2025 (7) TMI 60 - HC - Indian Laws

Rejection of his nomination for election to the Managing Committee of respondent - as on the date of scrutiny of nominations the respondent No.5 stood as a defaulter of a cooperative bank and was therefore disqualified to contest the said election. HELD THAT - Prima facie this Court is of the considered view that respondent No.5 appears to fall within the category of defaulter as defined under Section 73CA of the Maharashtra Cooperative Societies Act 1960 on the date of scrutiny of nomination papers. The material placed on record including the statutory notice issued under the SARFAESI Act and the absence of a cogent rebuttal from respondent No.5 collectively support such a conclusion at this stage. The Maharashtra Cooperative Societies Act 1960 lays down a clear legal framework for dealing with objections to nomination papers during elections to cooperative societies. While Section 152A of the Act provides for a limited right of appeal against the decision of the Returning Officer who rejects a nomination paper Section 91 gives a broader remedy of filing an election petition before the Cooperative Court. Section 152A offers only a limited and summary remedy. The appellate authority under this provision does not re-examine the full facts or conduct a fresh inquiry. Its job is only to check whether the Returning Officer followed the correct legal process acted reasonably and did not violate any rules of natural justice. This type of limited scrutiny may be called limited appellate review where the court or authority checks the process followed not the merits of the decision. There is no provision in Section 152A which allows the appellate authority to take on record new documents that were not before the Returning Officer. Allowing this would not only reduce the Returning Officer s role to a mere formality but would also delay the decision of appeal which is supposed to be completed in ten days period. The courts have time and again emphasised the importance of timely elections. Permitting new evidence at this stage would also cause legal confusion overlapping proceedings and unnecessary delays. It would blur the line between the two legal remedies a summary appeal and a full-fledged election petition which the law has carefully separated - Therefore if a person genuinely believes that a candidate is factually ineligible then the proper course is to file an election petition under Section 91. That forum is meant for such serious and detailed factual matters. This Court is of the view that allowing a person to bring new documents in an appeal under Section 152A would go against the legal framework of the Act disturb procedural fairness and lead to misuse of the appellate process. Whether in an appeal preferred under Section 152-A of the Maharashtra Co-operative Societies Act 1960 challenging the rejection of a nomination paper all validly nominated candidates are necessary parties to such appeal? - HELD THAT - The finalization of the list of candidates is not merely a ministerial act but has implications on the legal standing and strategic positions of the other contestants. Any subsequent alteration in the list would directly impinge upon their rights and legitimate expectations. Therefore the appellate forum while exercising jurisdiction under Section 152A is required to afford an opportunity of hearing to all those likely to be affected including validly nominated candidates before reversing or modifying the decision of the Returning Officer. The reasoning adopted by the Division Bench of this Court in the case of Tukaram Hari Khamkar warrants a reconsideration on certain significant grounds which touch upon the fundamental principles of election law and the interpretation of statutory remedies under the MCS Act. On a plain reading of Section 152A of the MCS Act it is evident that sub-section (2) merely declares that the list of validly nominated candidates published under sub-section (1) shall be subject to the decision of the appellate authority under sub-section (1). In my considered view the purpose behind making the published list subject to the outcome of the appeal is to ensure that the appellate authority s decision particularly in cases where it holds that a nomination was wrongly rejected can be effectively implemented. Such implementation may require the Returning Officer to update or modify the list in light of the appellate order. The provision is intended to protect the efficacy of appellate remedy under Section 152A and not to create any independent or accrued right in favour of other validly nominated candidates to participate in the appeal proceedings. Whether this Court in exercise of its writ jurisdiction under Article 226 of the Constitution of India ought to interfere with the action of the Appellate Authority in accepting the nomination paper of respondent no. 5 particularly when the election process under the Maharashtra Co-operative Societies Act 1960 is already underway and has reached an advanced stage? - HELD THAT - Acceptance of a nomination paper is not a mere ministerial act; it is a quasi-judicial function to be exercised in accordance with the applicable statutory provisions rules and bye-laws. An error at this stage particularly one that results in permitting a person who is statutorily disqualified or otherwise ineligible has the potential to vitiate the entire process and defeat the mandate of a free and fair election. In the present case if the Appellate Authority has accepted the nomination paper of respondent no. 5 despite the existence of an apparent disqualification under the MCS Act or the relevant Rules or Bye-laws say for instance arrears of dues to the society or violation of specific eligibility conditions the petitioner cannot be relegated to a post-election remedy under Section 91 of the MCS Act particularly when the said acceptance is shown to be without application of mind or contrary to statutory provisions - if the petitioner has approached this Court promptly and the issue raised pertains to an error apparent on the face of the record in the acceptance of a nomination paper which if not corrected would render the entire election process vulnerable to challenge and result in avoidable expense hardship and multiplicity of proceedings the Court would be justified in entertaining the writ petition and granting appropriate relief. However such intervention must be exercised with circumspection and only when the facts clearly demonstrate that the error is not one which can be resolved through disputed questions of fact or extensive evidence but is apparent from the record and the relief sought can be granted without disturbing the larger electoral timeline or causing prejudice to the democratic process. In the facts of the present case this Court is satisfied that the petitioner has demonstrated a case of such exceptional nature as would warrant interference at this stage. The material on record indicates that during the scrutiny of nomination papers a specific objection was raised by the petitioner pointing out that respondent no. 5 had defaulted on a substantial financial liability amounting to over Rs. 6 crores as evidenced by a public notice issued by the secured creditor published in a widely circulated newspaper. This Court is of the considered opinion that the acceptance of the nomination paper of respondent no. 5 by the Appellate Authority suffers from a patent error and is contrary to the statutory scheme governing the elections under the Maharashtra Co-operative Societies Act 1960. The challenge raised by the petitioner is not merely an individual grievance but touches upon the core issue of legality and propriety of the electoral process. The objection raised by the petitioner regarding disqualification was substantiated by credible and unimpeachable documentary evidence which has been disregarded by the Appellate Authority without any application of mind. In such circumstances relegating the petitioner to the remedy of an election petition under Section 91 of the Act would result in grave injustice and render the entire exercise nugatory. The facts of the present case warrant judicial interference at this stage not to stall the electoral process but to ensure its purity and fairness. The following question of law of substantial importance arises for consideration of this Court - Whether in an appeal preferred under Section 152A of the Maharashtra Cooperative Societies Act 1960 challenging rejection of a nomination paper it is mandatory to implead all validly nominated candidates as necessary parties to the appeal? To consider this question in its proper perspective it would be appropriate to invoke the provisions of Rule 8 of Chapter I of the Bombay High Court Appellate Side Rules 1960 and direct that the papers of this case be placed before the Hon ble the Chief Justice so as to consider whether the present writ petition can be more advantageously heard and decided by a Bench of two or more learned Judges.

Summary

Issues Presented and Considered

1. Whether respondent No.5 was a "defaulter" within the meaning of Section 73CA of the Maharashtra Cooperative Societies Act, 1960 ("MCS Act") as on the date of scrutiny of nomination papers, thereby disqualifying him from contesting the election.

2. Whether reliance on a newspaper publication under Rule 8(6) of the Security Interest (Enforcement) Rules, 2002, read with Section 13(4) of the SARFAESI Act, 2002, is admissible evidence to establish default and consequent disqualification.

3. Whether the appellate authority under Section 152A of the MCS Act can entertain new documents or evidence not produced before the Returning Officer at the time of scrutiny.

4. Whether all validly nominated candidates are necessary parties to an appeal under Section 152A challenging the rejection of a nomination paper.

5. The scope and extent of judicial interference under Article 226 of the Constitution of India in election matters governed by the MCS Act, particularly at an advanced stage of the election process.

6. The maintainability and propriety of the present writ petition challenging the order of the appellate authority allowing respondent No.5's nomination.

Issue-Wise Detailed Analysis

Issue 1: Defaulter Status under Section 73CA of the MCS Act

The MCS Act, under Section 73CA(1), disqualifies a person from election if he is a "defaulter" of any cooperative society. The explanation clarifies that default includes failure to repay loans as per agreed terms. The petitioner produced an original newspaper publication issued under Rule 8(6) of the Security Interest (Enforcement) Rules, 2002, evidencing initiation of SARFAESI proceedings by Karad Urban Cooperative Bank against respondent No.5, showing substantial arrears exceeding Rs. 6 crores as of February 2025.

Respondent No.5's reply to the objection was vague and lacked specific rebuttal or documentary proof negating default. The Returning Officer accepted the objection and rejected respondent No.5's nomination. The appellate authority reversed this, relying on precedents that disqualification cannot be presumed without formal adjudication.

The Court examined the Full Bench decision in Narayan Gujabrao Bhoyar, which overruled earlier judgments relied upon by the appellate authority. The Full Bench held that disqualification under Sections 73FF and 78 operate independently, and a declaration of default after following natural justice (including issuance of show-cause notice) suffices to attract disqualification without formal removal proceedings. Thus, the appellate authority's reliance on overruled precedents was erroneous.

Accordingly, the Court found prima facie that respondent No.5 was a defaulter under Section 73CA as on the date of scrutiny, supported by statutory notice and absence of cogent rebuttal.

Issue 2: Admissibility of Newspaper Publication under SARFAESI Rules

The petitioner produced a newspaper publication issued under Rule 8(6) of the Security Interest (Enforcement) Rules, 2002, which requires publication of auction notices in two local newspapers when action is initiated under Section 13(4) of the SARFAESI Act. The Returning Officer accepted this as sufficient evidence of default.

The appellate authority rejected this reliance, holding that a newspaper report is inadmissible evidence and no notice from the bank was placed on record. The Court disagreed with the appellate authority, noting the statutory mandate for such publication and that the original notice was produced before the Returning Officer. The Court found the publication to be unimpeachable documentary evidence prima facie establishing default.

Issue 3: Admission of New Documents in Appeal under Section 152A

The petitioner placed on record a certificate dated 12 March 2025 from the Karad Urban Cooperative Bank evidencing outstanding dues exceeding Rs. 7 crores, which was not produced before the Returning Officer. The question arose whether new evidence can be introduced at the appellate stage under Section 152A.

The Court analyzed the statutory scheme distinguishing Section 152A (summary appeal) and Section 91 (detailed election petition). Section 152A provides only limited appellate review of the Returning Officer's decision on legal and procedural grounds, not a full re-examination of facts or admission of new evidence. Allowing new documents at this stage would disrupt the summary nature of the appeal and the election timeline.

Accordingly, the Court held that new documents not produced at scrutiny cannot be admitted in the appeal under Section 152A, and such matters must be pursued via an election petition under Section 91.

Issue 4: Necessary Parties in Appeal under Section 152A

There was a conflict of opinion on whether all validly nominated candidates are necessary parties to an appeal challenging rejection of a nomination paper. Earlier Division Bench decisions held that all such candidates have a legal interest and must be impleaded to protect their rights.

The Court examined the statutory provisions and authoritative Supreme Court precedent in Jyoti Basu, which held that election rights are statutory and must be strictly construed. It emphasized that the statute does not mandate impleadment of all candidates in such appeals. Strict construction and practical considerations, including the large number of candidates (207 in this case) and the ten-day statutory timeframe for deciding appeals, render such a requirement unworkable and contrary to legislative intent.

The Court opined that only the objector and the candidate whose nomination is rejected are necessary parties in such appeals. It suggested reconsideration of the Division Bench rulings that implied mandatory impleadment of all candidates.

Issue 5: Scope of Judicial Interference under Article 226 in Election Matters

The Court reviewed extensive precedents including Pandurang Hindurao Patil, Chandrakant Mahadev Patole, Ashok Kumar, and others, establishing that judicial interference in election matters after commencement of the election process is generally discouraged to avoid disruption. However, exceptions exist where the Returning Officer's decision is patently illegal, without jurisdiction, arbitrary, or violates fundamental principles, and where waiting for post-election remedies would cause irreparable injustice.

The Court noted that acceptance of a nomination paper is a quasi-judicial function and errors at this stage can vitiate the entire election. It cited Supreme Court authority holding that inclusion of a disqualified candidate constitutes a fraud on the Constitution, justifying pre-election intervention.

Applying these principles, the Court found that the appellate authority's acceptance of respondent No.5's nomination despite prima facie disqualification and unimpeachable evidence was a patent error warranting judicial interference under Article 226. The Court emphasized that such intervention is to uphold the purity and legality of the electoral process, not to stall it.

Issue 6: Maintainability of the Writ Petition and Interim Relief

The respondent contended non-joinder of necessary parties and that the writ petition amounted to impermissible pre-election interference. The Court found that due service of notice had been effected on most respondents through multiple modes, including newspaper publication and electronic communication, satisfying procedural fairness.

The Court held the writ petition maintainable in the limited supervisory jurisdiction under Article 227 and Article 226, given the patent legal infirmity in the appellate order. It granted interim relief restraining respondent No.5 from contesting the election pending final disposal, on the basis of a strong prima facie case, balance of convenience, and irreparable injury, applying the tripartite test from Deoraj v. State of Maharashtra.

The Court declined the request for stay of the judgment and directed that the question of mandatory impleadment of all validly nominated candidates be referred to a larger Bench for authoritative pronouncement.

Significant Holdings

"The Full Bench categorically held that the provisions of Sections 73FF and 78 operate in distinct and independent spheres, and that the declaration of default under Section 73FF(1) is not contingent upon prior removal under Section 78(1)."

"The reliance placed by the Appellate Authority on Kerabaji and Keshavrao-both of which have been specifically overruled by the Full Bench in Narayan Gujabrao Bhoyar-is clearly misconceived and legally untenable."

"It is not legally permissible for a person to place new documents on record in an appeal under Section 152A of the Maharashtra Cooperative Societies Act, 1960, to prove a candidate's eligibility or ineligibility."

"The right to be elected and to contest elections are purely statutory rights and must be strictly construed. Unless the statute mandates impleadment of all validly nominated candidates, such a requirement cannot be read into Section 152A."

"Judicial interference in election matters after commencement of the process is to be sparingly exercised and only where the Returning Officer's decision is manifestly illegal, arbitrary, or without jurisdiction."

"Acceptance of a nomination paper is a quasi-judicial function and an error permitting a disqualified candidate may vitiate the entire election process."

"In rare and exceptional circumstances, the High Court may grant interim relief that effectively amounts to final relief to prevent irreparable injury and injustice."

"The petitioner has demonstrated a strong prima facie case that respondent No.5 was disqualified as a defaulter under the MCS Act, supported by unimpeachable documentary evidence, which the appellate authority wrongly ignored."

"The writ petition is maintainable and interim relief is granted restraining the respondent No.5 from contesting the election pending final disposal."