Case Note & Summary
The petitioner, Sri G Nagaraju, was elected as a Director of the Janagere Primary Agricultural Credit Co-operative Society Ltd. (Respondent No. 4) on 16.02.2020. A complaint was filed by one Ganga Rangaiah on 19.05.2020 alleging that the petitioner was a defaulter as he had not cleared his loan dues to the Society as on the date of his election, and therefore ought to have been disqualified. The Assistant Registrar of Co-operative Societies (Respondent No. 1) passed an order dated 11.09.2020 under Section 29-C(1)(a) of the Karnataka Co-operative Societies Act, 1959 disqualifying the petitioner. The petitioner's appeal to the Deputy Registrar (Respondent No. 2) was dismissed on 25.11.2020. The petitioner then filed a writ petition under Articles 226 and 227 of the Constitution of India challenging both orders. The key legal issue was whether the disqualification under Section 29-C(1)(a) is permanent or ceases upon repayment of the overdue loan before the date of election. The petitioner argued that he had repaid the loan prior to his election and thus was not a defaulter. The respondents contended that the disqualification was permanent. The court analyzed the provision and held that the disqualification under Section 29-C(1)(a) is a continuing disqualification, meaning it applies only as long as the loan remains overdue. Once the loan is repaid before the date of election, the disqualification ceases. The court emphasized that the relevant date for determining disqualification is the date of election. Since the petitioner had repaid the loan before 16.02.2020, he was not disqualified. The court quashed the orders of the Assistant Registrar and Deputy Registrar, allowing the writ petition.
Headnote
A) Co-operative Law - Disqualification of Director - Section 29-C(1)(a) Karnataka Co-operative Societies Act, 1959 - Continuing Disqualification - The petitioner was elected as Director on 16.02.2020 but a complaint alleged he was a defaulter. The Assistant Registrar disqualified him under Section 29-C(1)(a). The court held that the disqualification under Section 29-C(1)(a) is not permanent; it is a continuing disqualification that ceases upon repayment of the overdue loan. Since the petitioner had repaid the loan before the date of election, the disqualification did not apply. The orders of disqualification were quashed. (Paras 1-10) B) Co-operative Law - Interpretation of Statute - Section 29-C(1)(a) Karnataka Co-operative Societies Act, 1959 - Relevant Date for Disqualification - The court interpreted that the relevant date for determining disqualification is the date of election. If the loan is repaid before that date, the member is not a defaulter and is not disqualified. The power under Section 29-C(1)(a) must be exercised based on the position as on the date of election. (Paras 5-9)
Issue of Consideration
Whether the disqualification under Section 29-C(1)(a) of the Karnataka Co-operative Societies Act, 1959 is permanent or ceases upon repayment of the overdue loan before the date of election.
Final Decision
Writ petition allowed. Orders dated 11.09.2020 (Annexure-G) and 25.11.2020 (Annexure-P) are quashed.
Law Points
- Disqualification under Section 29-C(1)(a) of Karnataka Co-operative Societies Act
- 1959 is not permanent
- it is a continuing disqualification that ceases upon repayment of the overdue loan before the date of election
- the relevant date for determining disqualification is the date of election
- repayment of loan prior to election cures the disqualification
- the power under Section 29-C(1)(a) must be exercised based on the position as on the date of election.
