Holding

An omnibus order deleting members under Section 11 without individual notice, hearing, and disclosure of material evidence violates natural justice and must be set aside.

Summary

The Maharashtra cooperative society, engaged in sugar production, sought to delete about 2,000 members under Section 11 of the Maharashtra Co-operative Societies Act, 1960, alleging they did not meet the bye‑law eligibility criteria. The Regional Joint Director (Sugar) issued an omnibus show‑cause notice and, without individual hearings or disclosure of the Committee’s report, ordered the removal of 1,415 members. The appellants contended that the process violated the principles of natural justice because each member was not given notice of the material relied upon nor an opportunity to be heard. The Supreme Court held that the non‑disclosure of the Committee’s findings and the lack of individual consideration amounted to a breach of natural justice, rendering the orders vitiated. Consequently, the Court set aside the High Court judgment, the Regional Joint Director’s order, and the Minister’s order, restored the proceedings to the Regional Joint Director, and directed disclosure of the report and a fresh hearing for each affected member.

Issues considered

Whether the Regional Joint Director’s omnibus order under Section 11, without individual notice and hearing, violates the principles of natural justice.
Whether the non‑disclosure of the Committee’s report, which contained findings on individual eligibility, warrants setting aside the orders.
Whether the High Court erred in holding that Section 11 powers are not limited to the formation or registration stage.

Legislation cited

Maharashtra Co-operative Societies Act, 1960s. 11, s. 152

Subjects

Natural JusticeAdministrative LawCooperative SocietiesSection 11Due ProcessDisclosure of EvidenceMembership RemovalQuasi‑judicial Authority

Judgment

[2023] 5 S.C.R. 717 717

DEEPAK ANANDA PATIL A
v.
THE STATE OF MAHARASHTRA & ORS
(Civil Appeal Nos 88-89 of 2023)
JANUARY 04, 2023 B
[DR. DHANANJAYA Y CHANDRACHUD, CJI AND
PAMIDIGHANTAM SRI NARASIMHA, J.]
Maharashtra Co-operative Societies Act, 1960 – s.11 –
Complaints filed seeking removal of approximately 2000 members
C
of the cooperative society (engaged primarily in the production of
sugar), disputing their eligibility in terms of the bye-laws – A total
of 1415 members were directed to be deleted – Correctness of –
Held: Order u/s.11 has serious consequences for the members – An
omnibus order was passed by the Regional Joint Director(Sugar),
preceded by a general notice to show cause which was issued to D
the cooperative society – There was no application of mind to the
grounds of ineligibility asserted against each member – Report of
the Committee, constituted to verify the allegations, submitted to the
Regional Joint Director (Sugar) containing findings w.r.t the
eligibility of individual members was not supplied to them or to the
E
cooperative society – Order u/s.11 operates to oust a particular
individual from the membership of the society – The principles of
natural justice must be observed in relation to each member whose
membership is sought to be ousted – There was a clear breach of
the principles of natural justice – The consequence of ousting such
a large group of members from the membership of a cooperative F
society would result in a serious miscarriage of justice unless
individual facts are considered in each case – Though, the High
Court proceeded exclusively on the basis of the submission with
reference to s.11, there were serious objections which were raised
both in the appeal and before the High Court in the pleadings in
G
regard to the alleged ineligibility of the members – Impugned
judgment of High Court set aside – Order of the Regional Joint
Director (Sugar) and the order of Minister of Cooperation also set
aside – Proceedings restored to the file of the Regional Joint Director
(Sugar) – Directions issued – Principles of Natural Justice –
Administrative Law. H
717
718 SUPREME COURT REPORTS [2023] 5 S.C.R.

A Administrative Law – Non-disclosure of relevant information
– Held: An adjudicatory body cannot base its decision on any
material unless the person against whom it is sought to be utilized
has been apprised of it and given an opportunity to respond to it –
Principles of Natural Justice.
B T. Takano v. Securities and Exchange Board of India
(2022) 8 SCC 162; Managing Director, ECIL,
Hyderabad v B. Karunakar (1993) 4 SCC 727 : [1993]
2 Suppl. SCR 576 – relied on.
Natwar Singh v Director of Enforcement (2010) 13 SCC
C 255 : [2010] 13 SCR 99; Krishna Chandra Tandon v
Union of India AIR 1974 SC 1589 : 1974 (4) SCC
374; Khudiram Das v State of West Bengal (1975) 2
SCC 81 : [1975] 2 SCR 832; Union of India v Mohd.
Ramzan Khan (1991) 1 SCC 588 : [1990] 3 Suppl. SCR
248; 576; State Bank of Patiala v SK Sharma (1996) 3
D SCC 364 : [1996] 3 SCR 972; State of Uttar Pradesh v
Ramesh Chandra Mangalik (2002) 3 SCC 443; Kothari
Filaments v Commr. Of Customs (2009) 2 SCC 192 :
[2008] 17 SCR 647 – referred to.
MP Jain & SN Jain’s treatise on Principles of
E Administrative Law – referred to.
Case Law Reference
(2022) 8 SCC 162 relied on Para 18
[2010] 13 SCR 99 referred to Para 18
F
1974 (4) SCC 374 referred to Para 18
[1975] 2 SCR 832 referred to Para 18
[1990] 3 Suppl. SCR 248 referred to Para 18
[1993] 2 Suppl. SCR 576 relied on Para 18
G
[1996] 3 SCR 972 referred to Para 18
(2002) 3 SCC 443 referred to Para 18
[2008] 17 SCR 647 referred to Para 18

H
DEEPAK ANANDA PATIL v. THE STATE OF MAHARASHTRA 719
& ORS

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.88-89 A
of 2023.
From the Judgment and Order dated 22.09.2022 of the High Court
of Judicature at Bombay in Writ Petition Nos.4647 and 4609 of 2021.
With
B
M A Nos.1978-1979 of 2022 in SLP (C) Nos. 20001-20002 of
2022 and SLP (C) Nos.22734-22737 of 2022.
Neeraj Kishan Kaul, Maninder Singh, Sr. Advs., Abhikalp Pratap
Singh, Raghav Agrawal, Toshiv Goyal, Dhruv Sharma, Ms. Aadya Yadav,
M/s. Lawyer S. Knit & Co., S. Udaya Kumar Sagar, Eeshan D. Khaire, C
Tushar Singh, Katubadi Ismail, Advs. for the Appellant.
Tushar Mehta, SG, Kedar Pralhad LAD, Dhawesh Pahuja,
Sandeep Singh, Siddharth Dhamadhikari, Aaditya Aniruddha Pande,
Bharat Bagla, Ms. Kirti Dadheech, Siddharth Bhatnagar, Ms. Pracheta
Kar, Aditya Sidhra, Nadeem Afroz, Advs. for the Respondents. D
The Judgment of the Court was delivered by
DR. DHANANJAYA Y CHANDRACHUD, CJI
Civil Appeal Nos 88-89 of 2023
1. Leave granted. E
2. These appeals arise from a judgment dated 22 September 2022
of a Single Judge of the High Court of Judicature at Bombay.
3. The ninth respondent, Shri Chhatrapati Rajaram Sahakari Sakhar
Karkhana Limited, is a cooperative society registered under the
Maharashtra Co-operative Societies Act 1960. The society has its own F
bye-laws and is engaged primarily in the production of sugar. The
jurisdiction of the cooperative society extends to 122 villages in seven
talukas of District Kolhapur and it has 17,173 cultivator members.
4. Bye-law 17-A prescribes the requirements for being a ‘producer
member’ of the society. The bye-law stipulates that a member should (i) G
have attained the age of 18 years; (ii) be an occupier of land within the
jurisdiction of the society/factory as owner or tenant; and (iii) cultivate
sugarcane in a minimum area of 10 gunthas of land.
5. In 2019, complaints were filed by respondents 3 to 8 while
invoking the provisions of Section 11 of the Maharashtra Cooperative H
720 SUPREME COURT REPORTS [2023] 5 S.C.R.

A Societies Act 1960. The complaints which were addressed to the Registrar,
sought the removal of approximately 2000 members on the ground that
they did not fulfill the conditions of eligibility.
6. On 3 January 2020, the Regional Joint Director (Sugar)
addressed a communication to the cooperative society adverting to the
B fact that the complainants had alleged that the members whose names
were set out in a list of members attached as ‘Annexure A’ were, as the
case may be, not residing in the jurisdiction of the factory; not holding
ten gunthas of land; and did not fulfill the requirements of eligibility in
terms of the bye-laws. The notice to show cause also adverted to the
fact that writ petitions were filed before the High Court of Judicature at
C Bombay in which an order had been passed on 20 December 2019
directing the Regional Joint Director to conclude the enquiry by 15
February 2020.
7. The cooperative society, upon receipt of the notice from the
Regional Joint Director, forwarded a copy to all the members whose
D eligibility was sought to be disputed. The allegations in the notice to
show cause were disputed by at least some of the members. The
members disputed the allegation that they were not eligible in terms of
the bye-laws and sought an opportunity to produce evidence in support
of their eligibility.
E 8. On 14 February 2020, the Regional Joint Director (Sugar) held
that the members whose names were set out in Annexure B to Annexure
B-6 were disqualified from being members of the society. The breakup
of these members is as follows:
(i) 59 members did not hold the minimum area of agricultural
F land within the jurisdiction of the factory;
(ii) 709 members did not hold agricultural land within the
jurisdiction of the factory;
(iii) 205 members held land on the basis of usufructuary
mortgages for which there was no entry in the revenue
G
records;
(iv) 33 members were dead, requiring the deletion of their
names;
(v) 69 members were found to have been recorded more than
H once;
DEEPAK ANANDA PATIL v. THE STATE OF MAHARASHTRA 721
& ORS [DR. DHANANJAYA Y CHANDRACHUD, CJI]

(vi) The shareholding of 2 members stood cancelled; and A
(vii) The factory had consented to the deletion of 338 members.
A total of 1415 members comprised in Annexures B to B-6 to the
order were directed to be deleted. 484 members (Annexures A and A-
1) were found to meet the conditions of eligibility.
B
9. An appeal against the order of the Regional Joint Director
(Sugar) under Section 152 of the Maharashtra Cooperative Societies
Act 1960 was dismissed on 18 February 2021 by the Minister of
Cooperation.
10. This led to the institution of writ petitions before the High
Court. The Single Judge rejected the Writ Petitions by the impugned C
judgment and order dated 22 September 2022. The Single Judge has
observed that there was no controversy on factual aspects and dealt
with the submission that the Registrar had no jurisdiction under Section
11 to enquire into whether a member stood disqualified after the formation
or registration of the cooperative society. The Single Judge held that the D
expression “for the purpose of the formation or registration or continuance
of society” was deleted by way of an amendment to Section 11. Hence,
it was held that the power of the Registrar under Section 11 is not
restricted to enquiring into the eligibility only at the stage of the formation
or registration of the society.
E
11. We have heard Mr Maninder Singh and Mr Neeraj Kishan
Kaul, senior counsel appearing on behalf of the appellants; Dr Abhishek
Manu Singhvi, senior counsel appearing on behalf of the original
complainants and Mr Tushar Mehta, Solicitor General of India appearing
on behalf of the State of Maharashtra. The sugar factory is represented
by Mr Siddarth Bhatnagar, senior counsel. F
12. The principal submission which has been urged on behalf of
the appellants is that there has been no enquiry at all on an individual
basis on whether or not the members who were sought to be disqualified
fulfilled the condition specified in the bye-laws. In this context, it was
submitted that: G
(i) One omnibus notice was issued to the cooperative society
containing an annexure listing out the members who were
sought to be disqualified;
(ii) There was no specific allegation of ineligibility against
individual members; H
722 SUPREME COURT REPORTS [2023] 5 S.C.R.

A (iii) Confronted with an order of the High Court dated 20
December 2019 requiring the enquiry to be concluded in
less than 2 months i.e. by 15 February 2020, the Regional
Joint Director pursued the enquiry in haste without
considering the individual eligibility of each of the members
who were sought to be disqualified;
B
(iv) Though a Committee was apparently constituted to verify
the allegations in the show cause notice, the report of the
Committee was not divulged either to the cooperative society
or to the members who were sought to be disqualified.
C Hence, it was urged that there was a breach of the principles of
natural justice. Moreover, it was submitted that the grounds in the appeal
before the appellate authority under Section 152 as well as before the
High Court in the Writ Petitions would indicate that there were serious
objections to the findings of ineligibility on facts. Since the facts have not
been enquired into, it was submitted that an order of remand to the
D Regional Joint Director (Sugar) would be warranted.
13. Dr Abhishek Manu Singhvi, senior counsel appearing on behalf
of the original complainants in the enquiry submitted:
(i) No submissions were raised before the High Court in regard
E to the lack of enquiry into individual eligibility; and
(ii) The only submission which was urged was on the basis of
Section 11.
Hence, it was urged that it would not be open to the appellants to
assert any other submission and, if they are aggrieved by the order of
F the High Court, the correct remedy would be in the form of a review.
14. The second limb of the submission of Dr Singhvi is that there
are concurrent findings in the order of the Regional Joint Director and
the appellate authority on factual aspects which have been affirmed by
the dismissal of the writ petition under Article 226 of the Constitution of
G India. Hence, it was urged that there is no warrant for the interference
of this Court.
15. While considering the rival submissions, certain basic facts
emerge from the record. An omnibus show cause notice was issued on
3 January 2020 to the cooperative society by the Regional Joint Director
H (Sugar) acting on the basis of complaints raising a dispute with regard to
DEEPAK ANANDA PATIL v. THE STATE OF MAHARASHTRA 723
& ORS [DR. DHANANJAYA Y CHANDRACHUD, CJI]

the eligibility of nearly 2,000 members. The cooperative society forwarded A
a copy of the show cause notice to each of the members.
16. The Single Judge of the High Court has recorded the
submission of the counsel appearing on behalf of the complainants that a
Committee was constituted to verify the allegations and that the
Committee submitted its report to the Regional Joint Director (Sugar). B
The report, insofar as it contained findings with regard to the eligibility of
individual members, was crucial for the members to set up their defense
in regard to the plea of their alleged ineligibility. A copy of the report was
not supplied to the individual members or to the cooperative society.
17. It is a well-established principle of administrative law that an C
adjudicatory body cannot base its decision on any material unless the
person against whom it is sought to be utilized has been apprised of it
and given an opportunity to respond to it. Surveying the precedents
extensively, MP Jain & SN Jain’s treatise on Principles of Administrative
Law1 notes that:
D
“If the adjudicatory body is going to rely on any material, evidence
or document for its decision against a party, then the same must
be brought to his notice and he be given an opportunity to rebut it
or comment thereon. It is regarded as a fundamental principle of
natural justice that no material ought to be relied on against a
party without giving him an opportunity to respond to the same. E
The right of being heard may be of little value if the individual is
kept in the dark as to the evidence against him and is not given an
opportunity to deal with it. The right to know the material on which
the authority is going to base its decision is an element of the right
to defend oneself. If without disclosing any evidence to the F
party, the authority takes it into its consideration, and
decides the matter against the party, then the decision is
vitiated for it amounts to denial of a real and effective
opportunity to the party to meet the case against him. The
principle can be seen operating in several judicial
pronouncements where non-disclosure of materials to the G
affected party has been held fatal to the validity of the hearing
proceedings.
(emphasis supplied)
1
MP Jain & SN Jain, Principles of Administrative Law (LexisNexis, 8 th ed.) at 490-91. H
724 SUPREME COURT REPORTS [2023] 5 S.C.R.

A 18. In T. Takano v Securities and Exchange Board of India2,
a two judge bench of this court, of which one of us was a part (D.Y.
Chandrachud, J.), discussed the line of cases of this Court on the duty to
disclose investigative material. The Court analyzed the ratio in Natwar
Singh v Director of Enforcement3, Krishna Chandra Tandon v Union
of India4, Khudiram Das v State of West Bengal5, Union of India v
B
Mohd. Ramzan Khan6, Managing Director, ECIL, Hyderabad v B.
Karunaka7, State Bank of Patiala v SK Sharma8, State of Uttar
Pradesh v Ramesh Chandra Mangalik 9, Kothari Filaments v
Commr. Of Customs10, and noted that:
“39. The following principles emerge from the above discussion:
C
(i) A quasi-judicial authority has a duty to disclose the
material that has been relied upon at the stage of
adjudication; and
(ii) An ipse dixit of the authority that it has not relied on certain
D material would not exempt it of its liability to disclose such
material if it is relevant to and has a nexus to the action that
is taken by the authority. In all reasonable probability, such
material would have influenced the decision reached by the
authority.

E Thus, the actual test is whether the material that is
required to be disclosed is relevant for purpose of
adjudication. If it is, then the principles of natural
justice require its due disclosure.”
(emphasis supplied)
F In the present case, it is undisputed that the Committee’s Report
submitted to the Regional Joint Director (Sugar) contained findings with
2
(2022) 8 SCC 162
3
(2010) 13 SCC 255
4
AIR 1974 SC 1589
5
G (1975) 2 SCC 81
6
(1991) 1 SCC 588
7
(1993) 4 SCC 727
8
(1996) 3 SCC 364
9
(2002) 3 SCC 443
10
(2009) 2 SCC 192
H
DEEPAK ANANDA PATIL v. THE STATE OF MAHARASHTRA 725
& ORS [DR. DHANANJAYA Y CHANDRACHUD, CJI]

regard to the eligibility of individual members. It was both relied upon A
and relevant for the purpose of adjudication. It is also undisputed that
the Report was not supplied to the individual members or to the cooperative
society.
19. On the issue of the impact of such non-disclosure, in T. Takano,
summarizing the ratio of the Constitution Bench in B. Karunakar11, we B
noted that:
“A Constitution Bench of this Court in Karunakar (supra) held
that the non-disclosure of the relevant information is not in itself
sufficient to warrant the setting aside of the order of punishment.
It was held that in order to set aside the order of C
punishment, the aggrieved person must be able prove that
prejudice has been caused to him due to non-disclosure.
To prove prejudice, he must prove that had the material
been disclosed to him the outcome or the punishment would
have been different. The test for the extent of disclosure and
the corresponding remedy for non-disclosure is dependent on the D
objective that the disclosure seeks to achieve. Therefore, the impact
of non-disclosure on the reliability of the verdict must also be
determined vis-à-vis, the overall fairness of the proceeding. While
determining the reliability of the verdict and punishment, the court
must also look into the possible uses of the undisclosed information E
for purposes ancillary to the outcome, but that which might have
impacted the verdict.”
The Committee’s Report dealing directly with the findings on the
eligibility of the individuals would have been relevant for any of the
individuals to dispute the factual aspects on the basis of which their F
eligibility was called into question. Furthermore, in the absence of any
other specific allegation or grounds of ineligibility being made available
to the individuals, it is certain that the non-disclosure of the Report
prejudiced them.
20. Further, it emerges from the record that there was a direction G
by the High Court in the exercise of its writ jurisdiction for the conclusion
of the enquiry by 15 February 2020. The notice to show cause specifically
referred to the direction in terms of which the Regional Joint Director
was to conclude the enquiry within a stipulated time frame. Neither the
11
Supra H
726 SUPREME COURT REPORTS [2023] 5 S.C.R.

A order of the Regional Joint Director (Sugar) nor the order of the appellate
authority has dealt with the facts pertaining to the eligibility of each of
the members. The findings of the Regional Joint Director are summarized
in the Annexure to the order of which Annexures B to B-6 have been
summarized in the earlier part of this judgment. There has been no
consideration of the nature of the ineligibility qua each member, the
B
ground of ineligibility or of the documentary material which was produced
in support of the claim that the member was ineligible.
21. The submission on behalf of the appellants is that several
members were enrolled as members of the society in 1984 and as a
result of the action of the Regional Joint Director, they would be made to
C suffer serious prejudice as a consequence of their losing the membership
of the cooperative society. The order under Section 11 has serious
consequences for the members. An omnibus order of this nature has
been passed by the Regional Joint Director, preceded by a general notice
to show cause which was issued to the cooperative society. There has
D been no application of mind to the grounds of ineligibility which were
asserted against each member. The order under Section 11 operates to
oust a particular individual from the membership of the society. The
principles of natural justice must be observed in relation to each member
whose membership is sought to be ousted. There was a clear breach of
the principles of natural justice.
E
22. For the above reasons, it would be appropriate to set aside the
impugned order of the High Court and to restore the proceedings to the
Regional Joint Director. Though the High Court has proceeded exclusively
on the basis of the submission with reference to Section 11, we find
from the record that there were serious objections which were raised
F both in the appeal and before the High Court in the pleadings in regard to
the alleged ineligibility of the members. The consequence of ousting
such a large group of members from the membership of a cooperative
society would result in a serious miscarriage of justice unless individual
facts are considered in each case.
G 23. We accordingly allow the appeals in the following terms:
a. We set aside (i) the impugned judgment and order of the
High Court dated 22 September 2022; (ii) the order of the
Regional Joint Director (Sugar) dated 14 February 2020;
and (iii) the order in appeal of the Minister of Cooperation
H dated 18 February 2021;
DEEPAK ANANDA PATIL v. THE STATE OF MAHARASHTRA 727
& ORS [DR. DHANANJAYA Y CHANDRACHUD, CJI]

b. The proceedings shall stand restored to the file of the A
Regional Joint Director (Sugar);
c. Since the members have appeared in these proceedings, no
further notice to show cause would be necessary to the
members;
d. The members who are sought to be proceeded against shall B
be entitled to a disclosure of the scrutiny report of the
Committee as well as of the copy of the complaints and the
documents which are annexed thereto. This exercise shall
be completed within a period of one month from the date of
this order; C
e. Thereafter, the members would be at liberty to submit their
replies within a period of one month;
f. The Regional Joint Director shall pass fresh orders after
furnishing to the members an opportunity of being heard
within a period of three months thereafter. D
24. The appeals shall stand allowed in the above terms.
25. Pending applications, if any, stand disposed of.
MA Nos 1978-1979 of 2022
26. The Interlocutory Applications seeking restoration of Special E
Leave Petition (C) Nos 20001-20002 of 2022 are allowed.
27. The Special Leave Petitions are restored to file in their original
numbers.
SLP (C) Nos 20001-20002 and 22734-22737 of 2022 F
28. In terms of the order passed in Civil Appeal Nos 88-89 of
2023, the Special Leave Petitions are disposed of.
29. Pending applications, if any, stand disposed of accordingly.

G
Divya Pandey Appeals allowed.
(Assisted by : Dayaar and Roopanshi Virang, LCRAs)

H