, on the ground that before issuing notification the society was not consulted as required under Section 157 of the Act.

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In support of the submission that the State Government has no power to issue the impugned notification with retrospective effect, Mr. Chandurkar has relied upon Full Bench judgment of Madhya Pradesh High Court in the case The Collective Farming Society Ltd. and others Vs. State of Madhya Pradesh and others : AIR 1974 MP 59. In the said case the issue before the Full Bench of Madhya Pradesh High Court was whether under Section 91 of the Madhya Pradesh Cooperative Societies Act, 1961 ("the MP Act" for short) the State Government had express or implicit power to make an order having retrospective effect. Section 91 of the said MP Act read thus:-

"Power to exempt societies from conditions as to registration :-

"Power to exempt societies from conditions as to registration and provisions of the Act- Notwithstanding anything contained in this Act, the State Government may, by a

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general or special order in each case and subject to such conditions, if any, as it may impose, exempt any society or class of societies from any of the provisions of this Act or may direct that such provisions shall apply to such society or class or societies with such modifications as may be specified in the order".

Dealing with the contentions of the petitioners that the State government had no power to extend the period of supersession with retrospective effect, in paragraphs 37 and 38 the Court observed thus:-

"37. The next contention for the petitioners is that the State Government had no power to extend the period of supersession with retrospective effect. In our opinion, this contention must be accepted. By order dated May 24, 1971 the period of supersession was extended with effect from November 10, 1970. By

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the second order dated October 24, 1972 the period of supersession was extended with effect from November 10, 1971. And, by the last order dated May 26, 1973 the period of supersession was extended with effect from December 10, 1972. It is only a sovereign legislature which can enact a law with retrospective operation. The Parliament can delegate it legislative power within the recognised limits. Where powers delegated the legislature to a particular authority, it will depend upon the language employed in the statutory provision which delegates such power, whether it has empowered, in express terms or by necessary implication, such person or authority to exercise that power with retrospective effect. But where no such language is to be found, the person or authority, exercising delegated legislative functions, cannot make order, which can operate with

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retrospective effect. When power is delegated to an authority by the legislature such authority has no power to exercise it with retrospective effect. In Indramani v. W.R. Natu (1963) 1 SCR 721 - (AIR 1963 SC 274) Subba Rao.,J. In his dissenting judgment, observed:-

"Unless a statute confers on the government an express power to make an order with retrospective effect, it cannot exercise such a power."

38 In I.T. Officer, Alleppey v. M.S. Ponnoose, AIR 1970 SC 385 it was laid down:-

"The Parliament can delegate its legislative power within the recognized limits. Where any rule or regulation is made by any person or authority to whom such powers have been delegated by the legislature it may or may not be possible to make the name so as to give retrospective

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operation. It will depend on the language employed in the statutory provision which may in express terms or by necessary implication empower the authority concerned to make a rule or regulation with retrospective effect. But where no such language is to be found it has been held by the Courts that the person or authority exercising subordinate legislative functions cannot make a rule, regulation or bye-law which can operate with

retrospective effect."

In that ruling. Grover, J., who spoke for the Court, referred to the view of Subba Rao, J.,(supra) and observed that in that case the majority did not express any different opinion on the point. See also Hukam Chand v. Union of India, (1972)

2 SCC 601 - (AIR 1972 SC 2427). We are therefore, of the opinion that all the three orders passed by the State Government are ultra vires and must be struck down. "

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45] Perusal of the above referred judgment, more particularly, paragraphs 37 and 38 which have been quoted above clearly discloses that the Full Bench of the M.P. High Court after placing reliance upon the judgments of the Apex Court held that the State Government had no power to extend the period of supersession retrospectively. Reliance was placed upon the judgment of the Apex Court in Indramani v. W.R. Natu (AIR 1963 SC 274) in which the Apex Court has held that unless the statute confers on the Government an express power to make an order with retrospective effect, it cannot exercise the power. Reliance was also placed on the judgment of the Apex Court in the case of I.T. Officer, Alleppey v. M. C. Ponnoose: AIR 1970 SC 385 wherein the Apex Court has held that the Parliament can delegate its legislative power within the recognized limits. Where any rule or regulation is made by any

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person or authority to whom such powers have been delegated by the legislature it may or may not be possible to make the same so as to give retrospective operation. It will depend on the language employed in the statutory provision which may in express terms or by necessary implication empower the authority concerned to make a rule or regulation with retrospective effect. But where no such language is to be found it has been held by the Courts that the person or authority exercising subordinate legislative functions cannot make a rule, regulation or bye-law which can operate with retrospective effect."

46] In our considered opinion, the ratio laid down in the above referred judgment of the Madhya Pradesh High Court, which was delivered after considering the Apex Court judgment is squarely applicable in the present case. The language of Section 157 of the Act is clear and unambiguous. Section 157 of the

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Act does not give power to the State Government to validate continuation of Liquidator after his period is over in terms of Section 109 of the Act.

In the judgment of India Sugars and and Refineries Ltd, Hospet vs. State of Mysore and others : AIR 1960 Mysore 326 relied upon by Mr. Chandurkar, Mysore High Court has held that the power conferred by the legislature on the subsidiary body, to issue notification cannot be exercised retrospectively unless such a power is expressly conferred. In paragraph 13 of the said judgment, it has been held that unless a power to legislate conferred on the executive body by the Legislature, expressly mentions that such power can be exercised retrospectively, it can only be exercised prospectively. In paragraph 14 the High Court held that there is a difference in this respect between the power of Legislative body and that of the delegated authority e.g. executive Government. A Legislate body can

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always legislate retrospectively unless there is a prohibition under the Constitution which has created it. In the said case the issue arose as to whether Rules framed by Madras Sugar Factories Control Act 1949 the government could levy cess retrospectively. Mysore High Court held that there was no such power vested in the Government. The law laid down in this judgment is also squarely applicable in the present case.

47] By impugned notification dated 15.1.2008 respondent no.2 has sought to validate continuation of Liquidator beyond the period of 10 years. A bare perusal of the notification dated 15.1.2008 discloses that it was issued because the order of winding up was passed on 9.5.1996 and the period of 10 years had expired on 9.6.2006. The notification further discloses that the Government to issue said notification because there were matters of the Society pending in the Courts and, therefore, it was necessary to

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sell the property of the society in order to make payment to the workers and other creditors of the society. The Government, therefore, thought it fit to exempt the society from the provisions of Section 109(1) of the Act by extending the period of Liquidator from 9.5.2006 to 8.5.2008. Ex facie, the notification has been issued on the premise that the period of Liquidator had expired on 9.5.2006 and, therefore, it was necessary to extend the period for a period of two years. It is, therefore, evident that the State Government has exercised the power under Section 157 of the Act with retrospective effect, which the State Government had no authority. We are of the considered opinion that having regard to the language of Section 157 of the Act, the State Government is not entitled to issue any notification with retrospective effect and since the impugned notification has effect of validating continuation of Liquidator with retrospective effect, the same is patently illegal and, therefore, it cannot be sustained.

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48] It is pertinent to note that the impugned notification came to be passed after the Liquidator of the Society by communication dated 11.12.2006 addressed to the Director of Textiles, Government of Maharashtra, sought exemption under Section 157 of the Act. By the said communication the Liquidator informed the Director of Textiles about pendency of Writ Petition No.3234/2006 filed by the Liquidator against the order of Industrial Court dated 23.3.2006 holding that the services of the employees of the mills were brought to end by adopting due process of law. The Liquidator further informed that unless the employees' dues are finally decided, he could not undertake settling the dues of others i.e. Government loans, etc.

49] It is also pertinent to note that as the period of liquidation proceeding was over the Government thought that it was necessary to exempt the society from operation of

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Section 109 of the Act for a period of two years. Therefore, it is also evident that the Government was of the opinion that period of 10 years under Section 109 of the Act was over and, therefore, it was necessary to exempt the society from provision of Section 109(1) of the Act.

50] We are conscious of the fact that striking down the notification dated 15.1.2008 may cause a state of confusion inasmuch as admittedly, the Liquidator has not submitted final report in terms of the provisions of the Act. Since the challenge to the notification dated 15.1.2008 is on the ground that the State Government was not competent to issue the notification retrospectively and the challenge has to be upheld in the light of settled law laid down by the Apex Court, which has been referred to, we have no other alternative but to quash the notification dated 15.1.2008 since the Government had no authority to issue such notification. If the State

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Government was serious in protecting the rights of the workmen by extending the period of Liquidator, the State Government ought to have passed such a notification extending the period of Liquidator prior to the expiry of the term of the Liquidator.

51] We shall now deal with the stand taken on behalf of respondent no.3 and the learned counsel for the State Government during arguments that it was not necessary for the State Government to issue notification dated 15.1.2008 since the period of six years in terms of Section 109 of the Act commences from 31.12.2005. This stand has been taken, for the first time, in the affidavit dated 27.8.2008 filed by the Liquidator. We fail to understand as to how the Liquidator could have taken such a stand which is contrary stand taken by the State Government as is evident from the notification dated 15.1.2008. The impugned notification has been issued by the State Government on the premise that the

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period of 10 years contemplated under Section 109 of the Act has elapsed and, therefore, the Liquidator had ceased to have jurisdiction after the period of 10 years was over. As stated above, by the said notification the period of Liquidator has been extended by two years with effect from 9.5.2006. It is also pertinent to note that the impugned notification came to be issued pursuant to the communication dated 11.12.2005 addressed to the Director of Textiles, inter alia, seeking exemption under Section 157 of the Act. The record discloses that the communication dated 11.12.2005 was addressed by Shri Nitin Vasantrao Dahibhate, who has been functioning as Liquidator from 2005. We are really surprised that such a stand which is contrary to the stand taken by the Government in the replies filed by the Government, has been taken by Shri Dahibhate, the Liquidator, who himself had addressed communication dated 11.12.2005 stating, inter alia, that it was necessary to exempt the society from the provisions of the

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Act since the period under Section 109 of the Act was over. We are constrained to make such observation since in none of the replies filed on behalf of the State Government such a stand has been taken. Even on merits, we do not find any substance in the stand taken by the Liquidator that the period of six years commenced from 31.12.2005. According to the Liquidator, by communication dated 13.4.2005 he requested the Special Auditor to conduct audit of the society and the Special Auditor prepared audit report, balance-sheet and submitted it on 31.12.2005. According to the Liquidator, since he had received audit report and balance-sheet on 31.12.2005 period of six years should be counted from 31.12.2005. This stand is patently contrary to a plain reading of Section 109 of the Act as amended. No doubt by amendment of 1986, the period of six years has to be computed from the date of Liquidator takes over the custody or control of all the property, effects and actionable claims to which the society is or

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appears to be entitled and of all books, records and other documents pertaining to the business of the society. It is difficult to believe that the Liquidator effected sale of 21 acres of land in the year 2004 without having control, custody of the property, books and records of the society. In any case, there is absolutely no other material placed on record by the Liquidator for us to ascertain as to on which date the Liquidator took over the custody or control of the property, effects and actionable claims etc of the society. In absence of any such data, we have no other alternative than to hold that the period of 10 years would commence from the date of appointment of the Liquidator for the society i. e. 9.5.1996.

52] In the case of Jagannath Maruti Pisal and others Vs. District Deputy Registrary and others (supra) the Division Bench of this Court interpreted Section 109 of the Act as it stood prior to its amendment in the year 1986 held that winding up proceeding of co-operative

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society must be deemed to have been closed in the eyes of law after completion of six years from the date on which the society was wound up, in the absence of any order passed by Registrar extending the period of one year at a time and four years in the aggregate. In the case of Shivnarayan Motilal Darak Vs. R. A. Zubairy : 1971 Mh.L.J. 742(supra), the Division bench of this Court considering the provisions of Section 109 of the Act as it stood prior to Amendment of 1986, held that liquidation proceeding shall be deemed to be terminated upon expiry of 10 years from the date of winding up of the order and merely because the Registrar had failed to to exercise his power to grant extension as it required by proviso to Section 109 (1) of the Act, such failure would not result into termination of liquidation proceeding, after six years. The Division Bench held that Section 109(1) of the Act if considered with the proviso thereto makes it abundant clear that in

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the eyes of law liquidation proceeding shall be deemed to be terminated on the expiry of 10 years from the date of winding up of the order.

The learned Single Judge of this

Court in the case of Krishnanath A. Prabhau Desai Vs. State of Goa and others : 2007 (6) Mh.L.J. 106 (supra) held that after expiry of maximum period prescribed under Section 109 of the Act winding up proceedings are deemed to have been terminated. Thus, the consistent view of this Court is that under Section 109 of the Act the liquidation proceedings are deemed to have been terminated upon expiry of maximum period stipulated therein. No doubt, in terms of amendment effected in the year 1986 the period of ten years has to be computed from the date of Liquidator takes custody or control of the property, effects and actionable claims etc. But in the absence of any date having been placed before us and also having regard to the fact that the

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Government itself has issued impugned notification dated 15.1.2008 exempting society from the provisions of 109(1) of the Act, the only conclusion that can be drawn is a period of the Liquidator was over on 9.5.2006. We have already held that we do not find any merit in the stand taken by the Liquidator that the period has to be reckoned from 31.12.2005 as audit report and the statements of accounts were submitted to the Liquidator. The necessary sequitur is that the Liquidator had no authority to effect the sale of the property of the society to respondent no.5 by inviting tenders in terms of notice dated 17.12.2007.

53] We shall now deal with the submission advanced by Mr. Kaptan that even if it is held that the Liquidator had no power to publish notice for sale property of the society in the year 2000 since his period had expired still the sale cannot be set aside since the entire transaction regarding sale of 20.20 acres of land to respondent no.5 was with the

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approval of the Additional Registrar and the State Government. We find absolutely no merit in the said submission.

Once the period prescribed under Section 109 of the Act is over there is absolutely no power either in the Additional Registrar or the State Government to effect sale of the property before the liquidator submits the final report, in terms of sub section (3) to Section 109 of the Act the Registrar on receipt of final report from the Liquidator to direct the Liquidator to convene general meeting of the society for recording his final report. In terms of Section 110 of the Act surplus assets as shown in the final report by the Liquidator which has been wound up may be divided by the Registrar, amongst its members with the previous sanction of the State Government or may be devoted to any object or objects provided in the bye-laws of the society, if they specify that such a surplus shall be utilised for the particular purpose or

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may be utilised for both the purpose and if surplus is not so divided amongst the members and the society has no such bye-laws, the surplus shall vest in the Registrar, who shall hold it in trust and shall transfer it to the reserve fund of a new society registered with a similar object, and serving more or less an area which the society, to which the surplus belonged was serving. In case no such society exists or is registered within three years of the cancellation of the society whose surplus is vested in the Registrar, the Registrar may distribute the surplus, as provided in the proviso to Section 110 of the Act. Thus, after conclusion of liquidation proceeding the Liquidator has to submit final report and the Registrar has to deal with the surplus assets of the society in terms of Section 110 of the Act. There is no provision in the Act, which empowers either the Additional Registrar or Registrar or the State Government to sell the property even before the final report is submitted by the Liquidator. Thus, we do not

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find any merit in the submission of Mr. Kaptan that even if it is held that maximum period of 10 years had expired the sale is not liable to be set aside and the transfer of land to respondent no.5 is not liable to be set aside on the ground that the same was with the concurrence of the Additional Registrar and the State Government.

54] In view of the above discussion, we dispose of both the writ petitions in the following terms:-

(i) Writ Petition No.1625/2006 stands dismissed with costs which are quantified at Rs. 2000/- (Rs. Thousand only) each in favour of the respondent nos. 1, 2, 5 to

10.

(ii) Writ Petition No. 12/2008 is partly allowed.

(iii) The impugned notification dated 15.1.2008 and subsequent notifications dated 23.5.2008 and 8.5.2009 which are

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consequential are also quashed and set aside.

(iv) The notice inviting tender dated 17.12.2007, consequential allotment of 20 acres of land of the society to respondent no.5 and the action of respondent no.3 in handing over possession of the said plot to respondent no.5 are quashed and set aside. Respondent no.5 shall hand over possession of 20 acres of land, plants and machinery etc., to respondent no.3 within a period of eight weeks simultaneously with handing over the possession of the plot along with plants, machinery etc., respondent no.3 shall refund amount of Rs. 81.10 crores to respondent no.5 along with interest, if any, accrued thereon.

(v) The Registrar shall pass order in terms of Section 109(1) of the Act

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terminating the liquidation proceedings in respect of the society.

(vi) Writ Petition stands dismissed as against respondent no.6.

(vii) Respondent no.7 shall deposit an amount of Rs. 20432496/- (Rs. Two crores four lakhs thirty two thousand four hundred and ninety six only) being difference between market rate of the land sold to respondent no.7 and the consideration for which the land was sold to respondent no.7 with the Registrar within a period of eight weeks and after the amount is deposited, the status-quo order shall stand vacated respondent no. 7 shall be at liberty to carry out construction of the buildings. In other words, subject to deposit of the aforesaid amount, the writ petition stands dismissed as against respondent no.7.

(viii) All the interim orders

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passed in both the petitions stand vacated.

JUDGE JUDGE

Ambulkar