Nashik Zilla Sarkari & Parishad Karmachari Sahakari Bank Niyamit Ltd. v. The State of Maharashtra

8. Appearing for Petitioners, Mr. Nitin Gaware the learned counsel would submit that the directives issued by the SCEA vide impugned communication are wholly without jurisdiction. That Section 73CB of the Act of 1960 does not vest jurisdiction in SCEA to issue directives for deletion of names of retired employees, as the same would have direct effect on their right to remain as a member of the society. He would draw our attention towards the provisions of the Maharashtra Cooperative Societies (Election of Committee) Rules 2014 (Rules of 2014) to submit that there is elaborate procedure prescribed for preparation of provisional list of voters. That there is an inbuilt mechanism of raising objections for preparation of provisional and final list of voters under the Rules and that therefore till commencement of the stage for preparation of provisional list of voters, there was no occasion for the SCEA to issue general directives for deletion of names of retired employees from provisional list of voters. That such an action on the part of SCEA amounts to putting a cart before horse. That SCEA has essentially tinkered with membership register of Petitioner No.1 Bank. He would submit that deletion of names of retired employees from provisional voters list would automatically entail cancellation of their membership. Relying on provisions of Section 25A of the Act of 1960, Mr. Gaware would contend that only the Registrar has power to decide issue of membership and that the SCEA has no jurisdiction in that regard. He would submit that there is a detail procedure prescribed for striking off any name from membership register and that unless such procedure is followed, names of members of Petitioner No.-1 Bank cannot be knocked off by issuing general direction by the SCEA. That Petitioner No.1-Bank has issued share certificates to its members and cancelation of membership would result in cancellation of share certificates and refund of share money to such members. Unless such an exercise undertaken, SCEA could not have issued a general direction which would have an impact on membership of Petitioner No.1 Bank.

9. Mr. Gaware would further submit that provisions of Section 144-5A cannot have the effect on right to vote by retired members of Petitioner No.1-Bank. That the concept of entitlement of a nominal members to keep deposits is different than their inherent right to vote in election as members of the bank. That it is the right of the Petitioner No.1 Bank to decide as to whom to admit as its members and that SCEA cannot take any decision in that regard. Mr. Gaware would therefore urge that the general directives issued by the SCEA be set aside and that the provisional voters list of Petitioner No.1-Bank be prepared by including the names of even retired members. He would further urge that as and when occasion arises for raising any objection to provisional list of voters, all questions with regard to entitlement of members of Respondent No.1 Bank to vote be left open to be decided by the appropriate authority.

10. Mr. Patil-Bankar, the learned counsel appearing for State Cooperative Election Officer would rely on the judgment delivered by a Single Judge of this Court (Sandeep V. Marne, J.) in Laxman Dattatray Jadhav and Ors. Vs. Taluka Co-Operative Election Officer and the Petition No.11351 of 2022 decided on 22 November 2022. He would submit that all issues involved in the present petition are squarely covered by the judgment and that Petitioners’ petition therefore deserves to be dismissed. Additionally he would submit that deletion of names from provisional list of voters does not amount to removal of names of members from membership register under Section 25A of the Act of

1960. That failure on the part of concerned Salary Earners Societies to remove names of retired employees from register of regular members was resulting in their participation in election process by casting votes in elections despite specific prohibition under Section 27(8) of the Act of 1960 and that therefore the SCEA is required to step in and issue general directives to ensure compliance of the provisions of Section 144-5A and 27(8) of the Act of 1960. He would however submit that since salary earners’ credit cooperative societies can admit a retired employee as a nominal member, SCEA has not issued any direction about membership register of such societies. That the requisite action for classifying retired employee of such societies will have to be taken by the Registrars. However with a view to prevent such retired employees from voting in elections, SCEA was required to issue general directives. Inviting our attention towards Rule 6 of the Rules 2014, he would submit that what is required to be prepared is ‘a provisional list of voters’ and therefore issue of membership becomes wholly irrelevant. The directives issued by the SCEA did not apply to register of membership but is restricted to voters list under Rule 6. He would invite our attention towards the provisions of Section 73CB of the Act of 1960 to contend that the SCEA is vested with the jurisdiction inter alia to prepare the electoral roll and that therefore the directives issued by the SCEA by communication dated 10 February 2023 are in tune with the statutory frame work. He would pray for dismissal of the petition.

11. Intervention application No.7895 of 2023 is filed by Shri. Nilesh Yadavrao Deshmukh & Ors. seeking intervention and vacation of interim order passed in the present petition. Mr. Deore learned counsel appearing for intervener has adopted submissions of Mr. Bankar.

12. Mr. Patel, the learned Addl. Government Pleader would also oppose the petition and rely upon judgment in Laxman Dattatray Jadhav in support of his contentions.

13. After attention of Mr. Gaware was drawn to the judgment in Laxman Dattatray Jadhav, in rejoinder he would submit that the judgment is not applicable to the present petition and that he would urge additional points to convince this court to take a different view than the one taken in Laxman Dattatray Jadhav. Mr. Gaware would submit that the judgment in Laxman Dattatray Jadhav deals with elections of ‘salary earners co-operative credit society’ whereas the Petitioner in the present case is a ‘Co-operative Bank’. He would further submit that in Laxman Dattatray Jadhav, the process of preparation of provisional voters list was undertaken and after lodging of a complaint against such provisional list, the Taluka Co-Operative Election Officer had passed an order directing deletion of names of retired employees from provisional voters list. That in the present case the process of preparation of provisional voters list of Respondent No.1 Bank is yet to commence and that therefore there was no occasion for the SCEA to precipitate the matter.

14. Rival contentions of the parties now fall for our consideration.

15. It must be observed at the very outset that the issue of jurisdiction of SCEA to direct deletion of names of retired employees of salary earners’ credit cooperative societies from provisional list of voters has been decided by this court in Laxman Dattatray Jadhav (supra). In that case, it is held that the Election Officer possess jurisdiction to direct such deletion. This court has further held that retired employee of a salary earner’s co-operative credit society can only become a nominal member of such society and does not have right to vote. Since the judgment in Laxman Dattatraya Jadhav (supra) has a direct bearing on the issues involved in the present petition, it would be apposite to reproduce the relevant portion of the judgment as under:

2. The issue that has attracted the attention of this court is, whether an employee can continue as member of Salary Earners' Credit Co-operative Society and whether his name can be continued in voters list after his retirement from service.

3. The issue arises on account of order dated 12.11.2022 passed by the Taluka Co-operative Election Officer and the Assistant Registrar of Cooperative Societies, Parbhani directing deletion of names of petitioners from voters list on account of their retirements from service.

12. After having heard the learned counsel for the parties, it is clear that the Society has been registered as a Salary Earners’ Credit Co-operative Society. Therefore, ordinarily only a salary earning employee should remain as an active member of the Society. Whether a retired employee can also remain as an active member of the Society for the purpose of contesting elections and voting, that is the issue involved in the present petition.

13. It would be necessary to first examine the Byelaws of the Society. Under Byelaw D-1.1, only a permanent employee can be admitted as a member of the Society. Admittedly, petitioners, having retired from service, are no longer permanent employees of the establishment. Faced with this difficulty, Mr. Suryawanshi has contended that Byelaw D-1.[1] applies only for the purpose of admission of an employee as a new member of the Society and that the same would have no application to the issue of termination of membership. I am unable to agree. If a person is not eligible to be admitted as a member of the Society, upon loosing status as a permanent employee, he would acquire ineligibility to continue as a member. If such a contention is accepted, a permanently appointed employee admitted as a new member would continue to hold membership even if he resigns from service. I am therefore of the view that the requirement of being a permanent employee is applicable both for admission of a new member as well as for continuing as an active member. The contention therefore deserves summary rejection.

14. One must also bear in mind the objective behind establishment of a Salary Earners’ Credit Co-operative Society, the objective being to extend credit facilities to the employees in service. As rightly submitted by Mr. Kadam, there is an inbuilt mechanism of recovery of installments / loans from the salaries of the employees in service. After their retirement, since the Society cannot recover its dues, no credit facilities can be extended to them. This is one more reason why only a serving employee should ideally remain as an active member of the Society.

15. Heavy reliance is placed by Mr. Suryawanshi on the previous proceedings relating to removal of petitioners from the post of Director of the Society. It is his case that the issue with regard to petitioners’ membership of the Society is finally concluded by order dated 10.02.2020 passed by the Divisional Joint Joint Registrar has not recorded any finding to the effect that petitioners continued to remain as active members of the Society, despite their retirements from service. The Divisional Joint Registrar has not examined the provisions of Byelaws nor distinction between an active and a nominal member. He was essentially determining validity of order of Assistant Therefore, order passed by the Divisional Joint Registrar cannot cited to contend that the issue of entitlement of petitioners to continue as active members of the society has either been decided or that it has attained finality in any manner.

16. Now, I turn to the submission of Mr. Suryawanshi that the Election Officer does not have jurisdiction to decide the issue of eligibility of petitioners to continue as a members of the Society. In support of his contentions, Mr. Suryawanshi has relied upon the above listed judgments. I agree with this submission of Mr. Suryawanshi. However, perusal of the order passed by the Election Officer would indicate that he has nowhere recorded a finding that petitioners have ceased to be members of the Society. What is held essentially is that they would now continue to be nominal members of the Society after their retirement from service. This findings has been recorded by referring to the provisions of Section 144-5A of the Act of 1960, which reads thus: “144-5A. Prohibition on accepting deposit from non- members. Notwithstanding anything contained in any Act, a non-agricultural cooperative credit society shall not accept deposit from any person who is not its member. If any society which has accepted deposit from nonmembers, before the date of commencement of the said Amendment Act, 2017, it shall either enroll them as members or refund deposits of all non-members within two years from commencement of the said Amendment Act, 2017. Provided that, the salary earners’ credit co- operative society may accept deposits voluntarily from their members after their retirement by enrolling them as nominal members. Explanation.- For the purposes of this section, “member” does not include nominal member.” (emphasis supplied)

17. The concept of nominal membership is recognized under Section 24 of the Act which reads thus:

18. The provision about entitlement of members to vote is dealt with under Section 27, Sub Section 8 of reads thus:

19. Thus the concept of nominal membership after retirement of an employee is recognized by the Act. Thus objective behind registration of a salary earners’ credit cooperative society together with the provision under Section 144-5A of the Act on 1960, would indicate that an active member can continue to remain in a capacity as a nominal member after his retirement. In his capacity as a nominal member, he can make voluntary deposits with a salary earners’ credit cooperative society. However under Sub Section 8 of Section 27 of the Act of 1960, such a nominal member does not enjoy the privilege of voting. The cumulative reading of the above provisions would lead to an inescapable conclusion that after retirement of an employee, he can continue only as a nominal member of a salary earners’ credit cooperative society and he is not entitled to vote.

20. Even otherwise, considering the broad objective behind establishment of a Salary Earners’ Credit Co-operative Society, in my view, accepting the contentions of the petitioners would lead to an absurd situation where a retired employee would indefinitely continue as member, contest elections and occupy positions in the management committee. Since the Society will not be in a position to extend any credit facilities to a retired employee, continuation of his membership with the Society would be only for the purpose of participation in the elections. This would completely defeat the very objective behind establishment of the Society. A retired employee does not earn any salary and cannot remain an active member of the Salary Earners’ Credit Co-operative Society. The interpretation sought to be placed by Petitioners which leads to absurdity will have to be avoided and the one that subserves the objective behind establishment of such society needs to be upheld. The Election Officer has therefore rightly held the petitioners to be nominal members of the Society.

16. Thus, the issue involved in the present petition is covered by the judgment of this court in Laxman Dattatray Jadhav. We could have disposed of the present petition in the light of findings recorded in that judgment. However Mr. Gaware has strenuously urged before us that the judgment in Laxman Dattatray Jadhav is distinguishable and has it has no application to the present case. He has also sought to advance certain additional submissions, which, according to him, have not been taken into consideration in that judgment. We therefore proceed to deal with the submissions of Mr. Gaware.

17. It is contended by Mr. Gaware that in Laxman Dattatray Jadhav, this court has dealt with a case of ‘salary earner’s co-operative credit society’, whereas Petitioner No.1 is a ‘salary earners’ bank’. That provisions of Section 144-5A of the Act of 1960 restricting retired employees only as nominal members would be applicable only to a ‘credit society’ and that the same would have no application to a ‘bank’.

18. There is no denial to the fact that Petitioner is salary earners’ co-operative society. In this regard, following averments made by the Petitioners in the petition would be relevant: “The Petitioner no.1 is a bank duly registered as per the provisions of Maharashtra Co-operative Societies Act, 1960 and Rules, 1961. The Petitioner No.1 Bank has salaried employees of state government & Zilla Parishads, State government undertaking & corporations as its members excluding police personnel and the primary teachers. The Petitioners state that the Petitioner No.1 Bank is having inservice salaried employees as well as retired employees as its members.”

19. Petitioners have also produced details of Petitioner No.1 Bank at Exhibit ‘A’ to the petition in which Petitioner No.1 Bank is described as ‘salary earners’ co-operative bank’. Therefore merely because Petitioner No.1 also happen to enjoy additional status as a ‘bank’, would not erase its fundamental status as a society of salaried employees dealing with disbursement of credit facilities and obtaining deposits from employees. It also appears that Petitioner No. 1 was initially a ‘credit society’, which subsequently received license to operate as a ‘bank’. Therefore mere receipt of license to operate as a bank would not alter status of Petitioner No. 1 as a cooperative society, nor can it escape application of Chapter XI-A of the Act of 1960 governing ‘Non Agricultural Cooperative Credit Societies’.

20. We consider the statutory framework regulating right of a retired employee, who is a member of a salary earner’s co-operative credit society, to vote in elections of that society. Chapter XI-1A of the Act of 1960 deals with ‘Non Agricultural Cooperative Credit Societies’. Relevant provisions of Chapter XI-A are: 144-2A. (1) Unless the context otherwise requires, this Chapter shall apply to the non-agricultural co-operative credit societies. (2) The provisions of this Chapter shall be, in addition to and not, save as hereinafter provided, in derogation of the provisions of this Act or any other law for the time being in force. 144-3A. In this Chapter, unless the context otherwise requires,– (a) “non-agricultural co-operative credit society” means a society, the primary object of which is to provide credit to its members and accept deposits from members and includes,—

(i) an urban credit co-operative society;

(ii) a rural non-agricultural credit co-operative society;

(iii) a salary earners’ credit co-operative society; and

(iv) any other society or class of societies, which the State Government may, by general or special order published in the Official Gazette, from time to time, specify in this behalf; (b) “the Maharashtra State Non-agricultural Co-operative Credit Societies Regulatory Board” or “the Regulatory Board” means the Board constituted under section 144-13A; (c) “Stabilization and Liquidity Support Fund” means the Stabilization and Liquidity Support Fund created under section 144-25A. “144-5A. Prohibition on accepting deposit from non- members. Notwithstanding anything contained in any Act, a non-agricultural cooperative credit society shall not accept deposit from any person who is not its member. If any society which has accepted deposit from non- members, before the date of commencement of the said Amendment Act, 2017, it shall either enroll them as members or refund deposits of all non-members within two years from commencement of the said Amendment Act, 2017. Provided that, the salary earners’ credit co- operative society may accept deposits voluntarily from their members after their retirement by enrolling them as nominal members. Explanation.- For the purposes of this section, “member” does not include nominal member.” (emphasis supplied)

21. Chapter III of the Act of 1960 deals with Members and their rights and liabilities. Section 27 deals with voting powers of members and reads thus: “27. Voting powers of members [(1) to (7)...... (8) No nominal member shall have the right to vote [and no such member shall be eligible to be a member of a committee or for appointment as a representative of the society on any other society].’ (9) to (12)......”

22. Thus the statutory scheme relating to rights of retired employees in their capacity as members of salary earners’ cooperative credit societies is as under: i) Under Section 144-5A of Act of 1960, a salary earners’ cooperative credit society can accept deposits from its members after their retirement by enrolling them as nominal members. Thus, a retired employee of a salary earners co-operative credit society can only be enrolled as a nominal member. ii) Under Sub-Section 8 of Section 27 of the Act of 1960, such a nominal member does not have a right to vote.

23. Thus, as per the combined effect of the provisions of Section 144-5A and Section 27(8) of the Act of 1960 a retired employee can enrolled by salary earner’s co-operative credit society only as a nominal member, who does not have right to vote. Since a nominal member does not have right to vote, his /her name cannot be included in the voters list prepared for holding elections of such societies. This statutory scheme has been considered and interpreted by this court in case of Laxman Dattatray Jadhav.

24. Mr. Gaware has contended that the impugned communication dated 10 February 2023 would have the effect of removal of names of retired employees from the membership register of Petitioner No.1 Society. Relying on provisions of Section 25A of the Act of 1960, it is contended that only the Registrar has power to remove names of members from the membership register. Section 25A reads thus: “25-A. Removal of names of members from Membership registers— The committee of a society shall remove from the register of its members the name of a person who has ceased to be a member or who stands disqualified by or under the provisions of this Act for being the member or continuing to be the member of a society: Provided that, if the society does not comply with the requirement of this section, the Registrar shall direct such society to remove the name of such person, and the society shall be bound to comply with such direction.”

25. However what is done by the SCEA in the present case is not removal of any member from register of membership of any society. Removal of name of a member from membership register of a society is an altogether different concept than deletion of names from voters list. As a matter of fact, considering the provisions of Section 144-5A of Act of 1990, retired employees can only remain as nominal members. Their names therefore are therefore required to be segregated from other members and entered separately in the register. However in the instant case, it appears that Petitioner No.1 Bank framed Bylaws, under which retired employees can continue as members of the society. Whether the Bylaws of Petitioner No.1 Bank are in tune with the provisions of Section 144-5A of the Act is an altogther different aspect, which can be determined in appropriate proceedings. We have not been called upon to answer the said issue. The limited issue involved in the present petition is whether a retired employee, who can be enrolled merely as a nominal member and who does not have right to vote, can find place in voters list prepared for conducting elections of the society. Since such nominal member does not have right to vote, inclusion of his / her name in voters list becomes an exercise in futility. Therefore no fault can be found in the impugned communication of the SCEA in directing deletion of names of retired employees from voters list of salary earner’s co-operative credit societies.

26. Mr. Gaware has contended that there is detailed mechanism provided for preparation of provisional list of voters under Rule 6 and 8 of the Rules of 2014 and that issuance of the impugned directives by SCEA at this juncture is premature. Rules 6 and 8 read thus:

6. Provisional list of voters for co-operative societies having individuals as members:— (1) A provisional list of voters shall be prepared by every society in the year in which the election of such society is due to be held. The member who has completed minimum two years as member from the date of his enrolment and who is an active member shall be included in the provisional list as laid down in sections 26 and 27 of the Act. If different constituencies are provided in the bye-laws, the names of voters shall be arranged constituency wise, if required, as laid down in the bye-laws. (2) (3) (4) (5)

8. Claims and objections to the provisional list of voters and the final list of voters for co- operative societies having individuals as members.—(1) When the provisional list of voters is published for inviting claims and objections, any omission or error in respect of name or address or other particulars in the list may be brought to the notice of the concerned District Co-operative Election officer or Taluka or Ward Co-operative Election Officer in writing by any member of the society during office hours within ten days from the date of publication of the provisional list of voters. (2) Every claim or objection shall be in writing and state the grounds on which the claim is based or the objection is raised, as the case may be. (3) The District Co-operative Election Officer or Taluka or Ward Cooperative Election Officer shall, or as directed by the SCEA, after making such enquiries as deem necessary in this behalf, consider each claim or objection, and give his decision thereon in writing to the persons concerned within ten days from the last date prescribed for receiving the claims and objections. Thereafter final voters list should be published within the period of fifteen days from the last date prescribed for receiving the claims and objections. The list finalized by the election officer after deciding all claims and objection shall be final list of voters. (4) The copies of the final list of voters shall be displayed on the notice board of the District Co-operative Election Officer and also on the notice board of the society at least ten days before the declaration of the election programme and in no case later than fifteen days from the finalization of claims and objections. The District Co-operative Election Officer may also cause it to be published on the official website of the SCEA, if any.

27. The submission of Mr. Gaware is premised on availability of remedies under Rule 8 of Rules of 2014 to the aggrieved persons to any entry in the provisional list of voters. It is his contention that in view of availability of remedies under the Rules of 2014 for deletion of names of ineligible voters, SCEA could not have issued an omnibus directive. The argument may appear to be attractive in the first lush, however the same is completely misplaced. What Mr. Gaware expects is that SCEA should allow the Taluka and District Co-operative Election Officers to prepare provisional list of voters, which may include names of even nominal members without a right to vote, and only upon raising of an objection, the process of deletion of their names can be undertaken. In short, if no objection is raised, retired employees in their capacity as nominal members, would vote in elections. This would be contrary to the statutory scheme. We find that the SCEA has taken a prompt step in issuing advance directives to all the Taluka and District Co-operative Election Officers to ensure that names of retired employees, who have no right to vote, should not be included in the provisional list of voters. This would obviate any error being committed in conducting elections of salary earners’ co-operative credit societies. The directives of SCEA, in our view, would not only ensure compliance with statutory provisions, but would also reduce litigations. Since the directives issued by the SCEA are found to be compliant to statutory framework of the Act of 1960 and Rules 2014, we are of the view that said directives would not, in any manner, affect the procedure prescribed for preparation of provisional list of voters under Rules 6 and 8 of Rules of 2014. The objection therefore deserves to be repelled.

28. Under Section 73CB of the Act of 1960, the SCEA is responsible inter alia for superintendence, direction and control of preparation of electoral rolls and conduct of elections of societies. Section 73-CB (1) reads thus: 73CB. (1) The superintendence, direction and control of the preparation of the electoral rolls for, and the conduct of, all elections to a society shall vest in the authority called as ‘the State Co-operative Election Authority’, as may be constituted by the State Government in that behalf. Every general election of the members of the committee and election of the office-bearers of a society including any casual vacancy, to the extent applicable, shall be held as per the procedure prescribed.

29. Thus SCEA is vested with jurisdiction of superintendence, direction and control of preparation of electoral rolls. It therefore possesses the necessary jurisdiction to issue directives to the District Cooperative Election Officers to ensure that the provisional and final list of voters are prepared as per the statutory framework. We have already held that directions for deletion of names of retired employees from provisional list of voters does not touch upon the issue of continuance of such employees as members of the salary earners’ cooperative credit society. Therefore the objection of jurisdiction raised by Petitioner deserves rejection.

30. Salary earners’ co-operative credit societies are formed and registered with the objective of providing credit facilities to salary earning employees of chosen establishments. They cater to the needs of employees of government and semi-government establishments. There are various restrictions imposed under Chapter XI-1A of the Act of 1960 on operations of non-agricultural credit societies such as advancement of loans, prohibition on trading, holding of properties, maintenance of cash reserves, maintenance of statutory liquidity ratio, etc. A provision has been made under Section 144-5A of the Act which prohibits acceptance of deposits from non-members by non-agricultural credit cooperative societies. However an exception has been carved out under Proviso to Section 144-5A, under which a salary earners’ cooperative credit society is permitted to accept deposits from retired employees, subject to a restriction that they can be enrolled only as nominal members. Thus merely because retired employees are extended a special concession of making deposits in a salary earners’ cooperative credit societies, it does not mean that they can participate in election process by voting or holding posts in managing committees of such societies.

31. The objective behind putting restrictions on rights of retired employees of salary earners’ cooperative credit societies is to ensure that the society is managed by salary earners and not by retired employees. After all it is a ‘salary earners society’ and one who no longer earns salary is not permitted under the Act to manage it. Also, with passage of time, there is possibility of number of retired employees exceeding the serving ones, thereby resulting in a situation where retired employees may take over the management of the society. We however need not delve any further into the aspect of legislative intent behind statutory provisions in the Act of 1960, as the same are not under challenge before us. Suffice it to hold that the impugned directives issued by the SCEA are in tune with the statutory provisions and are therefore validly issued.

32. Interim Order was passed by this Court in the present Petition staying the impugned directives on 9 May 2023 on the basis of submission made on behalf of Petitioners that SCEA does not have jurisdiction to order deletion of members of a society. We have already held that the impugned directives does not have the effect of deletion of retired employees from membership register. Election of these societies have already been held up for a long time inter alia due to pandemic restrictions. SCEA had issued directives to prepare the provisional lists of voters of all such societies by 1 February and to finalise the elections by 30 June 2023. It is therefore necessary to vacate the interim order so that elections can take place in an expeditious manner.

33. Resultantly, we do not find any merit in the present petition. Writ Petition is accordingly dismissed with no order as to costs. Interim Order stands vacated. With dismissal of the Petition noting survives in the IA, which is also disposed of. Rule is discharged.

SANDEEP V. MARNE, J. DHIRAJ SINGH THAKUR, J.